Patrick Taylor, Brandon Krajewski and Elizabeth Lacey Author Global Trade Law Journal Article on Shipping Terms and Supply Chain Risk
Quarles & Brady attorneys Patrick Taylor, Brandon Krajewski and Elizabeth Lacey wrote an article for The Global Trade Law Journal that examines the differences between shipping terms under the Uniform Commercial Code (UCC) and Incoterms®, highlighting common pitfalls that can create confusion in commercial transactions.
The authors — Taylor is a partner in the Corporate Group, Krajewski is a partner in the Litigation & Dispute Resolution Practice Group and Lacey is a Corporate Group associate — offer practical guidance for supply chain and contracting professionals on properly incorporating shipping terms into agreements and avoiding inconsistencies that can affect risk allocation, insurance obligations and transportation responsibilities
An excerpt:
Although the Uniform Commercial Code (UCC) contains default contractual terms for sales of goods in U.S. states where it has been adopted, certain issues relating to shipment of goods are not directly addressed by the UCC, and in many cases (particularly in international contracts) parties prefer to agree on different shipping terms. In these cases, contracting parties often use “International Commercial Terms,” also known as “Incoterms.”
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Given the difference in terms depending on whether Incoterms or the UCC is applied, how do you know which should be applied? In domestic contracts in states that have adopted the UCC, the UCC is the set of default rules governing contracts for sales of goods. If in the above example the agreement just states “FOB Port of Boston,” the UCC terms would be applied. If, however, you want Incoterms to apply, you must explicitly state that Incoterms apply. For example, if you want Incoterms to apply to the situation above, you should note “FOB Port of Boston (Incoterms 2020®).”