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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

Taran Co and Hesper Ltd sign a sale contract that says 'CIF Rotterdam' with no reference to any version of the Incoterms rules. A dispute arises over who bears the cost of unloading. Which statement best describes the legal position of Incoterms?

Incoterms are contractual rules published by the ICC, not legislation or a treaty. They bind the parties only when incorporated into the contract, and the parties should name the version, for example Incoterms 2020, to avoid uncertainty.

  1. AIncoterms are an international treaty that automatically applies to every cross-border sale
  2. BIncoterms are part of the national law of every country and apply by default
  3. CIncoterms are contractual terms that bind the parties only if they incorporate them into the contract, and the version should be specifiedCorrect
  4. DIncoterms bind only the carrier named in the transport contract, not the seller or buyer

Explanation

Incoterms are published by the ICC and are not law or a treaty. They apply only when the parties incorporate them, and it is good practice to state the version, such as Incoterms 2020. The treaty option is wrong because the ICC is a private body.

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