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| CHAPTER: Understanding Trade terms and Codes |
| 5. |
What are Incoterms and how do I use them? |
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ANSWER: Incoterms are international terms of sale developed by the International Chamber of Commerce. These shorthand terms are used in foreign trade contracts to define which parties incur costs and when. The most frequently used Incoterms are: EXW (ex-works), FAS (free alongside ship), FOB (free on board), CFR (cost and freight), and CIF (cost, insurance and freight). You should specify the appropriate Incoterms in your documentation, such as price quotes, proforma invoices, Letters of Credit, etc. to specify the way in which title will pass and delivery will be made. See Incoterms 2000 for a complete list of Incoterms, definitions, and risks and responsibilities of each party.
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