The government's Brexit advice urges businesses trading with the EU to review their contracts for the supply of goods – particularly those based on Incoterms – to ensure that they remain appropriate in the event of "no deal". What are Incoterms, why do they matter and what changes should you make in the light of Brexit?
What are Incoterms and why do they matter?
Incoterms are standard provisions drawn up by the International Chamber of Commerce (ICC) for use in contracts relating to international trade in goods. They are not obligatory but they are widely used in practice.
Incoterms govern the following issues:
- which party has the obligation to arrange transport (known as "carriage") and insurance of the goods;
- which party will be responsible for the costs of transport, insurance and customs duties; and
- at what point delivery is deemed to take place and risk (but not title) passes to the customer.