Incoterms
Standard trade terms from the International Chamber of Commerce that say who arranges and pays for transport and insurance, and when risk passes from seller to buyer.
What it means in business
An Incoterm such as EXW, FOB or CIF, written with a named place, fixes the seller's and buyer's duties for a sale: who books and pays for freight and insurance, who handles export and import clearance, and the point where the buyer takes on the risk of loss or damage. They are used in contracts and quotations for international sales and are sometimes used in domestic ones.
Example
A seller quotes FOB Mumbai: it delivers the goods on board the ship at Mumbai, and from then the buyer bears the cost and risk of the sea journey and arranges the insurance. This is an illustration of normal business use rather than a quoted case study.
How to use it correctly
Name the exact Incoterm, the edition, and the place in the contract and on the quotation, such as 'FOB Mumbai, Incoterms 2020'. Check that the price you quote covers what that term makes you responsible for.
Common confusion
An Incoterm decides costs and risk between buyer and seller, but it does not decide who owns the goods or when payment is due, and it is not a law. The editions differ, so the edition should be named.
Related glossary terms
Sources and further reading
Written on 24 October 2026 for lamp. Confirm the current rules with the official source or an adviser before relying on it.