Answer to Question #268203 in Economics for jenan

Question

How can Incoterms be used as a competitive advantage?

Answer 1

In any international transaction, there are many conditions that must be agreed upon: for example, who organizes the delivery, when and where the seller transfers the goods to the buyer, who will be responsible if something happens to the cargo during transportation.

It is long and difficult to discuss and write separately each condition in the contract. In addition, the contract is read not only by the buyer and seller but also by third parties:

Logisticians.

Brokers.

International freight workers.

Financial specialists and accountants of counterparties.

Bank employees.

Customs officers.

Tax and insurance inspectors.

All of these people work in different places and speak different languages. The Incoterms rules help them understand the terms of delivery in the same way, and the buyer does not need to agree on the terms with the seller separately. Instead, they choose a suitable term from the list. Each term already contains a fixed set of conditions.