Incoterms are terms used in international commercial transactions that define the roles and responsibilities of buyers and sellers concerning the transport and delivery of goods.

These terms are defined by the International Chamber of Commerce (ICC) and are used by businesses in international trade to define and understand the terms of business agreements.

Types of Incoterms

There are 11 incoterms in total, divided into two categories.

Terms that apply to any mode of transport:

• EXW
• FCA
• CPT
• CIP
• DAT
• DAP
• DDP

Terms that apply only to sea and inland waterways:

• FAS
• FOB
• CFR
• CIF

The type of incoterm that will be used will depend on the type of goods being shipped, the mode of transport, and the location of the buyer and seller.

What is not covered by incoterms?

• The conditions of a sale
• The type of goods or price
• The payment method between seller and buyer
• When ownership of the goods passes from seller to buyer
• Which documents must be provided for customs clearance
• What happens if the goods are not delivered or delivered faulty, there are any delays or other issues with the delivery.