Foreseeing the transfer of risk is a key aspect of preparing the contract. By using INCOTERMS, the risk of loss and damage can be shifted in different ways between the supplier and the buyer. It is up to the parties to select the means that is appropriate for their contract and, if necessary, modify the INCOTERMS used.
When products ‗at the seller‘s risk‘ are damaged or lost, the seller may be prevented from completing its obligation to deliver according to the terms of the contract. In this situation, the buyer will not have to pay the purchase price and may resort to legal remedies available to recover any losses incurred because of the default.
When damage or destruction occurs to products ‗at the buyer‘s risk‘, the buyer will have to bear the loss. The buyer must still fulfill its obligations to pay the seller. It will be up to the buyer to claim for damages on insurance companies or transport operators, as appropriate. Such claims may involve both contracts for procurement and carriage as well as mandatory international legal conventions.
