Expansion of incoterm is International Commercial Terms it is a collection of commercial terms which is issued by the International Chamber of Commerce (ICC) and is used while making any international transactions or importing or exporting of goods or services. These are the terms that are globally accepted by all the trade councils, governments and authorities. These terms are used to interpret the commonly used terms and to facilitate uniformity during international trade where different countries may have different laws. It is a very vital term for all those companies and individuals which carry out international trade.
Need of Incoterms
Incoterms are considered the most useful way of communication. The main objective of incoterms is to minimize the possibilities of confusion and uncertainties while making international trade. These terms are used to highlight and specify the obligations and responsibilities of a buyer and the seller who indulge in international trade. It is also used to clarify the risks which may be passed onto the buyer from a seller under the rules specified. It also specifies the cost that the buyer or the seller must bear as a result of the transaction. Normally the incoterms can be used while drafting a purchase order documentation of Free Carrier Arrangement, shipment transport labeling.
