Incoterms®, derived from “International Commercial Terms,” are globally recognized standard contract terms used to clearly define the responsibilities and risks between buyers and sellers in international trade transactions. The incoterms (International Commercial Terms) enable both parties to clarify who is responsible for transportation, insurance, customs clearance, and other logistical aspects of a transaction.

Definition of Incoterms®: Incoterms® are a set of standardized contractual clauses. They define the rights and obligations of buyers and sellers in international trade transactions. In addition, they define the terms of delivery and the place of delivery. They also allocate costs and risks between both parties. Furthermore, they provide clarity regarding responsibilities related to transportation and customs clearance.

Key aspects of “Incoterms®”:

• Delivery terms: Determine where and when the risks and costs of the goods pass from the seller to the buyer.
• Responsibilities: Define who is responsible for arranging transportation, insurance, customs clearance and other logistical aspects of the shipment.
• International standardization: Provide a uniform set of terms recognized and used worldwide, facilitating communication and understanding between trading parties.

Example of Incoterms® (International Commercial Terms): A company in the Netherlands sells electronic equipment to a buyer in the United States. Both parties agree to use the Incoterms® “FOB Rotterdam.” This means that the seller delivers the goods on board the ship at the port of Rotterdam. From that moment on, the buyer assumes responsibility for the transport, insurance, and customs clearance of the goods.

Companies such as Neele-Vat, which are active in international trade, must thoroughly understand and correctly apply the International Commercial Terms ( Incoterms ). Using the correct Incoterms® prevents confusion and misunderstandings. It also provides clarity regarding the responsibilities of both parties. This promotes the smooth and efficient handling of international trade transactions.