The Incoterms® rules are a globally-recognised set of standards defining the delivery parity in the field of trade for the sale of goods. “Incoterms®” is an acronym standing for International Commercial Terms. These rules are widely used in international commercial transactions and they are increasingly becoming a decisive factor in domestic commercial transactions.
Freight costs cannot be analysed without the adequate knowledge of the Incoterms rules. The purpose of the Incoterms is to provide a set of international rules for the interpretation of the most commonly used trade terms in foreign trade.
It is an international standard that defines the rights and obligations of the buyer and seller in the international transport of goods.
The Incoterms clauses define the following:
- the terms of transport,
- the place of performance, and
- the responsibilities, obligations and rights of the seller and the buyer.
These standards used in international trade were established by the International Chamber of Commerce (“ICC”) in 1936. The Incoterms rules have been regularly amended and revised due to the development of trade; the latest (9th) edition is from 2020. Thus, the parties shall specify in the contract which Incoterm version has been agreed upon.