GlossaryEN1 min readUpdated: Jun 26, 2026

interpretation rule

Interpretation rules establish which reading governs when the wording of a transport contract, set of delivery terms, or customs document is open to more than one meaning.

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Last updated: 26 June 2026Published: 27 January 2026

Source: https://iccwbo.org/resources-for-business/incoterms-2020/

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Definition & Explanation

Interpretation rules establish which reading governs when the wording of a transport contract, set of delivery terms, or customs document is open to more than one meaning. They determine who bears costs, at what point risk transfers, and who is liable for loss or damage – ensuring that shippers, freight forwarders, and authorities reach the same conclusion. Their practical weight is most visible in tariff classification: the General Rules for the Interpretation of the Harmonized System (GRI) provide a structured hierarchy for assigning goods to the correct HS heading when no single heading is self-evident. In the context of Incoterms, interpretation rules ensure that clauses such as DDP or FOB carry the same meaning regardless of where a contract is concluded. This distinguishes them from trade usage or commercial custom, which lack formal binding force.

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