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The most complex & important tool of International Trade is Language. Small changes in wording can have a major impact on all the aspects of Business agreement, esp. in International Trade. For Business terminology to be effective, phrases must mean the same thing through out the industry. This is where “Incoterms” comes into existence.

Incoterms” is devised & published by the International Chamber of Commerce in 1936. Incoterms International commercial terms are a series of international sales terms widely used throughout the world. INCOTERMS are designed to create a bridge between different members of the industry by acting as a uniform language they can use.

ICC introduced the first version of Incoterms – short for “International Commercial Terms” – in 1936. Since then, ICC expert lawyers and trade practitioners have updated it many times to keep pace with the development of international trade. Effective January 1 of 2000, the ICC once again updated Incoterms to follow the modern trends in international trade. They should now be incorporated under the reference “Incoterms 2000” into contracts that are effective from January 2000 or any date thereafter.

Incoterms 2000 are internationally accepted commercial terms defining the respective roles of the buyer (Importer) and seller (Exporter) in the arrangement of transportation and other responsibilities and clarify when the ownership of the merchandise takes place.These terms are incorporated into export-import sales agreements and contracts worldwide and are a necessary part of foreign trade.

The main objective of Incoterms2000 defines the responsibilities and the obligations of a seller (Exporter) and a buyer (Importer) within the framework of international contracts of trade concerning loading, transport, type of transport, insurances and delivery. Its first function is about a distribution of transport charges. The second role of the Incoterms2000 is to define the place of transfer and the transport risks involved in order to justify the ownership for support and damage of goods by shipments sent by the seller (exporter) or the buyer (importer) in an event of execution of transport.

Incoterms safeguard the following issues in the Foreign Trade contract or International Trade Contract:

a) To determine the critical point of the transfer of the risks of the seller to the buyer in the process forwarding of the goods (risks of loss, deterioration,robbery of the goods) allow the person who supports these risks to make arrangements in particular in term of insurance.

b) To specify is going to subscribe the contract of carriage that is to say the seller or the buyer.

c) To distribute between the seller and the buyer the logistic and administrative expenses at the various stages of the process.

d) To define who is responsible for packaging, marking, operations of handling, loading and unloading of the goods or the potting and the discharge of the containers as well as the operations of inspection.

e) To fix respective obligations for the achievement of the formalities of exportation and /or importation, the payment of the rights and taxes of importation as well as the supply of the documents.

International Commercial Terms are a series of international trade terms that are used worldwide to divide the transaction costs and responsibilities between the seller and the buyer and reflect state-of-the-art transportation practices.

Incoterms deal with the questions related to the delivery of the products from the seller (exporter) to the buyer (importer). This includes the carriage of products, export and import clearance responsibilities, who pays for what, and who has risk for the condition of the products at different locations within the transport process.Incoterms are always linked to a physical location and has nothing to do with the transfer of ownership.

INCOTERMS are most frequently listed by category. Below are the 13 international Incoterms adopted by the International Chamber of Commerce.