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ACCA Applied Skills · Corporate and Business Law (Global) · Introduction to the UN Convention on Contracts for the International Sale of Goods and ICC Incoterms

Aroha Ltd in New Zealand agrees to sell machinery to Berg GmbH in Germany. The contract states only 'delivery terms: FOB Auckland, Incoterms 2020'. Which statement best describes the purpose of the Incoterms rule in this contract?

Incoterms allocate the tasks, costs and risks of delivering goods between seller and buyer. They are not a source of law on contract validity, remedies or court jurisdiction, so those matters must be dealt with by the governing law and by separate contract clauses.

  1. AIt sets out the legal rules on the validity of the contract and the remedies for breach
  2. BIt allocates tasks, costs and risks of delivery between seller and buyerCorrect
  3. CIt determines which country's courts have jurisdiction over any dispute

Explanation

Incoterms are standard trade terms published by the ICC that set out who arranges carriage, who bears costs and where risk passes. They do not deal with validity, remedies or jurisdiction, which are matters for the governing law and the contract's dispute clauses.

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