INCOTERMS - International Commercial Terms

Incoterms are rules drawn up by the International Chamber of Commerce to interpret commercial terms used in international transactions.

When commercial traders enter into a contract for the purchase and sale of goods they are free to negotiate specific terms of their contract. These terms include the price, quantity, and characteristics of the goods. Every international contract will also contain what is referred to as an Incoterm (international commercial term). The Incoterm selected by the parties to the transaction will determine which party pays the cost of each segment of transport, who is responsible for loading and unloading of goods, and who bears the risk of loss at any given point during a given international shipment. Incoterms also influence Customs valuation basis of imported merchandise.

Incoterms are overseen and administered by the International Chamber of Commerce in Paris and are adhered to by the major trading nations of the world. There are currently 13 Incoterms in use, and they can be considered on the basis cited above.

What do Incoterms regulate?

Incoterms regulate the distribution of documents, the conditions to deliver goods, the distribution of the costs and risks of the transaction.

What is beyond the scope of its regulation?

Internal clauses in sale agreements, the situation of goods, conveyance of property, guarantee and payment, and noncompliance of sale agreements, among other things.

Groups or basic categories

Group E = EXW (Departure)
Group F = FCA , FAS y FOB (Main carriage not paid by seller)
Group C = CFR , CIF , CPT y CIP (Main carriage paid by seller)
Group D = DAF , DES , DEQ , DDU y DDP (Arrival)

Recommendations

For all kinds of Transportation: EXW - FCA - CPT - CIP - DDU - DDP
For maritime and inland waters: FAS - FOB - CFR - CIF - DES - DEQ
For road transportation: DAF

Glossary of common terms

Spanish Glossary

English Glossary

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