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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

Evanto Ltd sells goods to Farrow Ltd under a contract stating 'FCA Evanto's warehouse, Incoterms 2020'. A dispute arises over who owns the goods while they are in transit, and whether the goods conform to the contract description. Which statement is correct?

Incoterms settle neither transfer of property nor conformity of the goods. They cover delivery, costs, risk and related documents only. Ownership, conformity, price and remedies must be dealt with by the contract terms and the governing law.

  1. AThe Incoterms rule settles both the transfer of property and conformity of the goods
  2. BThe Incoterms rule settles the transfer of property but not conformity of the goods
  3. CThe Incoterms rule settles neither issue, which are left to the contract and governing lawCorrect

Explanation

Incoterms deal with delivery, costs, risk, and related documents and obligations. They do not govern transfer of ownership, conformity of goods, price, payment terms or remedies for breach. Those are matters for the contract and the applicable law, such as the CISG where it applies.

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