Should your business be using the latest Incoterms to reflect the new trading landscape between the UK and EU? Beth Miel, corporate and commercial lawyer, B P Collins advises on why you should check as soon as possible.
The new Incoterms were published in January 2020, which allocate specific risks and responsibilities between the buyer and seller in relation to the delivery of goods. Many businesses incorporate them into their terms and conditions of business. The terms are updated every ten years in order to reflect up to date trading practices, so while parties do not have to use the latest version of Incoterms, it may be worthwhile considering, as it may be more appropriate for your business. In addition, Brexit may significantly increase the risk of not using the most appropriate Incoterms for your business. This is particularly true of Incoterms that allocate responsibility for customs and other border clearance issues, such as import or export licences. Prior to 1st January, Incoterms relating to compliance with export or import formalities were not applicable in relation to goods flowing between the UK and EU. Since 1st January, those provisions are directly and commercially significant. Even if you are already using ExWorks for example, where duty is paid by the customer, you should consider whether your customer would be able to deal with the customs requirements or whether they may be put off trading with you again if they have to deal with customs declarations.
The changes brought about by Incoterms 2020 provide businesses with an opportunity to review their existing terms and conditions with customers and suppliers more generally, to make sure that key provisions such as pricing, delivery and risk, reflect their up to date business practices and have enough flexibility to adapt to the changing economic climate. B P Collins has expertise in all aspects of commercial contracts and would be happy to help.