What would likely happen if a company does not comply with Incoterms?

If a company does not comply with Incoterms, liabilities and responsibilities may become unclear. Incoterms define the roles of buyers and sellers in an international transaction, specifying who is responsible for costs, risks, and insurance at each step of the shipping process. When these guidelines are not followed, it can lead to confusion regarding who is responsible for transportation, customs duties, and insurance, among other factors.

This lack of clarity can result in disputes during the shipping process, with parties unsure of their obligations. For example, if a shipment is delayed or damaged, the parties may disagree on who bears the financial responsibility for the loss or additional costs incurred. Thus, compliance with Incoterms is crucial to ensure that all parties understand their specific rights, obligations, and any associated risks in the transaction.

The other options do not accurately reflect the consequences of non-compliance. The shipment not reaching its destination is not guaranteed simply due to a lack of compliance; rather, it is the lack of clarity that poses the major risk. Saving money by disregarding these terms is unlikely in the long run, as the potential for disputes and complications could lead to increased costs. Lastly, all international trades being unaffected is not realistic, as disputes and confusion can arise from any