Incoterms are standardized trade rules published by the International Chamber of Commerce that allocate specified delivery responsibilities, costs and risks between buyers and sellers.
How it works in retail
A contract identifies the chosen rule, named place or port and version. The rules help clarify responsibilities for delivery, transport and, where applicable, customs formalities.
A retail example
A purchase agreement specifies a particular Incoterms rule together with the named destination and the agreed version of the rules.
What to keep in mind
Incoterms do not settle every contract issue, such as payment terms or transfer of ownership. Use the actual rule and agreement to determine responsibilities.
Sources & further reading
International Trade Administration: Know your Incoterms
Examples are illustrative. Terminology and measurement conventions can vary by business and market.