Incoterms enjoy worldwide recognition and, through their universal implementation, accurately reflect the standard for carrying out international trade practices. Incoterms closely correspond to the U. N. Convention on Contracts for the International Sales of Goods. The question and answer format is used for simplicity and ease of understanding.
Q: What does the acronym "Incoterms" stand for?
A: The acronym means International commerce terms.
Q: What are Incoterms?
A: Incoterms are the official International Chamber of Commerce (ICC) rules for the explanation of trade terms. Incoterms are administered by the ICC in Paris and are adhered to by all major trading nations of the world. Incoterms are the authoritative text for determining how costs and risks are allocated to the parties conducting international transactions.
Q: What do Incoterms do?
A: Incoterms facilitate the conduct of international business by defining the responsibilities of the involved participants.
Q: Why do people use Incoterms?
A: Incoterms help establish and execute an international transaction by defining distinct obligations and responsibilities between buyers and sellers. The buyer's and seller's agreement to use a particular Incoterm pursuant to the international transaction will by definition have implications for other services needed to perform the transaction such as contracts of carriage, insurance and payment.
Q: What is the purpose of Incoterms?
A: Incoterms provide a set of rules for the interpretation of commonly used trade terms in foreign trade. Reference to Incoterms in a sales contract defines clearly the parties' respective obligations and responsibilities thereby reducing the risk of multi-jurisdictional legal complications.
Q: Why did Incoterms come about?
A: Differences in trading practices and legal interpretations between traders of different countries necessitated a need for a common set of rules. These rules needed to be easy to understand by all of the participants in order to prevent misunderstandings, disputes and litigation.
Q: When were Incoterms created?
A: Incoterms were first created in 1936 and were designated "Incoterms 1936."
Q: How have Incoterms evolved?
A: Incoterms have evolved into the codified worldwide contractual standard and are periodically updated with the progressive evolution of international trade. Amendments and additions were made in 1953, 1967, 1976, 1980 and 2000. Presently, Incoterms 2000 governs transactions reflecting the influences of modern electronic processes and computer driven techniques.
Q: What revisions were made in Incoterms 2000?
A: Incoterms 2000 take into account the expanded use of customs-free trade zones, the increased use of electronic communications, and modern carriage practices. Incoterms 2000 offer a simpler and clearer presentation of the thirteen definitions, all of which have been revised.
Q: How many Incoterms are there?
A: The complete set consists of 13 Incoterms.
Q: What responsibilities and obligations of the buyer and seller are listed in the Incoterms?
A: There are obligations and responsibilities for the seller and the buyer defined under each of the Incoterms. When a seller and a buyer agree to employ a particular Incoterm, each accepts the corresponding obligations and responsibilities as clearly set forth and defined under that particular Incoterm.
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