What are Incoterms?
Incoterms or International Commercial terms are a series of sales terms. They are published by the International Chamber of Commerce (ICC) and are widely used in international commercial transactions. The purpose of Incoterms is to provide a set of international rules for the interpretation of commonly used trade terms in international transactions. They closely correspond to the U.N. Convention on Contracts for the International Sale of Goods. The first Incoterms were issued in 1936. The most recent Incoterms were updated in 2010 and became effective January 1, 2011.
Who needs to understand Incoterms?
Government trade officials as well as many private sector parties should understand Incoterms. Such private sector parties include: exporters, importers, trade finance professionals, export compliance specialists, customs brokers, freight forwarders, insurers, international credit professionals, and sales and purchasing managers.
What are Incoterms used for?
Incoterms assist trade practitioners in interpreting the most commonly used international trade terms. Using correct Incoterms in an international transaction reduces considerably uncertainties arising from the different interpretation of such terms in different countries. They apportion international trade transaction costs and responsibilities between buyers (importers) and sellers (exporters) and reflect modern-day transportation practices. Incoterms assist in significantly reducing misunderstandings among traders and thereby minimizing trade disputes and litigation. However, their scope is limited to matters related to the international rights and obligations of the parties involved in the contract of sale with respect to the delivery of the goods sold. Thus, they apply to the contract of carriage, not the contract of sale.
Why were the INCOTERMS® 2000 revised?
INCOTERMS® 2010 are the updated version of INCOTERMS® 2000. INCOTERMS® 2010 have been developed as a result of an