In international sales operations, conflicts may arise if rules have not been established that will mark the transport of the merchandise from origin to destination.
To avoid setbacks, the International Chamber of Commerce established in 1936 a protocol of codes that, since then, has governed contracts in foreign trade.
Incoterms are also called price clauses, since each term allows the elements that compose it to be determined.
The selection of the Incoterms influences the cost of the contract.

Incoterms determine:

  • The scope of the price.
  • When and where the transfer of risks on the merchandise from the seller to the buyer occurs.
  • The place of delivery of the merchandise.
  • Who contracts and pays for transportation
  • Who contracts and pays for the insurance
  • What documents are handled each part and its cost.

These are the most prominent:

-Responsibility for delivery by the seller

For a given term, "Yes" indicates that the seller has the responsibility to provide the service included in the price; "No" indicates that it is the responsibility of the buyer. If insurance is not included in the terms (eg CFR) then transportation insurance is the responsibility of the buyer.

In short, Incoterms are widely known and used by the different actors involved in foreign trade operations (exporters, importers, carriers, freight forwarders, customs agents, banks and insurance companies, etc.) and therefore must be known in depth, to be used correctly and thereby avoid discrepancies between the parties.