Incoterms are internationally recognised delivery terms that clearly determine who bears the costs of transport, insurance and customs clearance, and at what point the risk of loss or damage to the goods passes from the seller to the buyer. They are used as a three-letter abbreviation supplemented with a place, for example delivery at a named place or handover at the seller's works. The choice of term has a direct impact on both price and liability: under one, the buyer bears almost everything; under another, the seller does, including import customs clearance abroad, which tends to be administratively demanding. The term must be stated precisely in the contract and on the invoice, together with the version of the rules. Incorrect use leads to disputes over who covers damage incurred during transport.
See also: Logistics and customs, Reverse logistics from abroad, Pricing for foreign markets.
