Incoterms is an abbreviation for International Commercial Terms. This is an international rule for the interpretation of the most commonly used trade terms in international trade prepared by ICC (International Chamber of Commerce) which is based in Paris. The purpose of the Incoterms is to avoid dispute between trading parties arising from different interpretation of such trade terms in different countries.
Today, most of the businesses of international trade in the world are conducted using Icoterms as a general business customs. In order to avoid misunderstanding and confusion between a seller and a buyer, it is advisable for the exporter to add to the contract or correspondence, which constitutes the agreement between term, a clause to the effect that interpretation of trade terms are based on Incoterms.
Most commonly, they stipulate the wording in the general terms and conditions of the contract. They put such phrases like "Trade terms such as FOB, CIF adn any other terms which may be used in this contract shall have the meanings defined and interpreted by Incoterms 2000, ICC, as amended, unless otherwise specifically provided in this contract".
There are 13 Incoterms as follows:
EXW : ex works
FCA : free carrier
FAS : free alongside ship
FOB : free on board
CFR : cost and freight (Formerly C&F)
CIF: cost, insurance and freight
CPT : carriage paid to
CIP: carriage and insurance paid
DAF: delivered at frontier
DES: delivered ex-ship
DEQ: delivered ex quay (duty paid)
DDU: delivered duty unpaid
DDP: delivered duty paid
For a precise understanding of Incoterms, check out the website http://www.icc.org/incoterm
Today, most of the businesses of international trade in the world are conducted using Icoterms as a general business customs. In order to avoid misunderstanding and confusion between a seller and a buyer, it is advisable for the exporter to add to the contract or correspondence, which constitutes the agreement between term, a clause to the effect that interpretation of trade terms are based on Incoterms.
Most commonly, they stipulate the wording in the general terms and conditions of the contract. They put such phrases like "Trade terms such as FOB, CIF adn any other terms which may be used in this contract shall have the meanings defined and interpreted by Incoterms 2000, ICC, as amended, unless otherwise specifically provided in this contract".
There are 13 Incoterms as follows:
EXW : ex works
FCA : free carrier
FAS : free alongside ship
FOB : free on board
CFR : cost and freight (Formerly C&F)
CIF: cost, insurance and freight
CPT : carriage paid to
CIP: carriage and insurance paid
DAF: delivered at frontier
DES: delivered ex-ship
DEQ: delivered ex quay (duty paid)
DDU: delivered duty unpaid
DDP: delivered duty paid
For a precise understanding of Incoterms, check out the website http://www.icc.org/incoterm
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