Abbreviation of International Commercial Terms, a set of standardized trade terms developed by the International Chamber of Commerce or ICC in 1932 and updated regularly. There are thirteen established Incoterms, the most frequently used being EXW (Ex works), FOB (Free on Board), CIF (Cost, Insurance and Freight), DDU (Delivered Duty Unpaid), DDP (Delivered Duty Paid), CIP (Carriage and Insurance Paid To), and CPT (Carriage Paid To).

Great care should be taken using Incoterms in sales contracts, as use of the wrong term can impose significant unexpected handling costs on the vendor or buyer. In addition, because high technology products are typically high value, or are for use in time sensitive contracts, and Incoterms also define who bears the risk of loss of goods at various points in the shipping process, care should be taken to ensure that the insurance arranged matches the Incoterm(s) used.

Related Terms