Incoterms: International Trade and Seller

Topics: International trade, Transport, Export Pages: 8 (2050 words) Published: April 7, 2011
Incoterms are internationally accepted commercial terms, developed in 1936 by the International Chamber of Commerce (ICC) in Paris. Incoterms 2000 define the respective roles of the buyer and seller in the agreement of transportation and other responsibilities and clarify when the ownership of the merchandise takes place. These terms are incorporated into export-import sales agreements and contracts worldwide and are a necessary part of foreign trade. 

Incoterms are used in union with a sales agreement or other methods of sales transactions and define the responsibilities and obligations of both, the exporter and importer in Foreign Trade Transactions. 

The main objectives of Incoterms 2000 revolve around the contract of Foreign Trade concerned with the loading, transport, insurance and delivery transactions. Its main function is the distribution of goods and regulation of transport charges. 

Another significant role played by Incoterms is to identify and define the place of transfer and the transport risks involved in order to justify the ownership for support and damage of goods by shipments sent by the seller or the buyer in an event of execution of transport. 

Incoterms make international trade easier and help traders in different countries to understand one another. These International Commercial Terms are the most widely used international contracts protected by the ICC copyright. 

Incoterms safeguard the following issues in the Foreign Trade contract or International Trade Contract: 1. To determine the critical point of the transfer of the risks of the seller to the buyer in the process forwarding of the goods (risks of loss, deterioration, robbery of the goods) allow the person who supports these risks to make arrangements in particular in term of insurance. 2. To specify who is going to subscribe the contract of carriage that is to say the seller (exporter) or the buyer (importer). 3. To distribute between the seller and the buyer the logistic and administrative expenses at the various stages of the process. 4. It is important to define who is responsible for packaging, marking, operations of handling, loading and unloading, inspection of the goods. 5. Need To confirm and fix respective obligations for the achievement of the formalities of exportation and importation, the payment of the rights and taxes of importation as well as the sending of the documents. In dealing Foreign Trade there are 13 Incoterms globally adopted by the International Chamber of Commerce.


Incoterms or International commercial terms make trade between different countries easier. International Commercial Terms are a series of international trade terms that are used are used worldwide to divide he transaction costs and responsibilities between the seller and the buyer and reflect state-of-the-art transportation practices. 

Incoterms directly deal with the questions related to the delivery of the products from the seller to the buyer. This includes the carriage of products, export and import responsibilities, who pays for what and who has the risk for the condition of the products at different locations within the transport process. 

Incoterms and world customs Incoterms deal with the various trade transactions all over the world and clearly distinguish between the respective responsibilities of the seller and the buyers. 

The 13 International Incoterms are:

Departure of goods by international transport with the risks and dangers to the Seller (Exporter) and Buyers (Importers)

"EXW"- Ex Works

Title and risk pass to buyer including payment of all transportation and insurance cost from the seller's door. Used for any mode of transportation.

Seller : In EXW shipment terms the Seller (Exporter) provides the goods for collection by the Buyer (Importer) on the seller or exporter's promise. Responsibility for the seller is to put the goods,...
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