Incoterms® – International Commercial Terms
Incoterms® (International Commercial Terms) are internationally recognized rules published by the International Chamber of Commerce (ICC) that define the responsibilities of buyers and sellers in international trade transactions. These rules clarify obligations related to transportation, delivery, transfer of risk, insurance, and customs formalities.
Incoterms® are incorporated into contracts for the sale of goods worldwide and serve as a standard reference for importers, exporters, freight forwarders, insurers, banks, and legal professionals involved in cross-border trade.
Applicability of Incoterms®
Incoterms® apply solely to contracts for the sale of goods and do not govern contracts of carriage, insurance, or payment unless expressly stated. Their use is voluntary and must be clearly referenced in commercial agreements.
To avoid ambiguity, contracts should specify the applicable Incoterms® rule along with the place named and the version year, for example:
“CIF Nhava Sheva – Incoterms® 2020.”
Current Version
The most recent edition, Incoterms® 2020, became effective on 1 January 2020 and remains in force until replaced by a subsequent ICC revision. Parties may agree to use earlier versions; however, this must be explicitly stated in the contract.
Official ICC reference: here
Overview of Incoterms® Rules
The ICC has defined 11 Incoterms® rules under Incoterms® 2020, categorized by the mode of transport.
Rules for Any Mode of Transport
- EXW – Ex Works
- FCA – Free Carrier
- CPT – Carriage Paid To
- CIP – Carriage and Insurance Paid To
- DAP – Delivered at Place
- DPU – Delivered at Place Unloaded
- DDP – Delivered Duty Paid
Rules for Sea and Inland Waterway Transport
- FAS – Free Alongside Ship
- FOB – Free On Board
- CFR – Cost and Freight
- CIF – Cost, Insurance and Freight
Each rule defines the point at which delivery is considered complete and when risk transfers from seller to buyer.
Responsibilities Defined by Incoterms®
Incoterms® determine:
- Allocation of transportation costs
- Transfer of risk of loss or damage
- Responsibility for export and import clearance
- Obligation to arrange insurance
- Delivery point and handover conditions
Use of Incoterms® in Logistics Services
While Incoterms® govern the sale of goods between buyers and sellers, logistics service providers operate based on separate contractual agreements. Any reference to Incoterms® in shipping or forwarding documentation does not modify the agreed responsibilities unless expressly stated in writing.
Disclaimer
Incoterms® are rules developed and owned by the International Chamber of Commerce (ICC). This page is provided for general informational purposes only and does not constitute legal advice. Users are advised to consult legal or trade professionals when drafting or interpreting commercial contracts involving Incoterms®.