International Trade Terms

General Aspects

Represented by acronyms (3 letters), international trade terms refer effectively to sale conditions, because they define minimal rights and obligations of the supplier and purchaser regarding freights, insurances, circulation in terminals, releases in customs-house and obtainment of documents from an international agreement of goods sale. That is the reason why they are also called “price clauses”, because each term determines the elements that make the goods price.

After joined to the purchase and sale agreement, they enter into legal force, with legal meaning precisely and effectively determined. They reflect, thus, summary writing of international use regarding trade, with the purpose of simplifying and making fast writing clauses of purchase and sale agreement.

A good knowledge of INCOTERMS is essential so that the trader can include all his costs in Foreign Trade transactions. Any erroneous interpretation on rights and obligations of purchaser and supplier may cause large business losses for either or both parties. Thus, it is important to carefully study the most appropriate term for each business operation, so that to avoid incompatibility with clauses intended by traders.

The last publishing, Brochure 560 of 2000, comprehends small changes in relation to the previous one, basically addressed to making easier procedures (customs release and payment of obligations FAS and DEQ and obligations of loading and unloading in FCA).

INCOTERMS Chart

Click the image below to expand the INCOTERMS chart: