What are Incoterms?
We’re going to take a look at Incoterms—what they are and how they originated. Next time, we’ll discuss how to apply Incoterms, how exporters benefit from them, and why they matter, so stay tuned!
What are Incoterms, and who uses them?
International Commercial Terms are the official International Chamber of Commerce (ICC) rules that explain trade terms. They are a voluntary, authoritative, globally-accepted and adhered-to text for determining the responsibilities of buyers and sellers for the delivery of goods under sales contracts for domestic and international trade. Incoterms closely correspond to the U.N. Convention on Contracts for the International Sales of Goods. Incoterms are known and implemented by all major trading nations.
Incoterms are only part of the whole export contract. They don’t say anything about the price to be paid or the method of payment that is used in the transaction. Furthermore, Incoterms don’t deal with the transfer of ownership of the goods, breach of contract, or product liability; all of these issues need to be considered in the contract of sale. Also, Incoterms can’t override any mandatory laws.