By the 1920s, commercial traders had developed a set of trade terms to describe their rights and liabilities with regards to the sale and transport of goods. These trade terms consisted of short abbreviations for lengthy contract provisions. Unfortunately, there was no uniform interpretation of them in all countries, and therefore misunderstandings often arose in cross-border transactions.

To improve this aspect of international trade, the International Chamber of Commerce (ICC) in Paris developed INCOTERMS or INternational COmmerce TERMS, a set of uniform rules for the interpretation of international commercial terms defining the costs, risks, and obligations of buyers and sellers in international transactions.

First published in 1936, these rules have been periodically revised to account for changing models of transport and document delivery. These rules reflect state of the art transportation practices and closely corresponds to the U.N. Convention on Contracts for the International Sale of Goods. The current version is Incoterms 2000.

Incoterms deal with the questions related to the delivery of the products from the seller to the buyer. This includes the carriage of products, export and import clearance responsibilities, who pays for what, and who has risk for the condition of the products at different locations within the transport process. Incoterms are always used with a geographical location and do not deal with transfer of title.

Source: Wikipedia.

 
Listed below are the standard options that are available to shippers, or Incoterms.