Incoterms in Practice:
When “Perceived” and Rule-Based Contract Performance Don’t Align
Incoterms provide clarity in both international and domestic trade. They define the rights and obligations of buyers and sellers in a uniform, globally recognized way and are regularly reviewed and updated by the International Chamber of Commerce (ICC). What Incoterms do not regulate, however, are payment terms or internal processes such as invoicing and document flow. This is precisely where misunderstandings often arise in day-to-day business.
In practice, two perspectives frequently collide: rule-based contract performance and perceived contract performance. This becomes particularly evident with delivery terms such as CPT or CIP. From a legal standpoint, the seller has fulfilled their contractual obligations once the goods are handed over to the first carrier—regardless of whether the buyer physically receives the goods days or even weeks later, for example in maritime transport. At the same time, invoicing today is often digital and almost instantaneous. As a result, the invoice may arrive while the goods are still at sea.
This can be irritating—but it is not an error. Rather, it reflects clearly defined Incoterms and modern, efficient processes. Complaints about “early invoicing” are usually rooted in the expectation that contract performance is only completed once the buyer can physically dispose of the goods. Incoterms take a different approach—and this transparency is one of their greatest strengths.
“Incoterms help remove emotion from the interpretation of contracts and replace it with clear rules—creating fairness and reliability for all parties involved,” says Gero Thieme, Managing Director of WTH GmbH.
At WTH GmbH, we therefore place great emphasis on regularly training our employees in delivery terms and their practical implications. This ensures that our teams act competently, objectively, and in a legally sound manner in day-to-day operations—even when perceived and formal contract performance occur at different times.
In the WTH Blog, we will take a closer look at Incoterms and their practical application throughout the second quarter of 2026.
