Canada: Incoterms 2010: An Adaptation To Contemporary Business Practice

Last Updated: October 15 2010
Article by Xavier Van Overmeire

Incoterms are rules used for domestic and international trade published by the International Chamber of Commerce (the "ICC") in order to facilitate global commerce. In particular, these terms clarify certain obligations of parties to a sale of goods contract. The recently‐launched Incoterms 2010 rules will become effective as of January 1, 2011.

Given that Incoterms 2010 are the ICC's first revision of the terms in the past decade, Incoterms 2010 provide certain noteworthy changes from the Incoterms 2000 rules reflecting contemporary business practice. These changes are generally described below.

1. New Incoterms (DAT and DAP) Replacing Previous Incoterms (DAF, DES, DEQ, DDU)

The most significant change since the previous Incoterms is the addition of two new rules: Delivered at Terminal (DAT) and Delivered at Place (DAP). In turn, the ICC has abolished four Incoterms 2000 rules (DAF, DES, DEQ and DDU).

The new Incoterms require the seller to specify, in the case of DAP, the place of delivery and, in the case of DAT, the terminal of delivery. By adding such a specification in the contract of sale, terms and conditions or other documents or schedules, the parties determine the time and place at which risks are transferred. In contrast with the Delivery Duty Paid (DDP) rule, DAP and DAT impose upon the buyer the obligation to clear the goods for import, to pay corresponding duties and to carry out other import customs formalities.

The main distinctions between the two new Incoterms are the delivery terms. For DAP, the seller's obligation to deliver the goods is when they are at the buyer's disposal, and ready for unloading at the named place (as under former DAF, DES and DDU rules), whereas DAT provides that the goods are delivered once they are unloaded from the ship or other means of transportation and are at the buyer's disposal at the named terminal (as under the former DEQ rule). Accordingly, the seller bears all risks involved in bringing the goods to and unloading them at the named terminal pursuant to the DAT rule, and at the named place pursuant to the DAP rule.

Given that the named terminal in DAT can be in a port, the former DEQ rule (which provided that delivery occurred when goods were placed at the disposal of the buyer on the quay at the named port) is no longer relevant. Moreover, the means of transportation under DAP may be a ship and the named place may be a port; therefore, the DES rule (which provided that delivery occurred once the goods were placed at the disposal of the buyer on the ship at the named port) is also superfluous.

2. New Classification of Incoterms

In order to better reflect modern commercial reality, the ICC created a new classification system for Incoterms and abolished the previous classification system which was based on the first letter of the Incoterm rule. Under Incoterms 2010, the ICC has divided the Incoterms in accordance with the means of transportation as follows:

Rules for any Mode or Modes of Transport: EXW, FCA, CPT, CIP, DAT, DAP, DDP

Rules for Sea and Inland Waterway Transport: FAS, FOB, CFR and CIF

This new classification system should not be a surprise to international traders given that it was foreshadowed in the introduction to the ICC's handbook on the 2000 rules. Therein, the ICC namely mentioned, that the FOB rule was often erroneously used to indicate any point of delivery, such as "FOB Factory", "FOB Plant", "FOB Ex seller's works" or other inland points, thereby creating confusion given that the FOB rule was meant to be used solely for sea and inland waterway transport. This is now clear with the new classification system.

3. Transfer of Risks under CIF, CFR and FOB Rules

Unlike the previous versions of the FOB, CFR and CIF rules, which provided that the responsibility for costs and the transfer of risks of loss or damage to the goods passed to the buyer once the goods passed the ship's rail at the named port of shipment, the new versions of FOB, CFR and CIF provide that the transfer occurs once the goods are on board the vessel nominated by the buyer at the named port of shipment.

This amendment was made to remedy the impracticality of the previous Incoterms which involved delivery occurring during the actual loading of the goods onto the ship. In light of the foregoing, the 2000 version of the FOB rule was often varied such as "FOB stowed", thereby ensuring that delivery and, by implication, the transfer of risks, only occurred once the goods were stowed. This made the calculation of loading fees easier for the parties. With the amendments, such a variation is no longer necessary.

4. Other Noteworthy Features

a) Terminal Handling Charges

A concern which was brought to the attention of the ICC during their revision of the Incoterms 2000 was that certain buyers complained about being charged twice for terminal handling charges in that, although it is one of the purchaser's obligations to arrange for carriage of the goods to the agreed upon destination (CPT, CIP, CFR, CIF, DAT, DAP and DDP), it was reflected in the purchase price. Thus buyers contended that they should not be charged again for these costs by the carrier or terminal operator. In light of the foregoing, the Incoterms 2010 rules clearly allocate these costs (articles A6/B6 of pertinent rules).

b) Insurance

The Incoterms 2010 take into account the revised Institute Cargo Clauses and therefore reference is made to this more recent version of the clauses. In addition, the new rules clarify certain information obligations relating to insurance. For instance, the new CIF rule provides that, in addition to providing evidence of insurance coverage, the seller must provide the buyer, at the buyer's request, risk and expense (if any), with information that the buyer needs to procure any additional insurance.

c) Security

In light of the heightened security concerns since September 11, 2001, certain new rules allocate obligations between buyer and seller with regard to obtaining security‐related clearances. For instance, the new EXW rule states that the seller must provide, at the buyer's request, risk and expense, any information in his possession that is required for the security clearance of the goods.

d) Electronic Communication

The new Incoterms 2010 rules provide that, to the extent that it is agreed upon by the parties or that it is customary, electronic records or procedures have the same effect as paper communication. Electronic communication is used broadly in order to allow for future technological developments.

e) Rules for Domestic and International Trade

Although Incoterms are traditionally used in international sale contracts, the Incoterms 2010 formally recognize that they can be used in domestic sale contracts as well. This change was made to respond to the fact that traders often use Incoterms for purely domestic sales including by U.S. traders who prefer Incoterms to the Uniform Commercial Code's equivalent rules.

f) String Sales

The new Incoterms 2010 rules were adapted to be consistent with the practice of string sales (i.e. the multiple sales of goods during transit "down a string"). As such, the language of the rules was modified to provide that, in such cases, the seller in the middle of a string has an obligation to "procure goods shipped" and not to "ship" the goods. Similarly, under rules FCA, CPT, CIP, FAS, FOB, CFR and CIF, the seller's obligation to contract for the carriage of goods has been amended to allow the seller to procure a contract of carriage. This adaptation of the rules makes them more attractive to commodity traders.

5. Conclusion

Given the January 1, 2011 effective date of the new Incoterms, it will be important for traders who wish to keep on using the previous version of the Incoterms to provide a specification to that effect. Otherwise, it is strongly recommended that the contract of sale, terms and conditions or other documents or schedules used in international (or domestic) trade be amended to properly take into account the new rules, including those described above. Fraser Milner Casgrain LLP remains available to provide any such advice or for any other questions in relation herewith.

Information on ordering Incoterms 2010 is available at:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
25 Nov 2016, Seminar, Toronto, Canada

On Thursday, September 22, 2016, Dentons hosted a panel discussion about the management of liabilities and risks associated with environmental crises, including potential liabilities for directors and officers and provided insight into risk and liability techniques associated with environmental crisis management.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.