Incoterms and International Sale of Goods Lawyer in Paris

Short answer. An Incoterms 2020 rule sets the place of delivery, the moment risk passes, the allocation of costs and the customs formalities; it does not govern transfer of title, the price, payment or remedies for non-performance. Between parties in contracting States, the Vienna Convention of 11 April 1980 applies without being chosen unless expressly excluded (Article 6); its default rules on passing of risk (Articles 66 to 69) give way to the agreed Incoterm, a usage accepted by the parties (Article 9). The buyer must notify defects within a reasonable time and no later than two years after actual delivery (Article 39), or lose its remedies. For containerised goods handed over at a terminal, the multimodal rules FCA, CPT and CIP are preferable to FOB, CFR and CIF, which are designed for goods loaded on board.

An international sale of goods rests on three layers that overlap without coinciding: the Incoterms 2020 rule chosen, which allocates delivery, risk and costs; the 1980 Vienna Convention (CISG), which governs formation, the parties’ obligations and remedies; and the national law designated by the governing law clause for everything the Convention does not cover. Most disputes arise from confusing the three.

The firm advises exporters, importers, traders and forwarders dealing with French counterparties on their contracts and general terms, and defends them when a dispute arises.

The risk: an Incoterm that does not say what you think, and a contract that did not provide for the rest

Incoterms settle four questions: place of delivery, moment of transfer of risk, allocation of costs and customs formalities. They do not settle transfer of title, price, payment or remedies. A seller delivering EXW believes it is released at the factory gate but often remains exposed to export formalities; a buyer purchasing CIF believes it is insured while the minimum Institute C cover excludes most damage; a FOB seller who lets the carrier load without a delivery document cannot prove the transfer of risk.

The second risk is the contract’s silence on governing law and jurisdiction. Absent a clause, the CISG applies of its own force between parties in contracting States, with its own rules on examination of the goods, notice of non-conformity within a reasonable time and price reduction; and jurisdiction is determined by the Brussels I bis Regulation or each State’s private international law. The dispute then opens with a year of proceedings on jurisdiction.

The legal solution: aligning the Incoterm, the CISG and the governing law clause

The security of an international sale lies in the consistency between Incoterm, mode of transport, payment method and insurance. A maritime Incoterm (FOB, CFR, CIF) does not suit a container delivered at the terminal; the multimodal rules (FCA, CPT, CIP) are then preferable. The documentary credit must call for documents the Incoterm actually allows the seller to obtain, failing which the bank will reject the presentation. Insurance must attach from the point of transfer of risk.

The contract must then settle what neither the Incoterm nor the CISG resolves: exclusion or adjustment of the Convention, retention of title, notice periods for defects, late-delivery penalties, warranty, governing law and jurisdiction or arbitration, force majeure and hardship. The firm has set out this method in its Incoterms and export payment guide.

The firm has also published, in French, a practical guide on the international sale of goods.

How the firm assists you

Upstream, the firm drafts or reviews export or import general terms, framework and distribution agreements, selects with the company the Incoterm suited to each flow and checks consistency with transport documents, the letter of credit and the insurance policy.

It also trains sales and logistics teams in the practical consequences of the rules adopted.

In a dispute, it determines the governing law and competent court, applies the CISG notice and formal demand periods, organises evidence of conformity or defect by expert survey, and brings the action for payment, avoidance or damages before the competent court or arbitral tribunal, then enforces the decision in France. These matters are handled together with the international contracts and international commercial litigation pages.

Typical matters

The situations below are illustrative scenarios drawn from the firm’s practice and anonymised.

CIF goods damaged during sea carriage

A French buyer receives corroded machinery sold CIF Le Havre by an Asian supplier. The firm establishes that risk passed on loading, directs the claim against the insurer procured by the seller and obtains compensation despite the minimum cover, the corrosion resulting from defective packing attributable to the seller.

Documentary credit rejected for discrepancies

An exporter’s presentation is rejected by the confirming bank for a discrepancy between the bill of lading and the letter of credit. The firm obtains the buyer’s waiver and, failing payment, sues under the sale contract and the CISG.

French buyer alleging late non-conformity

A buyer refuses to pay eight months after delivery, alleging defects. The firm obtains a ruling that notice was not given within a reasonable time under Article 39 CISG and full payment of the price.

On payment by documentary credit, read our article Documentary credit: bank discrepancies and non-conforming documents.

This work is part of the matters the firm handles in international trade law.

Frequently Asked Questions

What do Incoterms decide, and what do they not?

They allocate delivery, the transfer of risk, the costs of transport, insurance and formalities, and responsibility for export and import clearance. They do not transfer ownership, do not set the price or the payment terms, do not designate the governing law or the forum, and say nothing about breach or limitation periods. Treating an Incoterm as a substitute for a contract is the error that produces most disputes in international sales, because the parties believe more has been agreed than actually has.

Which rule fits which situation?

EXW and the D series place the burden at opposite ends of the chain, FCA, CPT and CIP suit containerised and multimodal traffic, and FOB, CFR and CIF remain appropriate for bulk carried by sea. A container handed over at a terminal is not loaded on board by the seller, which is why FOB is so often misused for container shipments. The rule is chosen for the physical reality of the movement and for the documents the trade requires, not out of habit.

When does risk pass?

At the point the chosen rule specifies, which is rarely the point the parties assume. Under FCA risk passes when the goods are handed to the carrier nominated by the buyer, under CIF on loading on board, under DAP on arrival at the named place before unloading. Naming the place precisely therefore matters as much as naming the rule, because a term used without a precise place is an invitation to argue about where exactly the risk moved.

How do Incoterms interact with the Vienna Convention?

They coexist. The CISG governs the contract of sale, the obligations of the parties, conformity, remedies and the passing of risk in the absence of agreement, while the Incoterm chosen by the parties prevails on delivery and risk as a usage they have adopted. The combination works well in practice, and it is then the contract’s own clauses on inspection, notice of non conformity and limitation of liability that determine how a dispute actually unfolds.

What are the most frequent mistakes?

Using a rule without naming the version, so that no one knows whether the 2010 or the 2020 text applies; naming a place too vaguely; using a maritime rule for a container; assuming insurance exists when the rule does not require it, since only CIF and CIP impose cover and at different levels; and forgetting that under EXW the buyer must carry out the export formalities, which a foreign buyer often cannot do. Each is corrected in a single line of the contract.

How is the customs and VAT position affected?

Considerably. The rule determines who is the exporter and the importer of record, and therefore who carries the customs formalities, who can reclaim import value added tax and who is exposed to a reassessment. Under DDP the seller takes on import clearance and duties in the buyer’s country, which usually requires a local registration it does not have. The tax and customs consequences are checked before the Incoterm is agreed, not once the invoice has been issued.

How should one choose among the eleven rules?

By who actually controls transport and formalities, not by habit. The question to ask is simple: which of the seller and the buyer is better placed to organise the main carriage, obtain the best terms and handle an incident along the way. An exporter selling for the first time in a country whose customs procedures it does not know has every interest in not committing to import clearance. A buyer with a framework agreement with a forwarder has every interest in keeping control of transport. Two rules deserve particular attention because they are poorly understood: those which make the seller responsible for clearance in the buyer’s country.

Who should take out cargo insurance?

Only two of the eleven rules require the seller to take out insurance, and the level of cover required differs between them. For all the others, insurance is a decision for whoever bears the risk, which presupposes that the point of transfer has been identified precisely. Two consequences follow. Goods may travel with no cargo insurance at all because each party assumed the other had arranged it, a frequent and costly situation. And where insurance is for the seller’s account, the buyer should require a copy of the policy and check the level of cover, since minimum cover does not respond to the most common types of damage on some trades.

How should the Incoterm be aligned with the documentary credit?

The two must be consistent, otherwise payment is blocked even though the goods have arrived. The credit calls for specific documents, and those documents can only be produced if the chosen Incoterm places the corresponding operations on the party that must present them. A seller required to present an ocean bill of lading cannot do so if it has sold under a rule in which delivery is complete before loading on board. Likewise, the latest shipment date in the credit must be compatible with the agreed place of delivery. This consistency check is made before the credit is issued, while it is still easy to amend.

Should general terms of sale be reviewed?

Yes, and for a regular exporter it is the most cost-effective step. Three points are checked. Consistency between the Incoterm referred to, the clause on transfer of ownership and the retention of title clause, often drafted at different times and since become contradictory. The interaction with the Vienna Convention, which applies automatically to international sales between parties established in contracting States and whose exclusion, if intended, must be express. And the dispute resolution clause, whose real cost must be proportionate to the amounts usually at stake. An annual review is enough, provided it is done before entering a new market rather than after the first dispute.

Does an Incoterm govern the transfer of ownership?

No, and the confusion is costly when the buyer fails to pay. Incoterms govern delivery, the transfer of risk, the allocation of costs and responsibility for customs formalities. They say nothing about ownership, which is a matter for the contract and the law applicable to it. The Vienna Convention itself excludes from its scope the effect the contract may have on the property in the goods. In practice, a retention of title clause must be stipulated separately, accepted by the buyer before delivery, and its validity checked under the law of the place where the goods will be located, failing which it cannot be relied on.

Which Incoterm for a container?

A multimodal rule: FCA, CPT or CIP, depending on the desired allocation of costs and of the insurance burden. FOB, CFR and CIF were designed for goods loaded on board, in bulk or as break-bulk cargo, and their point of delivery is on board the vessel. Used for a container handed over at the terminal several days before loading, they leave a gap: no one knows who bears the risk between delivery at the terminal and loading on board, and that is precisely where damage and theft occur. The correction takes a single line in the general terms, provided it is made before the loss.

Matters in this field are handled by Hervé Guyader, avocat at the Paris Bar and Doctor of Law. Page updated on 2 November 2026.