Incoterms
Definition
Incoterms are internationally agreed standard terms that define who is responsible for transport, insurance and customs formalities in an international business delivery, for example "EXW" or "DAP". They prevent confusion between buyer and seller about who carries which risk.
Who carries the risk during transport
Without an agreement, it's unclear from which point the buyer becomes responsible for a delivery: when it leaves the seller's warehouse, or only on arrival. Incoterms capture that in a few letters.
Relevant for exports
Companies that sell internationally state the applicable Incoterm on quotes and order confirmations, so there's no dispute over shipping costs or who handles customs.
Practical example
A manufacturer sells "DAP" (Delivered At Place) to a customer in the Netherlands: the seller arranges and pays for transport to the customer's door, who only handles import duties.
Related terms
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