17. What is incoterms and what is its role in contracts of international sale?

The International Chamber of Commerce developed the Incoterms, (stands for international commercial terms), which provide guidelines in shipping or transport of merchandise that are accepted worldwide. They specify:

- Who (seller / buyer) is responsible to pay for which at portion of the transport - transportation

- Who (seller / buyer) is liable for any possible damage or loss of merchandise during the transport.- - transfer of risk, insurance obligations

The Incoterms® rules have become an essential part of the daily language of trade. They have been incorporated in contracts for the sale of goods worldwide and provide rules and guidance to importers, exporters, lawyers, transporters, insurers and students of international trade. The idea, first conceived by the International Chamber of Commerce (ICC) in 1921, and brought to fruition with the first Incoterms® rules in 1936, set in motion a long and vibrant history of Incoterms® publications that continues today with Incoterms® 2010, which will go into effect 1 January 2011. The aim of INCOTERMS, which stands for international commercial terms, is to provide a set of international rules for the interpretation of the most commonly used trade terms in foreign trade. These trade terms are used to allocate the costs of freight and insurance in addition to designating the point in time when the risk of loss passes to the purchaser.

18. How INCOTERMS should be used by the parties to the contract of international sale of goods?

The parties should refer to the version of INCOTERMS (INCOTERMS 1990, or INCOTERMS 2010) and the commercial term agreed by the parties directly in the contract, for instance - Goods are sold EX WORKS Kiev INCOTERMS 2000. Ukrainian legislation as well as UN Convention on Contracts of International Sale of Goods require indication of INCOTERMS term as essential condition of the contracts of international sale.

19. How many editions of INCOTERMS exist and which editions are used in practice of inernational commerce?

Since their introduction in 1936, Incoterms® rules have been revised periodically to meet the demands of changes in a global trade environment and to reflect prevailing business-to-business practices, there are generally eight editions of INCOTERMS. The latest versions used in practice are INCOTERMS 1990, 2000 and 2010. INCOTERMS 2010 effective as of January, 2011.

20. How many trade terms contain INCOTERMS 2010?

The INCOTERMS 2010 contain 11 Incoterms® rules:

RULES FOR ANY MODE OR MODES OF TRANSPORT

EXW Ex Works

FCA Free Carrier

CPT Carriage Paid To

CIP Carriage And Insurance Paid To

DAT Delivered At Terminal

DAP Delivered At Place

DDP Delivered Duty Paid

RULES FOR SEA AND INLAND WATERWAY TRANSPORT

FAS Free Alongside Ship

FOB Free On Board

CFR Cost And Freight

CIF Cost, Insurance and Freight

The number of Incoterms® rules has been reduced from 13 to 11. This has been achieved by substituting two new rules that may be used irrespective of the agreed mode of transport – DAT, Delivered at Terminal, and DAP, Delivered at Place – for the Incoterms® 2000 rules DAF, DES, DEQ and DDU.