Incoterms: What are they, what types exist and what are they for?
Sometimes misunderstandings arise in international negotiations due to the different interpretations of each country. For this reason, a standardization of the rules is required, to avoid this type of inconvenience.
So Incoterms were born, or International Commercial Terms, which are established rules in international trade about the conditions of delivery of the freights.
These rules are intended to define the responsibilities and obligations that must be assumed by both the buyer, who exports the product and the seller, who imports the product.
Keep reading this article if you want to know more about the Incoterms!
We hope to solve all your doubts!
What types of Incoterms exist?
The first standards of international sales contracts were published for the first time by the International Chamber of Commerce in 1935, being recognized as Incoterms in 1963. Over the years, modifications have been executed to these rules, taking place the last version in 2010. In this last modification 11 terms are divided into 4 groups, where each incoterms is abbreviated by acronyms of three letters.
The following Incoterms are distinguished:
What are the Incoterms for?
The advantages of Incoterms are numerous. On the one hand, they allow defining clearly what are the rights and obligations of the parties involved in an international negotiation. It ensures the commitment of both parties to the contract.
They help us to determine the responsibilities of both parties regarding the payment of the transport, the insurance of the freight and the procedures required in the contract, specifying the moment of the process in which the responsibility passes from the seller to the buyer.
Its relevance is due, finally, to the fact that this standardization of rules in international contracts has legal recognition throughout the world.