Incoterms® are rules published by the International Chamber of Commerce for use in sales contracts. They allocate specified delivery obligations, costs and risks between seller and buyer. The chosen rule should be stated with a named place or port and the intended version.
What they help clarify
The rule can help establish who arranges transport, where delivery occurs for the sale contract and who handles specified export or import formalities. Some rules also allocate an obligation to arrange insurance.
The rules do not replace the entire sales contract, the freight booking or every legal requirement. They should not be treated as a universal statement about ownership transfer or payment due dates.
Why the named place matters
A term without a precise location leaves room for confusion. A city can contain many warehouses, terminals and unloading points. Make the relevant place clear enough to connect the commercial agreement with the practical transport instructions.
Information to share with your manager
- The agreed rule, named location and version.
- Who is requesting and paying for the transport service.
- The physical collection and delivery addresses.
- Which parties arrange customs procedures where relevant.
- Any unloading or special handling requirements.
The transport quotation must still describe the service being purchased. A sales term alone does not book a tail lift, reserve a warehouse slot or appoint a customs representative.
Before choosing a rule
Make sure the buyer and seller understand the intended allocation and consult the actual ICC rules where needed. For a practical example of delivery and unloading allocation, read DAP explained. Compare commercial and transport parties.