Incoterms for Forwarders, Exporters and Importers. Rules for not sinning.

1. Always remember to include the incoterm version following the term Incoterm. For instance: "CIP Haifa Port (Incoterms 2010)". Incoterm version after the term incoterm. For instance: "CIP Haifa Port (Incoterms 2010)".

Remember that Incoterms determine the moment of delivery and existence Incoterms that differs the delivery time in one version and another. Examples: FOB, CFR and CIF do not determine the same delivery time in the 2000 version as in the 2010 version.

If you do not specify the version and there is a damage on the goods, it will not be clear who was responsible of the merchandise at the time the damage occurred.

2. It is advisable to use the last proclaimed version. Currently the 11 terms of the 2010 version. The parties, seller and buyer, can use the term that best fits the transaction of sale, although it is collected in a version before the current one.

3. Be as concise as possible, indicating the place of delivery at origin or destination, depending on the Incoterm, in this way the obligations and responsibilities of the seller and buyer will be clearly established. Example: FCA Mollet del Vallés, Barcelona, Spain, Calle Pintor Dalí 5, Las Mallas Industrial Estate (Incoterms 2010).

4. To delimit the date of collection in the term EXW, specify in the sale terms , in which space of time (days) the buyer must load in the warehouse of the seller. This will limit the time of delivery. Remember that in the term EXW the moment of delivery occurs when the seller puts in his store at the disposal of the buyer the goods. Therefore, delivery has occurred when the seller and the buyer have reached the máximum collection date. If this has been breached by the buyer, the risk and costs of the goods are paid by the buyer, once the maximum collection date has expired.

5. The Incoterms do not reflect the transfer of ownership of the merchandise, remember to include in your contracts, acceptance of orders, proforma invoice or commercial invoice the clause of reservation of ownership. For example: "The buyer company detailed in this invoice, will acquire ownership of the merchandise when it has been proved that the 100% of the payment has been made.

6. Issue specific instructions to the freight forwarder / carrier regarding the term. Incoterms used (prepaid freight or freight collect) to ensure that the transportation contract is in accordance with the contract of sale / commercial invoice / proforma invoice. Remember that the Incoterm only affects the seller / buyer relationship in terms of rights and obligations, and not the other "actors" involved in the operational development of the foreign trade logistics chain.

7. It is advisable to use the marine Incoterms FAS, FOB, CFR and CIF for goods under conventional loading (the one that does not use the container) or for bulk merchandise and liquids.

8. For containerized goods, both in groupage regime and in full regime. It is advisable to use the term polyvalent (FCA, CPT and CIP) in substitution of the maritime terms) since the polyvalent ones reflect with greater accuracy the moment of delivery of the merchandise (in this way you will avoid conflicts).

9. Incoterms in group C (CIF, CFR, CIP y CPT) are not contracts of arrival or delivery at destination, but boarding contracts. The delivery occurs at origin, just like the terms of group F. The responsibility of the merchandise during the main transport is of the buyer in group C, therefore the buyer is who has the risk of the goods from the moment of delivery in origin (seller's country) to final destination.

10.There are some polyvalent Incoterms of the group of C (CPT and CIP) that do not indicate the delivery time, but of shipping contracts, so it is convenient that you specify the delivery time at origin in order to delimit risk liability of the merchandise. Example CIP Moscow, Calle Kremlin, 25 (delivery of Calle Comunidad 10, Albacete, Spain) Incoterms 2010.

In this case the seller located in Albacete delivers (transmission of the risk to the buyer) in its facilities located at number 5 of the street Comunidad de Albacete and supports the cost of transport and insurance to Moscow. From the moment of the load to the truck in its installations of Albacete takes place the transmission of the risk of the merchandise.

11.Use the Tricoterms properly (time of delivery, means of payment, document that proves the delivery of the goods). For documentary forms of payment, especially documentary credit (letter of credit) it is advisable to determine the documents related to the condition of the credits according to the Incoterms.

For EXW invoice and packing list, in no case documents of transport or delivery of the merchandise since the seller will be at the expense of the buyer until he does not collect the merchandise in the stores of the seller.

For Incoterms Group F, document of receipt of the goods by the carrier / freight forwarder, such as the FCR (FIATA Certificate Receipt) or FWR (FIATA Warehouse Receipt), in no case transport documents, since it is the buyer who appoints the carrier and it pays for the transport so that the load dominates the main means of transport and access to the transport document.

For group C terms, boarding document or international transportation: Bill of Lading or Sea Waybill for maritime; Air Waybill for air; Fiata Bill of Lading or Fiata Waybill for multimodal; CMR waybill for road; and CIM transport letter for rail.

For group D Incoterms, certificate of delivery of the merchandise such as the document FIATA Certificate Transport (FCT). It is not usual, due to reluctance, or ignorance, of banking entities in the management of group D Incoterms, but they are totally feasible.

12. If you are selling in terms CIF or CIP, please specify the coverage of the insurance and its geographic and temporal scope, that is to say, where and when it begins and ends. Remember that for these two terms you have to contract a specific insurance (travel policy or floating policy) with at least minimum coverage and 110% of the CIF / CIP value (not of the CFR / CPT value). The civil liability insurance of the means of transport, nor the global policies are not valid.

13. It is advisable not to use the DDP for intra-community sales (trade between countries of the European Union), replace it with the DAP (Place). There are no customs nor import taxes in intra-community trade. For sales to non-EU countries remember to include the import VAT exclusion with the mention VAT Excluded (DDP VAT Excluded).

14. If you are selling in term DAP (Place), delivery at a point located inside the country of destination. It is advisable that you include clauses of force majeure, exemptions or temporary extensions.

Author: Alberto Rino | Trainer, Consultant, Auditor Foreign Trade | Specialist in Customs, Taxation and Cross Trade | Managing Director Educatio Humanum | ESNI Business School | www.esni.es | Online training www.cursoscomercioexterior-online.es

Partner and translation: Mar Martin | Specialist in Purchasing, Foreign Trade and Marketing