Franco Model in Incoterms: a Tool for Regulating Costs and Responsibilities in the Supply Chain

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Pages: 123-135

Abstract:

The Incoterms comprise international trade terms that are crucial for international sales contracts. They are a practical tool for managing the conditions of international trade and have the function of allocating responsibilities between counterparties by defining the key starting points in the supply chain. The place of delivery and the place of transfer of risk have been relatively wide ly analyzed and researched in the scientific literature. Despite the numerous updates of Incoterms, presented with precise and detailed explanations, in theory and practice one of the key places in the supply chain remains in the background, namely the “free” place. Embedded in the terminological basis of international trade terms, it still finds its place today in Incoterms 2020. This publication analyzes the development of Incoterms from 1936 to their latest version, effective as of January 1, 2020. The place of delivery, the place of transfer of risk and the “free” place are studied as part of the Incoterms model. A different reading of the delivery rules is presented, refracted through the prism of the concept of “franco” (free) as part of the Incoterms model.

Keywords:

international delivery; “free” place; shipping costs; franking; Incoterms.

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