Commercial Law

Commercial Law

INCOTERMS in International Trade Agreements

Drafting contracts properly in international trade agreements is essential in commercial law. Drafting and reviewing obligations set out in international commercial agreements varies according to the applicable law. This is why International Chamber of Commerce introduced to the commercial life a set of notions that determines delivery and payment methods and are integrable into contracts. These notions, also known as INCOTERMS across the world, determine delivery and payment methods while also being updated according to the latest technological and commercial developments.

Today most common delivery terms are as follows; Ex-Works(EXW) meaning the place of the production of goods, Free Carrier(FCA) meaning the place of delivery agreed by the parties, Free Alongside Ship(FAS) meaning the board of the ship, Free on Board(FOB) meaning the deck of the ship is the place of delivery. Cost-Insurance-Freight(CIF) means that all costs, insurance and freights are to be born by the seller up to the country of delivery. For INCOTERMS to be applicable, the parties need to refer to the INCOTERMS in the contract clearly beyond any doubt. For example; in a contract mentioning CIF delivery terms, clearly writing down CIF/Antalya-Incoterms 2000 will clear any doubts on the place of delivery and avoid any potential disputes regarding thereof.

While there are many payment terms in international commerce, only a few of these are commonly used in daily life. The most commonly used payment terms are as follows; Letter of Credit(L/C) meaning a letter of payment guarantee issued by a bank, Documentary Collection(CAD) meaning payment upon the submission of the transfer documents concerning the exported goods to the bank, Open Account(CAG) meaning the shipment of the goods and the documents to the buyer before the fees are collected.

International Sale Contracts

In an international sale contract the seller undertakes to deliver the subject of the sale to the buyer whereas the buyer undertakes to pay the sale price of the subject of the contract to the seller. In the beginning stages of ordinary commercial sales, when the parties come to an agreement on the sale of the goods, they decide on the conditions to renew or amend the agreement, the delivery of the goods, the type of payment, distribution of the risks and resolution of the possible disputes. In the event that the sale and delivery operations are to be carried overseas, the parties should also include in the contract the additional conditions such as sharing the costs, shipping documents and insurance policy. These are conditions specifically agreed upon for each sale, based on the requests of the parties.

Although international traders generally use standard form contracts drafted by the International Chamber of Commerce with their own set of norms, from time to time they also require tailor-made contracts for their individual needs and circumstances of the sales. Due to the reason that these individual contracts are drafted separately for each sale, they prolong the preparation and negotiation phase. This is the reason that many organizations, institutions and chambers of professions formed by international traders use standard contracts rather than individual contracs for standardizing the conditions based on sectos, locations, subject of sale, type of delivery. Today, sale subjects such as agriculture, textile, spice, sugar, energy and metal all have their own standard contracts drafted by international institutions.

Antalya lawyer Baris Erkan Celebi provides legal services for drafting, reviewing, signing, amending and applying international sale contracts.

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