International Trade Terms Glossary

Incoterms

The 13 terms which form the rules that underpin world trade. These are standard definitions that enable international contracts to be unambiguously agreed to and executed. Incoterms are devised by the International Chamber of Commerce.

The seller is responsible for all the services relating to the warehousing at the point of origin. After the goods have left the warehouse there are varying degrees of responsibility which are defined under Incoterms. For instance, customs duties could be paid by either party and it is the function of Incoterms to specify unambiguously who has taken on that responsibility without the need to have wordy explanations in the contract.

Incoterms need not be inflexibly adhered to. In fact, the buyer and the seller can modify or add to the terms by mutual agreement where further detail is required in the contract. Also, Incoterms are amended from time to time so if you are unsure it can be useful to state the applicable date, eg FCA Incoterms 2000.

Often the Incoterms refer to 'The Carrier'. The Carrier is defined as anyone who undertakes or procures the means to transport the goods whether by rail, air, sea, inland waterway or any combination of these modes.

The motto is: be careful when exporting. Otherwise you may be obliged to pay for more than you thought, thus eroding your profit on the deal. And you thought it was only the price of the goods that had to be agreed!

Use the wizard to work out which Incoterm you should use on your quotation.

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