Incoterms

Incoterms, or International Commercial Terms, are a series of standardized commercial terms used in international trade to define the rights and obligations of the buyer and seller. They are published by the International Chamber of Commerce (ICC) and are widely used in international trade contracts.

Incoterms are divided into four groups:

• E terms: The seller delivers the goods to the buyer at the seller's premises (EXW), at a named place (FCA), at the seller's port of loading (FAS), or at the buyer's port of loading (FOB).
• C terms: The seller pays for the cost of transporting the goods to the named port of destination (CFR), to the named port of destination and unloads the goods (CIF), or to the named inland point of destination (CIP).
• D terms: The seller delivers the goods to the buyer at the named place of destination (DAT), on the quay at the named port of destination (DAP), on the terminal at the named port of destination (DPU), or unloaded at the named place of destination (DDP).
• Other terms: These terms are not included in the Incoterms 2020 publication and are used less frequently.

Incoterms are important because they help to clarify the responsibilities of the buyer and seller in an international trade transaction. They can also help to reduce the risk of disputes between the parties.

When drafting an international trade contract, it is important to choose the Incoterm that is most appropriate for the transaction. The Incoterm chosen will determine who is responsible for paying for the transportation of the goods, who is responsible for arranging for insurance, and who bears the risk of loss or damage to the goods.

For more information on Incoterms, please visit the ICC website.