Incoterms, short for International Commercial Terms, are a set of standardized trade terms published by the International Chamber of Commerce (ICC) that define the responsibilities, risks, and obligations of buyers and sellers in international trade transactions. Incoterms are widely used in contracts for the sale of goods and are recognized globally to clarify the terms of shipment and delivery.

There are currently 11 Incoterms, with the latest version being Incoterms 2020. Each Incoterm specifies:

1. The point at which responsibility and risk transfer from the seller to the buyer.

2. The division of costs between the parties involved in the transaction.

3. The obligations related to transportation, insurance, and customs clearance.

Some common Incoterms include EXW (Ex Works), FCA (Free Carrier), CIF (Cost, Insurance, and Freight), and DAP (Delivered at Place).

Incoterms are essential for ensuring clarity and avoiding misunderstandings between trading partners, especially in international transactions where goods may pass through multiple jurisdictions and modes of transport. However, it's important for buyers and sellers to carefully select the appropriate Incoterm based on their specific requirements and the nature of the goods being traded.

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