The International Chamber of Commerce first published the Incoterms rules in 1936.
Incoterms, short for International Commercial Terms, are standardized trade terms used in sales contracts for goods. They clarify which party handles transport, insurance, export and import formalities, costs and the risk of loss at different stages of delivery.
The first edition was created to reduce confusion caused by differing commercial practices in different countries. The rules have since been revised several times as shipping methods, transport documents and international logistics have changed. The current edition is Incoterms 2020.
Incoterms do not determine ownership, payment terms, product quality or the governing law of a contract. They also do not replace the sales contract itself. A common mistake is assuming that every Incoterm places the same customs responsibilities on the seller; those duties vary considerably between terms such as EXW, FOB, CIF and DDP.