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Shipping Terms in Your Commerce Contracts

Shipping terms used in domestic commerce in the United States are defined by the Uniform Commercial Code (UCC), as adopted by each individual state. However, the UCC terms (as they currently stand) are inadequate for international transactions because they do not deal with responsibility for exporting and importing as well as who loads and unloads the goods at the various points throughout delivery and who pays for which points of delivery. . If you are an importer, your shipping terms should be defined by referring to the “Incoterms,” which is a registered trademark of the International Chamber of Commerce (ICC). The ICC drafted the Incoterms and continues to update and revise them every 10 years, with the latest version having been published in 2010.

Incoterms are used by exporters and importers in nearly every trading country worldwide and they define the primary obligations of the exporter and importer in relation to the shipment of goods in international transactions. There are 11 very specific delivery terms in the Incoterms all of which precisely define who is responsible for transporting, loading and unloading from the seller’s facility, the port of export and the port of import, insuring, and complying with exporting and importing regulations..

There is no such detailed definition of the terms of delivery within the UCC  The “F.O.B. term deals with the issue of risk of loss and freight charges. People routinely modify the term to add language such as F.O.B, Origin, Freight Prepaid & Charged Back.” The additional language is not defined in the UCC; rather it is ‘defined” by industry usage.

The 11 Incoterms do not require additional statements. As soon as the seller quotes the buyer “EXW ABC Facility in Houston, TX, USA-Incoterms 2010”, both parties know that the seller is saying that any freight charges, forwarding fees and customs clearance are the Buyer’s responsibility.

It is important that you understand the distinctions between the 11 delivery terms of the Incoterms 2010. It is also important that you have similar discussions with your supplier as to which delivery term will apply and then ensure that this term I’m convinced that you need a “cheat sheet” listing all the responsibilities included as part of your purchase order. I’ve created a graph identifying the buyer’s and seller’s obligations within the 11 Incoterms and will be happy to email it to you if you send me an email to

Our next blog will provide you a brief summary of some of the Incoterms you will want to be familiar with. However, this can be a very complex area of the law and you should obtain legal counsel when participating in international trade. Contact Leslie S. Marell for assistance in understanding domestic shipment terms under the UCC and international shipment terms under the Incoterms.

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