Incoterms
Why are Incoterms Important?
Trade terms are key elements of international contracts of sale, since they tell the parties what to do with respect to carriage of the goods from seller to buyer and export and import clearance.
They also explain the division of costs and risks between the parties.
Four Categories:
- E-Terms: Making the goods available at the sellers' premises
- F-Terms: Main carriage not paid by seller
- C-Terms: Main carriage paid by seller
- D-Terms: Delivered terms
Trade terms clarify whether one party has an obligation to the other party according to a particular term. The terms do not stipulate whether it is advisable for a party to take certain measures on his own behalf even though the Incoterm may not obligate the party to do so, as in the case of insurance.
For example, the FOB or CFR terms do not obligate the buyer to take out insurance. However, the buyer bears the risk of loss or damage to the goods from the moment they are loaded on board the ship, and it is normal commercial practice for the buyer to insure against such risks.
For questions or further information about Incoterms, please contact your local AIT office.
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