Question

INCOTERMS are standard terms used in sales contracts to help buyers and sellers determine their responsibility for a shipment. Identify three points addressed by the various INCOTERMS.

Answer 1

INCOTERMS address delivery, transportation, and insurance and risk in sales contracts.

Step-by-step explanation:

INCOTERMS are standard terms used in sales contracts to determine the responsibilities of buyers and sellers in a shipment. There are several points addressed by the various INCOTERMS:

1. Delivery: INCOTERMS specify when and where the seller transfers the goods to the buyer. For example, the terms FOB (Free On Board) and EXW (Ex Works) determine whether the seller is responsible for delivering the goods to the port or factory.
2. Transportation: INCOTERMS outline who is responsible for arranging and paying for transportation, such as the terms CIF (Cost, Insurance, and Freight) and DDP (Delivered Duty Paid).
3. Insurance and Risk: INCOTERMS establish when the risk of loss or damage to the goods transfers from the seller to the buyer. For instance, the terms CFR (Cost and Freight) and DAP (Delivered at Place) determine at which point the buyer becomes responsible for insurance and risk.