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Incoterms rules

Beauty Supplies
From Indonesia
To Malaysia
244 views / 0 experts
Raymond Y.
Apr 26, 2021

What Incoterms rules work best with letters of credit?

1 answer

Apr 26, 2021

Where possible use CIF, CIP, CFR or CPT.

For all these rules, delivery takes place before the main carriage. The carrier gives the seller a transport document which (usually) serves as a mechanism for control of the goods – it will be presented to a bank under the letter of credit, and then passed on to the buyer so that the goods can be claimed.

All the other rules are potentially problematical in one way or another.

For example with FCA, the buyer is in control of the main transport, and there are circumstances in which the buyer may be able to frustrate the transaction.

Conversely with DAT, the buyer can be at risk, because seller may be able to get paid under the letter of credit before fulfilling the delivery obligation.

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