Text A General Introduction of INCOTERMS (Ⅰ)
The global economy has given businesses broader access than ever before to
markets all over the world. Goods are sold in more countries, in larger quantities, and
in greater variety. But as the volume and complexity of international sales increase, so
do possibilities for misunderstandings and costly disputes when sales contracts are not
Incoterms, the official ICC rules for the interpretation of trade terms, facilitate
the conduct of international trade. Reference to Incoterms 2000 in a sales contract
defines clearly the parties' respective obligations and reduces the risk of legal
Since the creation of Incoterms by ICC in 1936, this undisputed world - wide
contractual standard has been regularly updated to keep pace with the development of
international trade. Incoterms 2000 take account of the recent spread of customs - free
zones, the increased use of electronic communications in business transactions, and
changes in transport practices. Incoterms 2000 offer a simpler and clearer presentation
of the 13 definitions, all of which have been revised.
The broad expertise of ICC's Commission on International Commercial Practice,
whose membership is drawn from all parts of the world and all trade sectors, ensures
that Incoterms 2000 respond to business needs everywhere.
1. International Rules for the Interpretation of Trade Terms
In today’s international trade practices, most of the transactions are carried out
by means of trade terms. Of course, we must attach enough importance to trade terms
and related problems.
Concept and Role of Trade terms
International trade, compared with national trade, is characterized by long
distance between parties, more complex links and more risk, etc. Needless to say, if
parties of every transaction have to allocate the rights and obligations and risks in
negotiation, this must prove to be not only time-consuming, but also expensive. In
order to save time and reduce the costs, some trade terms were being used among
merchants in many European countries. These trade terms served as a shorthand
method of expressing certain meanings in the area of goods shipping and risks
allocating. Trade terms are usually expressed in the form of acronym, such as FOB
meaning free on board, and CIF means cost, insurance and freight. By using these
certain trade terms, the parties to a sale contract can express their agreement
immediately with little confusion and with little language problems. Problems also
arise about the application of these trade terms, because merchants in different regions
offer different interpretations to these trade terms. So, if the parties decide to use a
trade term in their contract, they must define it. If it is not defined in their contract, a
court of law would have to look to the applicable law, such as the UCC, or Incoterms,
for its interpretation. Warsaw-Oxford Rules 1932, Revised American Foreign Trade
Definitions 1941 and Incoterms are widely recognized and accepted editions of the
interpretation of trade terms. Among this, of course, Incoterms is of the greatest
Incoterms and its Different Editions
As we have just mentioned, Incoterms is the most important set of trade term
definitions. It was published by the International Chamber of Commerce with its
headquarters in Paris. These definitions are influential all over the world. The first
edition was published in 1936. In order to keep pace with the development of
international trade, the International Chamber of Commerce published the successive
editions of Incoterms, well known as Incoterms 1953、 1967、 1976、 1980、1990. And
the nearest edition is Incoterms 2000.
Incoterms 2000 include thirteen trade terms, according to relative responsibilities
of each party and to the point at which the risk of loss passed from the seller to buyer,
these 13 terms are classified into 4 groups, namely E terms, F terms, C terms and D
2 About Incoterms Itself
2.1.PURPOSE AND SCOPE OF INCOTERMS
The purpose of Incoterms is to provide a set of international rules for the
interpretation of the most commonly used trade terms in foreign trade. Thus, the
uncertainties of different interpretations of such terms in different countries can be
avoided or at least reduced to a considerable degree.
Frequently, parties to a contract are unaware of the different trading practices in
their respective countries. This can give rise to misunderstandings, disputes and
litigation, with all the waste of time and money that this entails. In order to remedy
these problems, the International Chamber of Commerce first published in 1936 a set
of international rules for the interpretation of trade terms. These rules were known as
"Incoterms 1936". Amendments and additions were later made in 1953, 1967, 1976,
1980, 1990 and presently in 2000 in order to bring the rules in line with current
international trade practices.
It should he stressed that the scope of Incoterms is limited to matters relating to
the rights and obligations of the parties to the contract of sale with respect to the
delivery of goods sold (in the sense of "tangibles", not including "intangibles" such as
It appears that two particular misconceptions about Incoterms are very common.
First, Incoterms are frequently misunderstood as applying to the contract of carriage
rather than to the contract of sale. Second, they are sometimes wrongly' assumed to
provide for all the duties which parties may wish to include in a contract of sale.
As has always been underlined by ICC, Incoterms deal only with the relation
between sellers and buyers under the contract of sale, and, moreover, only do so in
some very distinct respects.
While it is essential for exporters and importers to consider the very practical
relationship between the various contracts needed to perform an international sales
transaction - where not only the contract of sale is required, but also contracts of
carriage, insurance and financing: - Incoterms relate to only one of these contracts,
namely the contract of sale.
Nevertheless, the parties' agreement to use a particular Incoterms, would
necessarily implications for the other contracts. To mention a few examples, a having
agreed to a CFR or CIF - contract cannot perform such a contract by any other mode
of transport than carriage by sea, since under these he must present a bill of lading or
other maritime document to the buyer which is simply not possible if other modes of
transport are used. Furthermore, -&c document required under a documentary credit
would necessarily depend upon the means of transport intended to he used.
Second, Incoterms deal with a number of identified obligations imposed on the
parties - such as the seller's obligation to place the goods at the disposal of the buyer
or hand them over for carriage or deliver them at destination and with the distribution
of risk between the parties in these cases.
Further, they deal with the obligations to clear the goods for export and import,
the packing of the goods, the buyer's obligation to take delivery as well as the
obligation to provide proof that the respective obligations have been duly fulfilled.
Although Incoterms are extremely important for the implementation of the contract of
sale, a great number of problems which may occur in such a contract are not dealt
with at all, like transfer of ownership and other property rights. breaches of contract
and the consequences following from such breaches m well as exemptions from
liability in certain situations. It should be stressed that Incoterms are not intended to
replace such contract terms that are needed for a complete contract of sale either by
the incorporation of standard terms or by individually negotiated terms.
Generally, Incoterms do not deal with the consequences of breach of contract and
any exemptions from liability owing to various impediments. These questions must he
resolved by other stipulations in tile contract of sale and tile applicable law.
Incoterms have always been primarily intended for use where goods are sold for
delivery across national boundaries: hence, international commercial terms. However,
Incoterms are in practice at times also incorporated into contracts for the sale of
goods within purely domestic markets. Where Incoterms are so used, the A2 and B2
clauses and any other stipulation of other articles dealing with export and import do,
of course, become redundant.
2.2. WHY REVISIONS OF INCOTERMS?
The main reason for successive revisions of Incoterms has been the need to adapt
them to contemporary commercial practice. Thus, in the 1980 revision the term Free
Carrier (now FCA) was introduced m order to deal with the frequent case where the
reception point in maritime trade was no longer the traditional FOB -point (passing of
the ship's rail) but rather a point on land, prior to loading on board a vessel, where the
goods were stowed into a container for subsequent transport by sea or by different
means of transport in combination (so-called combined or multi-model transport).
Further, in the 1990 revision of Incoterms, the clauses dealing with the seller's
obligation to provide proof of delivery permitted a replacement of paper
documentation by EDI - messages provided the parties had agreed to communicate
electronically. Needless to say, efforts are constantly made to improve upon the
drafting and presentation of Incoterms in order to facilitate their practical
adapted from the website: www.icc.org
(TO BE CONTINUED)
Words and Expressions
obligation (n) （法律上的）责任，义务；
trade terms (n) 贸易术语；
party (n) (合同的)当事人；
Notes to the Texts
引起误解、 争议和诉讼，从而浪费时间和费用。 为了解决这些问题，国际商会(ICC)
于一九三六年首次公布了一套解释贸易术语的国际规则，名为 Incoterms 1936，
I. Match Column A with Column B.
1. facilitate a. to deal with a problem or improve a bad situation
2. successive b. to go beyond the usual limits of something
3. entail c. coming or following one after the other
4. remedy d. to involve something as a necessary part or result
5. fulfill e. to make it easier for a process or activity to happen
6. exemption f. permission not to do or pay something that you
would normally have to do or pay
7. impediment g. to do or provide what is necessary or needed
8. intern h. the point at which one area of work,
responsibility etc ends and another begins
9. demarcation i. someone, especially a student, who works for a
short time in a particular job in order to gain
10. transcend j. a situation or event that makes it difficult or
impossible for someone or something to succeed or
II. Complete the following sentences with the appropriate form of a word or
phrases chosen from the words listed below.
Keep pace with be characterized by in line with
with respect to intend to do something on the basis of by virtue of
in particular in keeping with be at stake
1. I to spend the night there.
2. The settlement and infrastructure field also a wide range of users with
a great diversity of interests.
3. They are paid their superiors' assessments of performance, as in the public
4. She became a British resident her marriage.
5. The supply of materials cannot demand.
6. Pensions will be increased inflation.
7. Was there anything that you wanted to talk about?
8. your request, I am not yet able to agree.
9. tradition, everyone wore black.
10. National pride in next week's game against England.
III. For each of the following questions, choose the most appropriate answer
according to your understanding of the text.
1. Which of the following is not mentioned as characteristics of International trade?
A. Long distance between parties
B. Simple links
C. More complex links
D. More risk
2. Incoterms 2000 include ＿trade terms, according to relative responsibilities of
each party and to the point at which the risk of loss passed from the seller to
3. What is the main reason for successive revisions of Incoterms?
A. The need to adapt them to contemporary commercial practice.
B. The need to take part in contemporary commercial practice.
C. The need to avoid contemporary commercial practice.
D. The need to prevent them from contemporary commercial practice.
4. Membership of UNIDROIT＿.
A. is open to all states
B. exclude some states
C. is restricted to States acceding to the UNIDROIT Statute
D. is restricted to the third world
5. From the passage, we know that ＿.
A. UNIDROIT has close ties of co- operation with intergovernmental
B. UNIDROIT has close ties of co- operation with non-governmental
C. UNIDROIT has close ties of co- operation with developed countries.
D. UNIDROIT has close ties of co- operation with Organizations, both
intergovernmental and non- governmental.
Text B About UNIDROIT
The International Institute for the Unification of Private Law (UNIDROIT) is an
independent intergovernmental organization with its seat in the Villa Aldobrandini in
Rome. Its purpose is to study needs and methods for modernizing, harmonizing and
coordinating private and, in particular, commercial law as between States and groups
Set up in 1926 as an auxiliary organ of the League of Nations, the Institute was,
following the demise of the League, re-established in 1940 on the basis of a
multilateral agreement, the Unidroit Statute.
Membership of UNIDROIT is restricted to States acceding to the UNIDROIT
Statute. UNIDROIT's 61 member States are drawn from the five continents and
represent a variety of different legal, economic and political systems as well as
different cultural backgrounds. The Institute is financed by annual contributions from
its member States which are fixed by the General Assembly as well as a basic annual
contribution from the Italian Government. Extra-budgetary contributions for purposes
identified by the donor may be established (trust funds).
UNIDROIT has an essentially three-tiered structure, made up of a Secretariat, a
Governing Council and a General Assembly.
The Secretariat is the executive organ of UNIDROIT responsible for the
day-to-day carrying out of its Work Program. It is run by a Secretary-General, who is
appointed by the Governing Council on the nomination of the President of the
Institute. The Secretary-General is assisted by a staff of international civil servants
and various ancillary staff.
The Secretariat welcomes qualified staff from Member States on Secondment as
well as interns who are either required to carry out an internship with an international
organization or as part of their university studies or wish to acquire experience within
an organization such as UNIDROIT
The Governing Council supervises all policy aspects of the means by which the
Institute's statutory objectives are to be attained and in particular the Secrtariat's
carrying out of the Work Program, the drawing up of which is its responsibility. It is
made up of one ex officio member, the President of the Institute, and 25 elected
members, typically eminent judges, practitioners, academics and civil servants.
The General Assembly is the ultimate decision-making organ of UNIDROIT: it
votes the Institute's budget each year; it approves the Work Program every three years;
it elects the Governing Council every five years. It is made up of one representative
from each member Government.
The official languages of UNIDROIT are English, French, German, Italian and
Spanish; its working languages are English and French.
Nature of instruments drawn up by UNIDROIT
UNIDROIT's basic statutory objective is to prepare modern and where
appropriate harmonized uniform rules of private law understood in a broad sense.
However, experience has demonstrated the necessity of permitting occasional
incursions into public law, especially in areas of law where hard and fast lines of
demarcation are difficult to draw or where transactional law and regulatory law are
intertwined. Uniform rules prepared by UNIDROIT are concerned with substantive
law rules; they will only include uniform conflict of law rules incidentally.
Technical approach to harmonization or unification favored by UNIDROIT
UNIDROIT's independent status amongst intergovernmental Organizations has
enabled it to pursue working methods which have made it a particularly suitable
forum for tackling more technical and correspondingly less political issues.
Factors determining eligibility of subjects for treatment
New technologies, commercial practices etc. call for new solutions and, where
transactions tend to be transnational by their very nature, these should be harmonized,
widely acceptable solutions. Generally speaking, the eligibility of a subject for
harmonization or even unification will to a large extent be conditional on the
perception of States being willing to accept change to their municipal law rules in
favor of a new international solution on that subject. Legal and other arguments in
favor of harmonization on a subject have accordingly to be weighed carefully against
these considerations. Similar considerations will also determine the most appropriate
sphere of application to be given to such rules, that is whether they should be
restricted to truly cross-border situations or relations or extended to cover also purely
internal situations or relations.
Factors determining choice of instrument to be prepared
The uniform rules drawn up by UNIDROIT have, in keeping with its
intergovernmental structure, traditionally tended to take the form of international
Conventions, designed to apply automatically in preference to a State’s municipal law
upon completion of all the formal requirements of that State’s domestic law for their
entry into force. However, the low priority which tends to be accorded by
Governments to the implementation of such Conventions and the time it therefore
tends to take for them to enter into force have led to the increasing popularity of
alternative forms of unification in areas where a binding instrument is not felt to be
essential. Such alternatives include model laws which States may take into
consideration when drafting domestic legislation on the subject covered or general
principles addressed directly to judges, arbitrators and contracting parties who are
however left free to decide whether to use them or not. Where the subject is not
judged ripe for the drawing up of uniform rules, another alternative consists in the
preparation of legal guides, typically on new business techniques, types of transaction
or on the framework for the organization of markets both at the domestic and the
international level. Generally speaking "hard law" solutions (i.e. Conventions) are
needed where rules' scope transcends the bi-polar relationship underlying ordinary
contract law and where third parties' or public interests are at stake as is the case in
the law of property.
Preliminary stage: use of study groups
Once a subject has been entered on UNIDROIT's Work Program, the Secretariat,
where necessary assisted by experts in the field, will draw up a feasibility study
and/or a preliminary comparative law report designed to ascertain the desirability and
feasibility of law reform. Where necessary and provided funding is available, an
economic impact assessment study is carried out. The report, sometimes including a
first rough draft of principles or such uniform rules, will then be laid before the
Governing Council which, if satisfied that a case has been made out for taking action,
will typically ask the Secretariat to convene a study group, traditionally chaired by a
member of the Council, for the preparation of a preliminary draft Convention or one
of the alternatives mentioned above. The membership of such study groups, made up
of experts sitting in their personal capacity, is a matter for the Secretariat, which seeks
to ensure as balanced a representation as possible of the world’s different legal and
economic systems and geographic regions.
Intergovernmental negotiation stage
A preliminary draft instrument established by a study group will be laid before
the Governing Council for approval and advice as to the most appropriate further
steps to be taken. Typically, in the case of a preliminary draft Convention, these will
consist in its asking the Secretariat to convene a committee of governmental experts
for the finalization of a draft Convention capable of submission for adoption to a
diplomatic Conference. In the case of one of the alternatives to a preliminary draft
Convention not suitable by virtue of its nature for transmission to a committee of
governmental experts, the Council will be called upon to authorize its publication and
dissemination by UNIDROIT in the circles for which it has been prepared.
Full participation in UNIDROIT committees of governmental experts is open to
representatives of all UNIDROIT member States. The Secretariat may in addition
invite such other States as it deems appropriate, notably in view of the subject-matter
concerned, and the relevant international Organizations and professional associations
to participate as observers. A draft Convention finalized by a committee of
governmental experts will then be laid before the Governing Council for approval and
advice as to the most appropriate further steps to be taken. Typically, where it judges
that the draft Convention reflects a consensus as between the States which have
participated in the committee of governmental experts and that it accordingly stands a
good chance of adoption at a diplomatic Conference, these steps will consist in its
authorization of the draft Convention's transmission to a diplomatic Conference for
adoption as an international Convention. Such a Conference will be convened by one
of UNIDROIT's member States.
Co-operation with other international Organizations
UNIDROIT maintains close ties of co-operation with its sister international
Organizations, both intergovernmental and non-governmental, which in many cases
take the form of co-operation agreements concluded at inter-Secretariat level.
By reason of its expertise in the international unification of law, UNIDROIT is
moreover at times commissioned by such other Organizations to prepare comparative
law studies and/or draft Conventions designed to serve as the basis for the preparation
and/or finalization of international instruments in those Organizations.
UNIDROIT has over the years prepared over seventy studies and drafts. Many of
these have resulted in international instruments, including the following international
Conventions and Model Laws, drawn up by UNIDROIT and - in the case of
Conventions - adopted by a diplomatic Conferences convened by member States of
1964 Convention relating to a Uniform Law on the Formation of Contracts for
the International Sale of Goods (The Hague);
1964 Convention relating to a Uniform Law on the International Sale of Goods
1970 International Convention on the Travel Contract (Brussels);
1973 Convention providing a Uniform Law on the Form of an International Will
1983 Convention on Agency in the International Sale of Goods (Geneva);
1988 UNIDROIT Convention on International Financial Leasing (Ottawa);
1988 UNIDROIT Convention on International Factoring (Ottawa);
1995 UNIDROIT Convention on Stolen or Illegally Exported Cultural Objects
2001 Convention on International Interests in Mobile Equipment (Cape Town);
2001 Protocol to the Convention on International Interests in Mobile Equipment
on Matters specific to Aircraft Equipment (Cape Town)
Model Franchise Disclosure Law (2002).
In addition, UNIDROIT has published:
Principles of International Commercial Contracts (1994; enlarged edition 2004);
Guide to International Master Franchise Arrangements (1998).
Principles of Transnational Civil Procedure (in co-operation with ALI) (2004)
UNIDROIT work has also served as the basis for a number of international
instruments adopted under the auspices of other international Organizations which are
already in force. These include:
1954 Convention for the Protection of Cultural Property in Case of War (adopted
under the auspices of UNESCO);
1955 European Convention on Establishment (Council of Europe);
1955 Benelux Treaty on Compulsory Insurance against Civil Liability in respect
of Motor Vehicles (Council of Europe);
1956 Convention on the Contract for the International Carriage of Goods by
Road (CMR) (UN/ECE);
1958 Convention concerning the recognition and enforcement of decisions
relating to maintenance obligations towards children (Hague Conference on Private
1959 European Convention on Compulsory Insurance against Civil Liability in
respect of Motor Vehicles (Council of Europe);
1962 European Convention on the Liability of Hotel-keepers concerning the
Property of their Guests (Council of Europe);
adapted from the website: www.unidroit.org
Words and Expressions
bill of lading (n) 提单；
deliver (v) 发货，交货；
statute (n) 制定法，成文法；
Notes to the Texts
是国际商会的简称。成立于 1919 年，发展至今已拥有来自 130 多个国家的
信用证统一惯例》《国际商会 1990 国际贸易术语解释通则》等被广泛地应用于
Free on Board 的简称，意思是装运港船上交货。在该贸易术语下，当货物在
V. True (T) or False (F)? Put a T at the end of the statement if you think it
is true and put an F if you think it is false.
1. In order to keep pace with the development of international trade, the International
Chamber of Commerce published the successive editions of Incoterms, well
known as Incoterms 1953、1967、1976、1980、1990. And the nearest edition is
2. Parties to a contract are aware of the different trading practices in their respective
3. UNIDROIT’s 61 member States are drawn from the five continents.
4. Uniform rules prepared by UNIDROIT are not concerned with substantive law
rules; they will not include uniform conflict of law rules incidentally.
5. Full participation in UNIDROIT committees of governmental experts is open to
representatives of all UNIDROIT member States.
VI. Questions for discussions.
1. What about the function of Incoterms? What do Incoterms take account of?
2. Describe the scope of Incoterms.
3. What is the International Institute for the Unification of Private Law( UNIDROIT)
4. Give a brief account of the General Assembly.