What are Incoterms?

Incoterms, or International Commercial Terms, are specialized terms adopted to facilitate international trade by providing a standardized set of rules regarding the responsibilities of buyers and sellers. The key aspect of Incoterms is that they establish clear guidelines on the delivery of goods, outlining who is responsible for transportation, insurance, customs clearance, and other logistical aspects associated with shipping goods across borders.

The correct choice emphasizes that Incoterms promote uniformity in international trade with 11 standard terms. These terms are recognized around the world, helping to reduce confusion and misinterpretations in international sales contracts, thereby fostering smoother transactions. Each term defines specific obligations, liabilities, and risks for both parties involved in the transaction, thereby creating a more predictable legal framework in the realm of international commerce.

Contextually, the other choices do not accurately capture the essence of Incoterms. For instance, the notion that they summarize local laws is misleading, as Incoterms are not tied to specific local legislation but rather serve as a universal language for international contracts. Guidelines for resolving trade disputes do not effectively describe Incoterms, as their primary purpose is to outline the roles and responsibilities in shipping rather than settle disputes. Similarly, stating that Incoterms govern domestic sales only is incorrect, as