We have noticed it is more and more common to find perception among logistic or traffic executives who believe INCOTERMS limit their obligation with regard to credit terms. I will talk about this subject in another article. However, I wanted to touch on the basic idea of what are INCOTERMS and what they are not.
What are INCOTERMS?
INCOTERMS stands for Internacional Comercial Terms. They are issued and promoted by the International Chamber of Commerce. Their last version was published in 2011.
They use three-letter coding for standard commercial terms which are commonly found in international sales agreements.
They provide definitions that have been internationally accepted and they also serve as a norm to interpret the most widely used commercial terms.
INCOTERMS are included in the sales agreement to inform and define applicable duties, filing of customs documents, costs and risks involved in the delivery of goods from seller to buyer.
What INCOTERMS are NOT
– They DO NOT constitute an agreement.
– They DO NOT substitute contract law.
– They DO NOT define price, currency type or credit terms.
– They DO NOT define transfer of property titles.
Using INCOTERMS in sales agreements greatly aids global commerce and facilitates understanding among commercial partners involved in trading from all the different countries.
Download the INCOTERMS Sheet