The Incoterms® rules are found in international sale contracts and any of the common documents that may evidence such contracts, such as a pro forma invoice or purchase order.
The legal nature of the Incoterms® rules is frequently misunderstood. The Incoterms® rules are creatures of contract, not legislation. The Incoterms® rules apply to a contract whenever the parties can demonstrate that they both intended the Incoterms® rules to apply. That is why it is important to explicitly incorporate the Incoterms® rules.
There are, however, important exceptions. If trade customs, general sales conditions, commercial usages or previous contractual dealings indicate that the parties intended to use the Incoterms® rules, then the Incoterms® rules may apply even in the absence of a specific mention in the sales contract. Under some legal systems, great weight is given to customs of trade and there may be a presumption that the Incoterms® rules constitute a custom of trade. In such countries, courts or arbitrators might take judicial notice of an Incoterms® rule to resolve a case, although no Incoterms® rule had been incorporated into the contract.