According to the International Chamber of Commerce (ICC), Incoterms® rules provide internationally accepted definitions and rules of interpretation for most common commercial terms used in contracts for the sale of goods. They are a set of rules published by the International Chamber of Commerce (ICC), which relate to International Commercial Law. The Incoterms® rules explain a set of eleven of the most commonly - used three letter trade terms, e.g. CIF, DAP, etc., reflecting business-to-business practice in contracts for the sale and purchase of goods.
The Incoterms® rules describe:
Obligations: Who does what as between seller and buyer, e.g. who organises carriage or insurance of the goods or who obtains shipping documents and export or import licences;
Risk: Where and when the seller “delivers” the goods, in other words where risk transfers from seller to buyer; and
Costs: Which party is responsible for which costs, for example transport, packaging, loading or unloading costs, and checking or security-related costs.