Incoterms

What are 'Incoterms'

Incoterms are 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 CIF and an incoterm?

    Learn the difference between CIF and an Incoterm. CIF is one of the 12 Incoterm established in 1936 by the International ... Read Answer >>
  2. Where can I find the terms governing my CIF in different ports of call?

    Creating standard terms for international trade was the main reason for the establishment of CIF and other Incoterms. Thus, ... Read Answer >>
  3. What does 'Incoterms' mean in relation to Ex Works (EXW) trades?

    Learn about Incoterms rules and ex works trade agreements and the obligations of buyers and sellers under the Incoterms rules ... Read Answer >>
  4. Is there a way to insure delivery duty paid?

    Learn about the relationship between insurance and delivery duty paid (DDP), and find out how DDP compares with other Incoterms. Read Answer >>
  5. What is the difference between Cost and Freight (CFR) and Free on Board (FOB)?

    Learn about some international Incoterms, and find out about the difference between free on board shipping and cost and freight ... Read Answer >>
  6. How does the International Chamber of Commerce define the term 'Free on Board' (FOB)?

    Find out more about the International Chamber of Commerce, Incoterms rules and how the International Chamber of Commerce ... Read Answer >>
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