Incoterms

DEFINITION of 'Incoterms'

Trade terms published by the International Chamber of Commerce (ICC) that are commonly used in both international and domestic trade contracts. Incoterms, short for "International Commercial Terms," are used to make international trade easier by helping traders in different countries understand one another. Incoterms were first developed in 1936 and are updated from time to time, in order to conform to current trade practices. Because of these updates, contracts should specify which version of Incoterms they are using (e.g., Incoterms 2010).

BREAKING DOWN 'Incoterms'

Trade terms used in different countries may appear identical on the surface, but actually have different meanings as they are used domestically. Incoterms are internationally recognized and thus help to prevent confusion in terms of foreign trade contracts, by helping sellers and buyers understand their obligations in any transaction. Examples of Incoterms include "DAT" (Delivered at Terminal), "DDP" (Delivered Duty Paid) and "CIF" (Cost, Insurance and Freight).

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RELATED FAQS
  1. What is the difference between cost and freight (CFR) and cost, insurance and freight ...

    The difference between cost and freight (CFR) and cost, insurance and freight (CIF) is essentially the requirement under ... Read Full Answer >>
  2. How does the International Chamber of Commerce define the term 'Free on Board' (FOB)?

    The International Chamber of Commerce (ICC) is one of world's largest business organizations and has published a set of trade ... Read Full Answer >>
  3. What determines if an international trade is Ex Works (EXW) or Free on Board (FOB)?

    "Ex works" (EXW) and "free on board" (FOB) are international trade terms that dictate the responsibilities of buyers and ... Read Full Answer >>
  4. How are transportation costs and risks assigned in an Ex Works (EXW) trade?

    An ex works (EXW) trade agreement is part of the Incoterms rules and requires the sellers of goods to make the goods readily ... Read Full Answer >>
  5. What does 'Incoterms' mean in relation to Ex Works (EXW) trades?

    Ex works is part of the published Incoterms and outlines the obligations of transportation to buyers and sellers. The International ... Read Full Answer >>
  6. What are the differences between Ex Works (EXW) and Free On Board (FOB)?

    Ex Works (EXW) and Free on Board (FOB) are Incoterms used to describe situations where sellers deliver goods. Ex Works describes ... Read Full Answer >>
  7. Are there international maritime laws that govern delivery duty paid?

    Aspects of maritime law are relevant to international trade. However, delivery duty paid (DDP) only determines which party ... Read Full Answer >>
  8. Is there a way to insure delivery duty paid?

    Delivery duty paid (DDP) cannot be insured, although insurance of goods during transport is one of the seller’s responsibilities ... Read Full Answer >>
  9. Are the laws on delivery duty paid different in every country?

    Laws and regulations on delivery duty paid (DDP) vary between countries, but they are overall very similar. Regulations regarding ... Read Full Answer >>
  10. Is there a way to profit from arbitrage trades on delivery duty paid?

    It is not possible to profit on Delivery Duty Paid (DDP) in arbitrage trades since DDP is not bought and sold; it is just ... Read Full Answer >>
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