Doing business internationally requires clear agreements about where the seller’s responsibility ends and the buyer’s begins. Incoterms describe the rights and obligations of both seller and buyer, including export and import clearance. They also explain the division of costs and risks between the parties. The incoterms are created and published by the International Chamber of Commerce. In 1990 they were adapted in connection with the increasing use of electronic data traffic.

Types of Incoterms

There are different types of incoterms, ranging from the situation where the selling party is entirely responsible for the transportation, to the situation where the buyer bears all responsibility for getting the goods from the factory to the buyer’s front door, and pretty much everything in between. They can be divided into four main categories, which can be recognized by the first letter of each incoterm. The categories are the E-term, F-terms, C-terms and D-terms.

Download incoterms chart