They determine the point of change of responsibility between the buyer and seller. Inco terms inform sales contracts defining respective obligations, costs, and risks involved in the delivery of goods from the seller to the buyer. Some commonly used Inco Terms:
- Ex Works (EXW): Seller has to place the goods at the disposal of the buyer. Carriage and Insurance are arranged by buyer
- Free On Board (FOB): Seller delivers when the goods pass the ship’s rail at the named port of shipment. This means the buyer has to bear all costs &risks to the goods from that point
- Cost, Insurance, Freight (CIF): The seller delivers when the goods pass the ship’s rail in the port of shipment. The seller must pay the cost & freight necessary to bring goods to the named port of destination, but the risk is transferred from seller to buyer