DCW Updates
DCW Monthly: December 2024
We’re thrilled to share the newest edition of DCW’s premium monthly content. This month’s highlights include: * Five
DCW Articles
Motivations and Rationale for Variation of Incoterms Rules
The ICC’s Incoterms® rules only reflect the most commonly used commercial practice. Therefore, where a situation demands and parties are in agreement, the rules may be amended to deviate from the default provisions or add to the rules to bring more precision.
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The ICC’s Incoterms® rules only reflect the most commonly used commercial practice. Therefore, where a situation demands and parties are in agreement, the rules may be amended to deviate from the default provisions or add to the rules to bring more precision.
The variation of Incoterms, if agreed to by parties, is reflected in the sales contract. LC specialists inter alia should have an understanding of these variations to make sure that the terms of the LC reflect these variations. For instance, the status of freight charges to collect which transport documents routinely are required to show; similarly the insurance document with regards the insured value and the type of cover. Also, some banks collateralise imported goods and therefore have an interest in the goods. The applicant submits the sales contract with their LC opening request which is reviewed by LC specialists. LC specialists must ensure that their bank’s interests are protected.
What is a variation in the context of Incoterms and why is it done?
Incoterms 2020, Incoterms 2010, and Incoterms 2000 recognise this and do not prohibit alterations/variations of the rules. Wording to this effect can be found in the Introduction section of Incoterms 2020, which is a replica of Incoterms 2010 except for the phrase “… to vary the point at which delivery is made and risk transfers to the buyer” which in 2010 was “… to vary the point at which the risk passes from seller to the buyer”.
Incoterms 2020 states:
CAUTION WITH VARIANTS OF INCOTERMS® RULES
78. Sometimes the parties want to alter an Incoterms® rule. The Incoterms® 2020 rules do not prohibit such alteration, but there are dangers in so doing. In order to avoid any unwelcome surprises, the parties would need to make the intended effect of such alterations extremely clear in their contract. Thus, for example, if the allocation of costs in the Incoterms® 2020 rules is altered in the contract, the parties should also clearly state whether they intend to vary the point at which delivery is made and the risk transfers to the buyer.
78. Sometimes the parties want to alter an Incoterms® rule. The Incoterms® 2020 rules do not prohibit such alteration, but there are dangers in so doing. In order to avoid any unwelcome surprises, the parties would need to make the intended effect of such alterations extremely clear in their contract. Thus, for example, if the allocation of costs in the Incoterms® 2020 rules is altered in the contract, the parties should also clearly state whether they intend to vary the point at which delivery is made and the risk transfers to the buyer.
In the rules, (both Incoterms 2020 & Incoterms 2010), the words “Unless otherwise agreed …” appear several times in the context of cost allocation. Incoterms 2000 discusses ‘variants’ succinctly. Unlike 2020 or 2010, examples of those variants and their usage in the shipping industry are also addressed.
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DCW Articles
Discrepancy Rates under UCP 600
In the second instalment of his DCW article series on major issues surrounding potential revision of UCP, ICC Banking Commission Senior Technical Advisor Dave Meynell considers the problems contributing to chronically high discrepancy rates and offers viable solutions.
DCW Articles
Risky and Uncertain Situations in Negotiation of LCs
The LC concept of negotiation has led to considerable misunderstanding and confusion in practice. In his article, Abdurrahman Özalp attempts to wade through areas of uncertainty and cast light on difficulties that confirming banks and beneficiaries could encounter.
DCW Articles
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DCW Articles
SBP Vision 2028 and Pakistan’s Transformation to a Shariah-Compliant Banking System
Pakistan has embarked on an ambitious multi-year plan to transform its financial system into a Shariah-compliant framework by 2028. Two trade finance specialists explain what this entails and the inherent challenges and opportunities it presents.
