What are Incoterms?
The term incoterms is an abbreviation for International Commercial Terms. They are a set of rules which define the responsibilities of sellers and buyers for the delivery of goods under sales contracts for domestic and international trade. They are published by the International Chamber of Commerce (ICC) and are widely used in international commercial transactions. The first Incoterms® were issued in 1936. The most recent version of Incoterms, Incoterms 2010, were launched in September 2010 and became effective January 1, 2011.
What are Incoterms used for?
Incoterms provide a common set of rules to clarify responsibilities of sellers and buyers for the delivery of goods under sales contracts. They apportion transportation costs and responsibilities associated with the delivery of goods between buyers (importers) and sellers (exporters) and reflect modern-day transportation practices. Incoterms significantly reduce misunderstandings among traders and thereby minimize trade disputes and litigation.
What are the Incoterms 2010?
The two main categories of Incoterms 2010 are now organized by modes of transport. Used in international as well as in domestic contracts for the first time, the new groups aim to simplify the drafting of contracts and help avoid misunderstandings by clearly stipulating the obligations of buyers and sellers.
Group 1. Incoterms that apply to any mode of transport are:
EXW Ex Works
FCA Free Carrier
CPT Carriage Paid To
CIP Carriage and Insurance Paid To
DAT Delivered at Terminal
DAP Delivered at Place
DDP Delivered Duty Paid
Group 2. Incoterms that apply to sea and inland waterway transport only:
FAS Free Alongside Ship
FOB Free on Board
CFR Cost and Freight
CIF Cost, Insurance, and Freight
Where can I learn more about the new Incoterms?
There are a number of private sector and government organizations that offer workshops, webinars, and seminars related to the new Incoterms. For webinars and other events related to Incoterms and many other topics of trade education that are being offered by the U.S. Commercial Service and its partners in support of the President’s National Export Initiative, you may visit our Trade Events Search Database.
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