The name Incoterms is derived from INternational COmmercial TERMS.

Incoterms are a series of internationally recognised standard trade definitions used in international sales contracts for goods and products.

The trade terms define the obligations and responsibilities of the exporter (seller) and the importer (buyer) for the delivery of goods, and how risks and costs are divided.

The terms relate to the trade terms in a contract of sale between buyer and seller and do not deal with the contract of carriage or payment mechanism.

The terms state the point at which the goods are “delivered”, meaning the point at which the obligations for carriage, risk and costs transfer from the seller to the buyer.

The terms are published by the International Chamber of Commerce (ICC) and are regularly updated to reflect changes in international trade. It is recommended that the buyer and seller are both familiar with, and understand, the meanings of the terms. The latest iteration is Incoterms 2000 and full copies are available from the ICC on-line book store or from a local Chamber of Commerce.

Under Incoterms 2000, the terms are grouped into E, F, C or D terms designated by the first letter of the term. A full list of Incoterms, the roles and responsibilities, and sub-categories are available from the ICC publications (www.iccbooks.com).

The ICC have recently listed all Incoterms and an overview of their meaning on their website.

Incoterms can become daunting and seem complicated. The various subcategories of Incoterms can be too detailed for some exporters, who only need to understand the basic elements of the terms. An introduction to Incoterms, and practical steps in their use, is included in the Ebook Appointing and Managing Agents and Distributors.

The ICC also publishes an Incoterms Wallchart - a read-only sample can be accessed on their webpage:

Tip: Do not select an Incoterm without taking payment term and shipment route into account. The exporter should not "deliver" the goods (transfer responsibility for the shipment) to the importer if payment has not already been made, or a guaranteed payment mechanism is in place.