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Incoterms

Incoterms

Incoterm is a trademark of the International Chamber of Commerce (ICC). The term is an acronym for international commercial terms, which are universal rules used in global trading of goods to provide clarity and predictability between trading parties.

The Incoterms rules published by the ICC includes 3-letter abbreviations that have universal meaning for buyers and sellers globally. The most recent edition is the Incoterms 2020 which you can get in both print and digital formats. Note that the Incoterms 2010 are still valid and in effect and you can continue to use them.

When you and the buyer agree on transport arrangements, it's a good idea to use the correct Incoterms rules for the particular contract. The Incoterms rules define the respective contractual obligations of the buyer and seller including the costs, delivery and passing of risk in the transportation of the goods by land and sea internationally. They state the point of delivery of the goods. This is where the risk of the goods being lost or damaged passes from you to the buyer. If the goods are damaged while you bear the risk, you must replace them with other goods. If you don't, you'll be in breach of contract. If the goods are damaged after the risk has passed to the buyer, the buyer bears the loss and must still pay you for the goods. If they don't, they'll be in breach of contract.

You should make sure that you have insurance cover while the goods are at your risk. Depending on the Incoterm rule used, you may also have an obligation to pay for insurance for the goods when they're at the buyer's risk.

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