Incoterms Are Not Enough — The Legal Gap That Destroys Iraq Deliveries

Most foreign suppliers think Incoterms = full legal protection.

They don’t.

Incoterms were never designed to cover the realities of Iraq’s customs system, last-mile delivery risks, documentation requirements, or the delays that happen once cargo touches Iraqi soil.

Yet suppliers routinely sign multimillion-dollar contracts assuming that choosing DAP, CIP, CFR, or EXW somehow protects them from:

• customs delays

• COO requirements

• HS code disputes

• conformity checks

• document mismatches

• penalty claims

• inspection arguments

• last-mile failures

Incoterms don’t cover any of these.

And that’s why deals fall apart.

1. Incoterms do NOT cover customs clearance delays

Suppliers assume:

“Under CFR or CIP, customs delays aren’t my problem.”

Wrong.

Iraqi customs can hold a shipment for:

• missing or improperly legalised Certificate of Origin

• HS code reclassification

• weight mismatches

• invoice format errors

• lack of conformity certificate

• routine inspection backlog

• randomised container checks

Incoterms only define risk transfer and cost allocation, not:

• responsibility for documentation

• compliance with Iraqi import rules

• timelines

• penalties

• legalisation requirements

• hold fees

• acceptance criteria

When clearance stalls, the buyer blames the supplier.

And because the contract didn’t allocate responsibility, the supplier has no protection.

2. Incoterms do NOT define documentation responsibilities

Iraq is documentation-driven.

Every clearance agent will tell you the same thing.

But suppliers often ship with:

• no Certificate of Origin

• no chamber stamp

• no embassy legalisation

• mismatched invoice/packing list

• incorrect HS codes

• incomplete technical sheets

• wrong product description

None of this is covered by Incoterms.

Meaning the supplier legally shipped —

but practically caused a total clearance failure.

If the contract doesn’t assign documentation responsibility with precision, the buyer can charge:

• demurrage

• storage fees

• downtime penalties

• contract LDs

All outside the scope of Incoterms.

3. Incoterms do NOT protect against late delivery penalties

Foreign suppliers often think:

“Delivery occurred when cargo reached the port.”

But Iraqi private sector contracts often define delivery as:

• arrival at port

• OR customs clearance

• OR release from port

• OR arrival at buyer’s warehouse

• OR arrival at project site

Many contracts mix these definitions inconsistently.

Incoterms cannot fix this.

They don’t override the contract.

They don’t define the delivery milestone.

They don’t prevent penalties.

A supplier can be “on time” under Incoterms and still be “late” under the contract.

This is how late-delivery penalties are triggered unfairly.

4. Incoterms do NOT define inspection or acceptance procedures

Iraq frequently requires:

• pre-shipment inspection

• arrival inspection

• conformity verification

• site-level acceptance

• functional testing

Incoterms say nothing about:

• who pays for inspection

• what the criteria are

• what documents are required

• what counts as “accepted goods”

• what happens if inspection is delayed

When inspections aren’t defined, every delay turns into a dispute.

5. Incoterms do NOT cover last-mile delivery risks in Iraq

The most dangerous part of any Iraq delivery is:

• port → warehouse

• warehouse → site

This is where:

• damage occurs

• subcontractors disappear

• insurance gaps appear

• delivery windows collapse

• project downtime snowballs

Incoterms don’t touch last-mile delivery.

Zero protection.

Zero allocation.

Total commercial exposure.

6. Incoterms do NOT solve banking or payment problems

Suppliers assume:

“Once the goods arrive, the bank pays.”

Not in Iraq.

Incoterms have nothing to do with:

• LC wording

• confirmation requirements

• sanctions filters

• compliance flags

• FX issues

• delayed SWIFT transfers

• banks rejecting paperwork

• fallback payment mechanisms

You can be legally perfect under Incoterms and still not get paid.

So why do foreign suppliers keep relying on Incoterms?

Because they don’t understand what Incoterms are:

Incoterms only define:

• who pays for which part of the shipment

• who carries risk during which leg of the journey

Incoterms do NOT define:

• customs responsibility

• documentation accuracy

• legalisation

• inspection

• clearance timelines

• penalties

• acceptance

• payment structure

They are useful.

But they are not a shield.

What suppliers actually need (the part no one talks about)

A contract for Iraq must include:

1. A proper documentation clause (COO, chamber stamp, embassy legalisation, HS codes, conformity)

2. A customs responsibility clause (who handles what)

3. A delayed-clearance protection clause

4. A detailed inspection procedure

5. Clear acceptance milestones

6. A penalty clause linked to factors the supplier controls

7. A fallback payment structure for LC or deposit failure

8. A last-mile delivery clause

9. Aligned Incoterms to the actual workflow

When these clauses are present, Incoterms work.

When they’re missing, Incoterms become meaningless.

Bottom Line

Foreign suppliers rely on Incoterms because they assume they form a complete risk-allocation system.

In Iraq — they don’t.

The real protection comes from contract structure, not Incoterms.

CARMA Group bridges that gap — aligning Incoterms, contracts, documentation, and operational reality so suppliers don’t learn these lessons the hard way.