What do Incoterms primarily define in international trade contracts?

Incoterms, which stands for International Commercial Terms, primarily define the delivery points and responsibilities of each party involved in international trade contracts. They outline the specific terms related to the shipment of goods, including who is responsible for shipping, insurance, tariffs, and when the risk transfers from the seller to the buyer. This helps to clarify the obligations of both parties and ensures that there is a mutual understanding of the logistics involved in the transaction.

In addition to detailing delivery points, Incoterms also specify the costs associated with transporting goods, which is essential for preventing disputes and ensuring efficiency in logistics. This clarity is crucial in international trade, where differing regulations and practices can complicate transactions.

While customs regulations and legal frameworks may play a significant role in international trade, they are not the primary focus of Incoterms. Payment terms are also separate from what Incoterms cover, as they pertain more to the financial aspects of transactions rather than the logistics and responsibilities involved in the delivery of goods.