Incoterm – what is it?
Incoterms, or International Commercial Terms, are a set of pre-defined trade terms published by the International Chamber of Commerce (ICC). These terms are universally recognized and used in international and domestic contracts for the sale of goods. Incoterms clarify the roles and responsibilities of sellers and buyers, including aspects related to the shipment, insurance, duties, and delivery of products. By providing clear definitions, Incoterms aim to reduce disputes and misunderstandings between trading partners from different countries with varying trade customs.
Most common questions
1. Why are Incoterms essential in international trade?
Incoterms play a pivotal role in international trade by standardizing the interpretation of common contractual sales practices. They dictate who pays for what, when the risks and responsibilities transfer from the seller to the buyer, and who is responsible for the transportation, insurance, and other logistical elements. This clarity is essential in international trade, where differing customs and regulations can create ambiguities.
2. Can you name a few commonly used Incoterms?
Of course! Some of the most commonly used Incoterms include EXW (Ex Works), FOB (Free On Board), CIF (Cost, Insurance, and Freight), and DDP (Delivered Duty Paid). Each term represents a specific agreement about the distribution of shipping responsibilities and costs between the buyer and seller.
3. How often are Incoterms updated?
The International Chamber of Commerce (ICC) reviews and updates Incoterms roughly every decade to ensure they remain relevant in the face of evolving trade practices and global commerce realities. For instance, the latest set was released in 2020, known as Incoterms 2020.
4. Are Incoterms applicable to both international and domestic trade?
While Incoterms were initially developed with international trade in mind, their principles can be, and often are, applied to domestic transactions. When utilized in domestic scenarios, they offer the same clarity and standardized understanding of roles and responsibilities as in international contexts.
5. How does Foodcom S.A. approach the use of Incoterms?
Foodcom S.A. recognizes the importance of clear and transparent trade agreements. As such, the company consistently adheres to the latest Incoterm standards in its transactions, ensuring that both partners in any trade deal have a clear understanding of their responsibilities. This commitment to clarity aids in streamlining operations, mitigating potential disputes, and fostering trust with their business partners.
