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As part of your import or export sales negotiations, you will be required to include international commercial terms (Incoterms) in your sales contract. These terms are a series of internationally recognised sales-related trade terms that clearly define the costs, risks, and obligations of both parties (the buyer and the seller). Using Incoterms might seem daunting at first, but you will soon realise how much easier they make the international buying and selling process.

For each stage of the transportation, International Commercial terms clearly stipulate:

  • Which party must take responsibility for transport costs (including taxes, insurance, and duties);
  • Which party is responsible for loading and unloading the goods; and
  • Which party bears the risk of loss?

For quotation purposes, it is important to familiarise yourself with the most up-to-date incoterms. You can read more about this in our blog article, Incoterms: A Guide to international buying and selling terms.

Before finalising your sales contract to send to a buyer, or signing a seller’s contract, make sure you review the quotation thoroughly. A thorough quotation should include various Incoterm options. Figure 1 below illustrates how using different Incoterms on a formal quotation influences cost whilst providing clarity to both the buyer and seller on what these costs entail. Each row of the quotation illustrates a different term option, along with example text to use on your invoice. The example includes colour-coded explanations of key sections of the quotation.

Note: It is not necessary to include every incoterm on your quotation. Your choice depends on the costs you are willing to bear and the amount of risk you are willing to take as well as the other party’s requirements.

It is however essential that terms are always written in the correct format which is: Rule – Point of transfer – Incoterms of relevance.

Need assistance with Incoterms, or other import- and export-related matters? Contact our friendly consultants on 087 550 1038, or get in touch via our website.

Tracy Venter

Tracy transitioned from industry to founding Import Export License in 2011, aiding importers and exporters with customs compliance. In 2014, she launched Trade Logistics, focusing on supporting startups and SMMEs in international trade. Since then, Tracy's team has assisted 35,000+ businesses, reaching 32,000 traders monthly through newsletters. She's contributed to publications like Entrepreneurs Magazine and SME Toolkit, spoken at trade events, and participated in customs forums. Import Export License helped with the pilot trial to launch customs' new online registration platform (RLA). Through Trade Logistics she has launched 3 online import-export training courses. She holds an Honours degree from Stellenbosch University and a Cum Laude Masters from Middlesex University. In her spare time, Tracy enjoys running, mountain biking, playing piano, and cherishing moments with her husband and four children.