Definition of the INCOTERM

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.

Incoterms make international trade easier and help traders in different countries to understand one another.

In 1936 the international Chamber of Commerce codified the current uses and distributed the first edition of the incoterms. The change of the transportation techniques, of handling, transmission of the data and the commercial practices drove it to put them up-to-date and to modify them.
Some revisions have been operated thus in 1953 , 1967 , 1974 , 1976 , 1980 , 1990 and 2000.

N.B: All along the tutorial, we are going to study the INCOTERMS version 2000

  • Previous
  • Top
  • Next