Prepared by:
Md. Mostafizur Rahman
01817206407
letonmostafiz@yahoo.com

INTERNATIONAL COMMERCIAL TERMS (INCOTERMS):
Incoterms (International Commercial Terms) are a set of international rule of interpretation, created in 1936 by the International Chamber of Commerce (ICC) in Paris. These terms define the responsibilities & the obligations of seller and buyer within the framework of contracts of trade considering loading, transportation, transfer of ownership & risk of cargo, responsibility of insurance, payment of customs duty and import & export stage & finally delivery of cargo from customs & port. The INCOTERMS is also known as Terms of Sale and Trade Terms. Thus, in an international sale contract, the Inco terms will allow to clear up some issues:

The INCOTERMS specify the following:

1. Transfer of risk:
•    When the seller has the right to claim for the contract price even if the goods are lost, damaged or short-delivered.
•    To determine the critical point of the transfer of the risks of the seller to the buyer in the process of forwarding the goods (risk of loss, deterioration, robbery of the goods).
•    Allow the person who supports these risks to make arrangement in particular terms of insurance.

2. Transfer of Obligation:
•    To define who is responsible for packaging, marking, operation of handling, loading & unloading of the goods or the potting and the discharge of the containers as well as the operations of inspection.
•    To fix respective obligations for the achievement of the formalities of exportation and/or importation, the payment of the right and taxes of importation as well as the supply of the documents.

3. Division of Cost:
•    To specify is going to subscribe the contract of carriage that is to say the seller or buyer.
•    To distribute between the seller and buyer the logistic & administrative expenses at the various stages of the process.

The complete range of INCOTERMS can be listed as below by dividing 4 groups according to their first letter of their abbreviations and purpose of use (E-, F-, C- and D- terms).

>>EXW under letter E represents the seller’s minimum obligation, since the exporter only has to make the goods available at its premises.
>>The letter F signifies that the seller must hand over the goods to a nominated carrier Free of risk and expense to the buyer. Under the F- terms the seller has to arrange any necessary pre-carriage to reach the agreed point for handing the goods to the carrier. It is the buyer’s responsibility to arrange and pay for the main carriage and associated costs.
>>The letter C signifies that the seller must bear certain Costs even after the critical point where title or ownership has passed.  Under the C-Terms the seller arranges and pays for the main contract of carriage and in some instances associated costs including insurance coverage.
>>The letter D signifies that the goods must arrive at a stated Destination.  Under the D-Terms the seller undertakes to arrange and pay for the main contract of carriage and associated costs including insurance coverage.
C-Terms differ from D-Terms as the seller fulfills its obligation by shipping the goods from its Country under the C-Terms. Under the D-Terms the seller fulfills its obligation only when the goods reach a stated Destination.