Terms of delivery refers to the agreed-upon conditions and processes that govern the shipment and arrival of goods or services from a seller to a buyer. It outlines the specific obligations, responsibilities, and rights of both parties involved in a commercial transaction.
In international trade, terms of delivery are typically specified by Incoterms, a set of internationally recognized rules established by the International Chamber of Commerce (ICC). Incoterms define the division of costs, risks, and tasks between the seller and the buyer in the process of transferring goods between countries. These terms clearly outline who is responsible for transportation, insurance, customs clearance, and the transfer of risk at different stages of the delivery process.
For instance, terms like EXW (Ex Works), FOB (Free On Board), CIF (Cost, Insurance, and Freight), and DDP (Delivered Duty Paid) are commonly used in international trade to establish the terms of delivery. Each term represents a different set of responsibilities and costs for the seller and the buyer.
Comprehensive terms of delivery ensure that both parties are aware of their obligations and rights from the point of sale to the moment the goods are received or services rendered. This promotes transparency, prevents disputes, and ensures a smooth and efficient delivery process.
