Incoterms, a\u00a0widely-used\u00a0terms of sale,\u00a0are a set of 11 internationally recognized rules\u00a0which define the responsibilities of sellers and buyers.\u00a0Incoterms specifies\u00a0who is responsible for paying for and managing the shipment, insurance, documentation, customs clearance, and other logistical activities. The Incoterms\u00ae\u00a0are a set of\u00a011 individual\u00a0rules\u00a0issued by the International Chamber of Commerce\u00a0(ICC)\u00a0which define the responsibilities of sellers and buyers for the\u00a0sale\u00a0of goods\u00a0in international transactions.\u00a0Of primary importance is that each\u00a0Incoterms rule\u00a0clarifies\u00a0the tasks,\u00a0costs, and risks to be borne by buyers and sellers\u00a0in these transactions.\u00a0Familiarizing yourself with\u00a0Incoterms\u00a0will help improve smoother transactions by clearly defining who is responsible for what and each step of the transaction. The Incoterms\u00ae 2020 rules are updated and grouped into two categories\u00a0reflecting modes of transport. Of the 11 rules, there are seven for ANY mode(s) of Transport and four for SEA or LAND or INLAND WATERWAY transport. The seven\u00a0Incoterms\u00ae 2020\u00a0rules for any mode(s) of Transport are:EXW\u00a0– Ex Works (insert place of delivery)FCA\u00a0\u00a0– Free Carrier (Insert named place of delivery)CPT\u00a0 – Carriage Paid to (insert place of destination)CIP\u00a0–\u00a0 Carriage and Insurance Paid To (insert place of destination)DAP\u00a0– Delivered at Place (insert named place of destination)DPU\u00a0– Delivered at Place Unloaded (insert of place of destination)DDP\u00a0– Delivered Duty Paid (Insert\u00a0place of destination) The four\u00a0Incoterms\u00ae 2020\u00a0rules for Sea and Inland Waterway Transport are:FAS\u00a0– Free Alongside Ship (insert name of port of loading)FOB\u00a0– Free on Board (insert named port of loading)CFR\u00a0– Cost and Freight (insert named port of destination)CIF –\u00a0\u00a0Cost Insurance and Freight (insert named port of destination) Incoterms Clarify Responsibilities of Parties to a Sales Transaction. For example, in each Incoterm rule, a\u00a0statement is provided as\u00a0to seller\u2019s responsibility to provide the goods and commercial invoice\u00a0in conformity with the contract of sale. Likewise, a corresponding\u00a0statement is provided which\u00a0stipulates that the buyer pays the price of goods as provided in the contract of sale. Each Incoterm rule has a statement stipulating\u00a0which party is responsible for obtaining any Export License or other official authorization\u00a0required for export and for carrying out the customs formalities necessary for the export to proceed. Similarly, each rule has a corresponding statement as to\u00a0which party is responsible for obtaining any import license or other official authorization required for import and for carrying out the customs formalities required for the import of goods. These statements also specify which party bears the cost of handling these tasks. Similarly, each Incoterm rule\u00a0specifies which party to the transaction, if any, is obligated to contract for the carriage of the goods. Another point addressed in each Incoterm rule is\u00a0which party, if any, is obligated, to provide for cargo insurance coverage. These statements also\u00a0specify which party bears the cost of handling these tasks. Each rule also contains statements, among others, as to\u00a0which party is responsible for packing the goods for Transport overseas and for bearing the costs of any pre-shipment inspections. A final example is cargo delivery. Each Incoterm rule\u00a0specifies the seller\u2019s obligations for cargo delivery and clarifies when delivery takes place. Each rule also\u00a0specifies when the risk of loss or damage to the goods being exported pass from the seller to the buyer\u00a0by reference to the delivery provision. The latest version of the Incoterms\u00ae 2020 rules is published by International Chamber of Commerce (ICC) and protected by copyright. The revised rules reflect the latest developments in commercial transactions. As of January 1, 2020, all sales contracts should include references to the Incoterms\u00ae 2020 rules. You may obtain Incoterms\u00ae 2020 rules visit the ICC website. Source ICC. Disclaimer Our content is not in any way legal advice or binding. The information provided by might not be the official legal or full definition. Also when pursuing a specific transaction you are encouraged to conduct your own due diligence and to consult legal counsel as appropriate.<\/p>\n