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INCOTERMInternational Commercial Term
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commercial concept or the Incoterm. What's more, parties should never just say that the goods will be delivered "FOB" without specifying exactly where delivery will occur, because if no place name is provided it may be unclear where delivery actually occurs.
One solution called for a re-examination of the Incoterms negotiated with the brands.
While Incoterms don't specifically treat the issue of title transfer, they do specifically treat the components used in determining the issue of title transfer.
Incoterms. Coming in an alphabet stew of abbreviations--such as EXW, FCP, DDU and DDP--spelled out in global protocols set forth by the International Chamber of Commerce (ICC), these govern the buyer's and seller's responsibilities.
While incoterms don't specifically treat title transfer, their focus on the delivery obligations of the seller also addresses components used in determining title transfer.
Relying on Incoterms' definition of FOB, the court observed that as soon as the seller delivers the goods to the carrier, the risk of loss or damage immediately passes to the buyer.
"Now companies that are buying a product that's already on the seas can use these Incoterm rules because they do allow for a transaction where the goods are being procured during the shipment."
Credit Managers, in particular, should be careful to counsel their organizations not to accept LCs in a format calling for the Ocean Bill of Lading as evidentiary documentation with Less than a "C" Incoterm. Since most banks have a great deal of trouble in issuing LCs without calling for an OBL (they are sometimes constrained by their charters not to do so), it is a good practice to insist that the Incoterm governing the taking in charge of the goods under the transaction should minimally be CIF, which would require that the engaging party, for the purposes of creation of this essential piece of evidentiary documentation, be the beneficiary or the beneficiary's designated agent.
The first set of Incoterms rules was published by ICC in 1936.
Similar to FOB shipments, insurance, under INCOTERMS definition would attach once the goods "pass the ship's rail".
While the revised set of rules on INCOTERMS in all international trade transactions has taken effect globally seven years ago, many exporters and importers, traders, bankers, insurers, freight forwarders, carriers and the people handling such transactions, namely business owners, treasurers, CFOs, procurement officers, trade negotiators and many lawyers are still unaware of these changes.
INCOTERMS are pre-defined commercial terms and rules published by the International Chamber of Commerce for the delivery of goods under sales contracts for domestic and international trade.