CandleFocus Glossary Editor
Incoterms, or International Commercial Terms, are used in international and domestic trade contracts to define the obligations of buyers and sellers. Incoterms are published by the ICC (International Chamber of Commerce), and is currently in its tenth edition, officially known as Incoterms®2020. Incoterms provide a set of three-letter trade terms that are widely used in international contracts for the sale of goods. They are used to define the responsibilities of each party in terms of the actual delivery of the goods.
Every edition of the Incoterms® has an effective date. As of 2020, there are eleven different Incoterms in effect. There are six differing categories: 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).
The terms of the Incoterms®2020 dictate the buyer and seller's respective costs and responsibilities. It is important to note that each Incoterm has specific obligations and the level of risk and cost associated with each depends on the specific term used. For example, the DAT Incoterm requires the seller to deliver the goods to the carrier’s terminal. However, the DDP term requires the seller to deliver the goods to the buyer's premises, clearing them for import, including the payment of duties and taxes.
The terms of the Incoterms®2020 are global standards, which buyers and sellers agree upon. The parties in a contract can customise their agreements accordingly and can mutually agree upon the term that best suits the transaction. Each Edition of Incoterms® may have minor changes, but generally account for the same principles. This includes regulations and customs practices that change over time, allowing them to be updated when needed.
In summary, Incoterms® provide guidelines on the responsibilities and rights of buyers and sellers, helping them to understand what they need to do when it comes to shipping, transportation and delivery of goods. This helps to ensure fair and reliable transactions taking place between global parties.
Every edition of the Incoterms® has an effective date. As of 2020, there are eleven different Incoterms in effect. There are six differing categories: 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).
The terms of the Incoterms®2020 dictate the buyer and seller's respective costs and responsibilities. It is important to note that each Incoterm has specific obligations and the level of risk and cost associated with each depends on the specific term used. For example, the DAT Incoterm requires the seller to deliver the goods to the carrier’s terminal. However, the DDP term requires the seller to deliver the goods to the buyer's premises, clearing them for import, including the payment of duties and taxes.
The terms of the Incoterms®2020 are global standards, which buyers and sellers agree upon. The parties in a contract can customise their agreements accordingly and can mutually agree upon the term that best suits the transaction. Each Edition of Incoterms® may have minor changes, but generally account for the same principles. This includes regulations and customs practices that change over time, allowing them to be updated when needed.
In summary, Incoterms® provide guidelines on the responsibilities and rights of buyers and sellers, helping them to understand what they need to do when it comes to shipping, transportation and delivery of goods. This helps to ensure fair and reliable transactions taking place between global parties.