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Using Incoterms in Sales Contracts

Incoterms are a set of standardized trading terms and conditions that are used in sales contracts to define the responsibilities of buyers and sellers in international trade transactions.

Incorporating Incoterms

When using Incoterms in a sales contract, it is important to:

  • Specify the exact Incoterm being used
  • Include the place of delivery
  • State the version of Incoterms being used (e.g., Incoterms® 2020)
  • Clearly define any additional terms or conditions

Example Contract Clause

A typical Incoterms clause in a sales contract might read:

"Delivery terms: FOB Shanghai Port, Incoterms® 2020"

Key Considerations

  • Ensure both parties understand the chosen Incoterm
  • Consider the mode of transport
  • Account for insurance requirements
  • Include customs clearance responsibilities
  • Specify payment terms separately

Common Mistakes to Avoid

  • Using outdated Incoterms versions
  • Failing to specify the delivery location
  • Mixing Incoterms with other delivery terms
  • Assuming Incoterms cover all aspects of the contract