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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

Cobalt Ltd sells goods to Ardent Co under a contract that incorporates Incoterms 2020 and also contains a clause that expressly says risk passes to the buyer on the date the contract is signed. Which statement is correct?

The express clause prevails. Incoterms are only contractual terms, not mandatory law, so the parties may vary them by clear agreement. Here the specific clause on risk transfer overrides the Incoterms rule on that point, though such changes should be drafted carefully.

  1. AThe Incoterms rule prevails because the parties cannot vary Incoterms
  2. BThe contract is void because it conflicts with Incoterms
  3. CThe express clause generally prevails, because Incoterms are contractual terms that the parties may modifyCorrect
  4. DThe carrier decides which provision applies

Explanation

Incoterms operate as terms of the contract and the parties are free to vary them by express agreement, although doing so can create ambiguity and should be done carefully. The specific clause therefore governs the point of risk transfer. The first option is wrong because Incoterms are not mandatory.

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