International commercial terms

INTERNATIONAL COMMERCIAL TERMS

The Incoterms (International Commercial Terms) are pre-defined commercial terms published by the International Chamber of Commerce (ICC). Three-letter standard trade terms (e.g. FOB, CFR, CIF) are commonly used in international commercial transactions for the sale of goods.

The Incoterms rules are intended to communicate the respective obligations tasks, costs, and risks that are associated with the transportation and delivery of goods. They define the trade contract liabilities between the buyer and the seller (the supplier and the consumer).
Each Incoterm refers to a particular type of agreement for the purchase and shipping of goods internationally.
The Incoterms rules are accepted by governments, legal authorities, and practitioners worldwide. They are intended to reduce or eliminate uncertainties that arise from different interpretation of the rules in different countries. The Incoterms also deal with the documentation required for global trade; they specify which parties are responsible for which documents, since requirements vary much between countries. Two items, however, are standard: the Commercial Invoice and Packing List. Their purpose is to divide transaction costs and responsibilities between buyer and seller. The Incoterms were first published in 1936; they are reviewed periodically to keep up with changes in the international trade needs.
The Incoterms were revised in 1953, 1967, 1976, 1980, 1990, 2000, bringing some changes to a few terms. The latest version of Incoterms, Incoterms2010, was launched in September 2010. Currently, there are rules for the interpretation of Incoterms trade terms in the 2010 edition, which are also relevant for 2018. The Incoterms are most frequently classified by category.
The Incoterms beginning with F refer to shipments where the primary cost of shipping is not paid for by the seller.
The Incoterms beginning with C deal with shipments where the seller pays for shipping. E-terms occur when a seller’s responsibilities are fulfilled when goods are ready to depart from their facilities. D-terms cover shipments where the shipper/seller’s responsibility ends when the goods arrive at some specific point.