International Commercial Terms
When traders enter into a contract of sale, are free to negotiate specific terms of their contract. These terms include the price, quantity, and characteristics of the goods. Every international contract will also contain what is called an Incoterm (international commercial term). The Incoterm selected by the parties involved in the transaction will determine which party pays the cost of each segment of transport, who is responsible for loading & unloading of goods, and who bears the risk of loss with at some point in international transport. The Incoterm also determines the basis of the valuation of imported goods at customs.