Glossary term
Incoterms
ICC rules defining the delivery, cost and risk obligations of buyers and sellers — but not title, payment or governing law.
A set of eleven three-letter rules published by the International Chamber of Commerce, defining who does what in a sale of goods: who arranges carriage, who bears cost, where risk passes, and who clears the goods for export and import.
What they do not cover is at least as important. Incoterms say nothing about when title passes, nothing about payment terms, nothing about what happens on breach, and nothing about the governing law. A contract that names a rule and leaves those to be inferred has not been finished.
Seven rules work for any mode: EXW, FCA, CPT, CIP, DAP, DPU, DDP. Four are for sea and inland waterway only: FAS, FOB, CFR, CIF. Using a sea rule for a container is the single most common error.
Editions are revised roughly every decade and older editions remain valid if named, so a contract should state which it uses - "Incoterms 2020" rather than "Incoterms".