Question

role of incoterms in negotiating contracts

Answer 1

Incoterms refer to International Commercial Terms. They are a series of pre-defined commercial terms that have been published by the ICC – International Chamber of Commerce.

Incoterms play an important and significant role in negotiating contracts, especially international contracts. This is because incoterms will prevent all sorts of confusion in an international contract as obligations of buyers and sellers are clarified. Incoterms help parties involved in a negotiation contract to not only understand each other but also to understand the exact terms of business arrangements as is being stipulated in the contract. Thus incoterms help to reduce the potential for seller-buyer misunderstandings.