Incoterms in sales contracts 

Incoterms (or International Commercial Terms) are a set of three-letter terms that are used in international commerce as definitions of the responsibilities of both parties during the delivery of goods. These terms seem to serve as a common language that provides clarity between buyers and sellers from different countries.  

The seven Incoterms 2020 rules for any mode(s) of transport are: 

EXW – Ex Works 

This Incoterm means the seller’s responsibility is only to pack the goods and make them available for the buyer. At the same time, costs and risks associated with transporting the goods are up to the buyer.  

FCA – Free Carrier 

The term under which the seller fulfills the responsibility of making the goods available for delivery to the agreed place (or person) whether it is the buyer’s means of transport or carrier. According to the risks, once the goods are available for pick-up, all threats are upon the buyer.  

CPT – Carriage Paid To 

Under this circumstance, the seller is responsible for delivering the goods to the carrier, another person, or a defined place. The seller is in charge of export clearance and arranging transportation to the agreed point. After handling the product over to the carrier, the duty is on the seller.  

CIP – Carriage and Insurance Paid To 

This Incoterm has a somewhat similar definition to CPT as the seller is also obligated to deliver the goods to the carrier, another person, or a defined place. However, the additional point here is that the trader is responsible for obtaining insurance against the buyer’s risk of loss or damage during transportation. 

DAP – Delivered At Place 

In the situation of DAP, the ordered products are considered to be delivered once they have reached the final destination where the buyer should get the parcel. Until this time, the seller is responsible for any damage that may happen.  

DPU – Delivered at Place Unloaded 

Under this rule, the seller is liable for any threats that may happen not only during the process of transferring the products but also at the time of unloading. So, in case of damage, it’s up to the seller to cover the expenses.  

DDP – Delivered Duty Paid 

This term means that the seller is responsible for all transferring costs as well as for export clearance. According to the receiver, he or she should get the parcel, and pay for insurance, as well as for any defects during the unload.  

Can the parties use Incoterms 2010, instead of the renewed versions? 

Yes, Incoterms 2010 can be used during the cooperation. However, to avoid any kind of confusion, all parties have to agree to use the same rules.  

To prevent issues, parties should have a mutual understanding of the outlined terms and conditions. In case of any kind of uncertainty, it’s advisable to seek legal advice or consider updating the contract to align with a common set of Incoterms. 

Our sales agreement templates digest the rights and obligations under said Incoterms in comprehensive language. 

Sellers of goods, whether professional or private, who sell products to consumers in United Kingdom are directly affected by consumer rights, the key points of which are as follows: 

1. Consumers are protected not only by the justice system, but also by consumer protection associations. 
2. Non-professional consumers have difficulty interpreting ambiguous restrictive clauses, and so often do not consent to them validly, rendering them null and void. 
3. Consumers have more rights than professional buyers, and your duty to inform them is more extensive. 
4. Consumers are in principle protected by more favourable rules in their country of domicile, unless they go abroad to buy, and therefore international sales may involve more extensive rights than in UK. 

Main legal rules 

Now that we’ve established the general framework, it’s time to look at the main legal rules that apply to consumer rights in UK. 

• Firstly, it is important to clarify who the consumer is. He is a person who buys goods only for his own personal consumption, admittedly he may resell them to a third party at a later date, such as a second-hand car, but without the resale being the main reason for the purchase. 
  • A company never acts as a consumer, but the situation of a sole trader or freelancer is more complicated. 
  • Indications that the buyer is more of a professional include registration in the commercial register, VAT registration, publication of the commercial website, the commercial trademark used or registered, the use of professional emails, etc. 
  • The mere promise or statement that the buyer is not a consumer is not in principle sufficient. 
• The specific right of all consumers is the right of withdrawal after distance selling. 
  • Any consumer may cancel the order within 14 days, without giving any particular reason. 
  • This right applies to all purchases made via the Internet, by telephone, by post (e.g. sale of goods via printed catalogues received by post) or by fax. 

However, the right of withdrawal is excluded in the following cases: 

1. Goods made to order or clearly personalised, the manufacture of which requires special adaptations to meet very precise technical and aesthetic requirements. The choice of options (e.g. colour, finish) in standard ranges does not change the nature or purpose of the goods sufficiently to make them clearly personal. 
2. Goods that have deteriorated or are rapidly perishable, except food products with a minimum durability date. 
3. Goods that have been opened by the buyer and cannot be returned for reasons of hygiene or health protection (e.g. sealed cosmetics, underwear sold in sealed bags). 
4. Goods that cannot be separated from other items (e.g. remote control for a television set). 
5. Digital content supplied on an intangible medium. 
6. CDs, DVDs or computer software opened by the buyer. 
7. Newspapers, periodicals or magazines, except in the case of a subscription contract. 

• By exercising the right of withdrawal, the consumer is withdrawing from the contract and must return the goods in return for a refund of the price, including delivery costs. 
  • The return period is 14 days following the sending of the cancellation by the customer. 
  • The seller may, however, charge delivery costs if a more expensive means of delivery has been chosen (e.g. 24-hour express delivery) when a less expensive means of delivery was available. The customer may be charged the difference. 
  • The refund period is also 14 days following the date of notification of withdrawal. However, the seller may defer the refund until the day of collection of the goods or until the customer has provided proof of dispatch of the goods. 
  • The price is refunded in the same way as the means of payment for the purchase. Other means are possible subject to the customer’s agreement. In particular, the purchaser may expressly agree to the refund being made as a purchase voucher or credited to the user account. 
• For sales over the counter in a shop, there is no right of cancellation, and the only way to get out of the contract is to establish a defect in consent at the time the sale is concluded, such as error, deception or coercion. 
• When buying online, consumers are protected by the right to clarity and transparency regarding the identity and conclusion of the contract on the part of the online trader. 
• There is also a maximum delivery period for online purchases of 30 days, subject to a tolerated delay expressly accepted by the customer. 

Now that we’ve looked at the main consumer rights and legal rules, here are some recommendations for sellers of goods: 

1. Please clearly state whether you intend to sell only to professionals or also to consumers. Different rules must be followed and applied. Our templates allow you to deal separately with the rights of consumers and those of professional buyers.  
2. Clearly assess whether or not you wish to offer online products to consumers in other countries. If so, we recommend that you create another web domain with general terms and conditions tailored to those countries. 
3. Don’t forget to include the necessary details about the merchant and the products on the website. Pay particular attention to prices and charges or taxes. 
4. Make sure that the buttons on the website are clear and unambiguous, and that you clearly state the summary of the order before confirming it. 

To protect yourself against consumer complaints, you can use our model sales contracts. 

Sellers of professional or private goods in United Kingdom are affected by this issue, whether they are selling to consumers or businesses, for all of the following reasons: 

• Because consumer law gives more rights and protection to private consumers 
• Because the seller assumes certain objective responsibilities, even without any fault whatsoever 
• Because a sale, especially a distance sale, involves the issues of re-invoicing taxes, customs duties, costs and insurance. 
• Because the greatest risk for the seller is not being paid, when ownership of the good has already been irrevocably transferred. 
• Because the manufacturer, retailer and resellers each bear their own responsibility on a case-by-case basis in the distribution chain. 

Owners of websites offering goods for sale or resale in UK are also affected by this issue, as data protection rules are added to the sales rules and are strictly regulated. These rules must be included in the general terms and conditions of sale (GTCS). 

This also applies to any private individual who sells second-hand goods privately, since the seller’s liability is not reduced depending on whether he or she is a professional or not. 

What is a sales agreement and what types are there? 

Sales contracts vary according to: 

• Form: an oral sales contract is possible, and many are often concluded, for example in the shop, but written contracts are recommended for distance transactions or for large sums. 

It should be noted that acceptance of the general terms and conditions of sale (GTCS) online is legally equivalent to a contract, even if it is not “in writing” as such. 

We also offer you a model of the general terms and conditions of sale which can be applied to any sale other than those ordered on a website, and which allows you to conclude only very brief sales contracts, with reference to the GTCS.  

• Territory: a distinction is often made between a contract of sale in the same country (without crossing the border) and an international contract of sale. This model allows you to deal with the issues of exporting and importing, re-invoicing customs duties, import VAT and other questions frequently asked in international trade. 

• More commonly used by private individuals, the vehicle sales contract is used to sell a new or used car, and thus to specify known defects, the last inspection, or even to impose prior work or modifications. 

• Finally, it is possible to sell only subject to the fulfilment of a certain condition. The property is leased to the buyer on a trial basis, against rent or, more generally, free of charge, until such time as the buyer decides whether or not to buy the property back. 

Alternatively, the foregoing may be formalised by a contract for the lease of the assets without any real commitment to repurchase, with a subsequent contract of sale that may be entered into by the parties. 

• The status of the seller: goods are often marketed not by the seller himself or by retail dealers, but by agents, distributors, business introducers or brokers. For sales in the name and on behalf of the seller, in return for commission, we offer you a model business provider contract. 

What are the main mistakes that salespeople can make and how can they avoid them with AdminTech? 

If the seller does not draw up a good contract of sale, here are the various errors that can occur:  

• Unclear or insufficient description of goods and their characteristics:  

It is not necessarily useful to include all the technical details of the goods for sale in the legal text, especially if it is a catalogue. What is more practical, and what we suggest in our templates, is to provide only a brief description, while adding a detailed appendix to avoid any misunderstanding. 

• Abuse and misunderstanding of Incoterms:  

Established to facilitate international sales, Incoterms identify the obligations and responsibilities of the parties, particularly with regard to transport, delivery and insurance. However, these terms are often confused, not clearly understood by both parties, or the version of Incoterms used is not up to date. For this reason, our templates allow you to select the responsibilities and duties of each party one by one, without ambiguity. 

• Omissions in respect of taxes, customs duties, insurance and other charges: 

Sales contracts often state only the total price, without even specifying whether this price is exclusive of tax (excluding VAT) or inclusive of tax (including VAT), whether customs duties may be charged in addition, who bears the cost of transport and insurance, if applicable, and for what amounts. Our templates address all these questions, depending on the type of sales contract you have chosen. 

• Insufficient specification of deadlines and means in the event of delays:  

The parties often fail to specify whether the deadline is strictly necessary or indicative. Our models allow you to specify whether the deadline cannot be exceeded at all, allowing cancellation in the event of the slightest delay, or to stipulate a penalty for delay in order to encourage the seller to perform his obligations to the best of his ability. 

As with sales deadlines, payment deadlines need to be fairly precise. Our models are so flexible that they allow you to pay according to an instalment plan, or to pay the guarantee instalments before the sale. 

• Defect detection: 

Defects can occur suddenly through no fault of the seller, which does not remove his liability, but the parties often fail to provide rules on how to deal with these situations.  

Our models allow you to prioritise certain measures over others, for example repair rather than cancellation of the sale. You can also limit the seller’s maximum liability, set a final deadline for reporting any defects or, on the contrary, offer additional guarantees. 

• Neglecting the risk of default:  

Not only is this the most common risk for any seller, but because ownership has already been transferred, the seller is often in a precarious position. At the very least, you should make use of the following options, which we suggest: fixing payment reminder fees and interest on arrears. However, the best solution is to provide a sufficient advance deposit, which is also possible with our sales contract templates. 

• Not preparing general terms and conditions of sale for sales to consumers: 

Firstly, they have more rights than professional buyers. Secondly, written contracts are often not concluded or negotiated with consumers – these oral sales leave ambiguity as to the rights and obligations of the parties. So having terms and conditions available, even if they are posted on your website or over the counter, improves the protection of your rights as a seller and gives you clarity and security in your dealings with customers. 

To create a more robust sales contract, we recommend using the AdminTech online contract builder.