Explain what are the incoterms?

EXPLAIN WHAT ARE THE INCOTERMS?

Incoterms (short for International Commercial Terms) are terms used in international contracts that define the obligations and responsibilities of the parties involved in a commercial transaction, including buyers and sellers. These standardized terms facilitate international trade by clearly stating who is responsible for the costs, transportation, risk and insurance of the goods at each stage of the shipping process.

Incoterms consist of three-letter codes, such as EXW, FOB, CIF, and others, and each represents a specific set of rules. Some of the key issues they address include delivery of the goods, place of delivery, timing of transfer of risks and costs, and transportation liability.

Some of the most common Incoterms include:

• EXW (Ex Works): The seller makes the goods available to the buyer at his own premises or named place, and the buyer assumes all costs and risks from that point.
• FOB (Free On Board): The seller delivers the goods on board ship at the named port of shipment. From that point on, the buyer assumes responsibility.
• CIF (Cost, Insurance, and Freight): The seller is responsible for delivering the goods on board the ship and paying the freight and insurance to the agreed port of destination. Thereafter, the buyer assumes responsibility.
• DDP (Delivered Duty Paid): The seller is responsible for delivering the goods to the specified destination and must pay all costs, including import duties and taxes.

These are just a few examples of the Incoterms terms available. It is important that the parties involved in an international trade transaction clearly agree and specify the Incoterm they will use in their contract to avoid confusion and ensure that all responsibilities and costs are clearly defined. Incoterms are a valuable tool to facilitate international trade and establish clear rules for commercial transactions between different parts of the world.

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