How to choose an Incoterms® rule

Start from what each side can actually do

A trade term should describe the deal you can actually perform, not the one that sounds most familiar. Before looking at codes, answer these questions with the other party:

• Which side can handle export formalities in the seller's country (for example, through a local customs broker)?
• Which side can handle import formalities and pay import charges in the buyer's country?
• Who gets better freight rates or wants to choose the carrier for the main journey?
• Who wants to control cargo insurance, and how much cover is needed?
• How will the goods travel: only by sea or inland waterway from port to port, or by road, rail, air or a combination?

Turn the answers into a shortlist

The five questions above are the same ones the rule chooser on this site asks. It filters the rules using our verified cost data and explains, for each suggestion, which of your answers it satisfies and which it does not.

If no rule fits every answer, two of your answers probably pull in different directions. Revisit the answer that matters least and run the chooser again.

Write the term down precisely

A three-letter code on its own leaves room for argument. In the contract, on orders and on invoices, write the code, the edition year and a precise named place — a full address or a specific terminal rather than just a city.

Keep the named place consistent across the quote, the order confirmation, the invoice and the transport documents. A mismatch between documents invites disputes about who pays.

Check the rest of the contract

A trade term is one clause in a sales contract. Before signing, check that the contract also clearly covers payment terms, when ownership passes, what happens if goods are late or damaged, and any costs your chosen rule leaves open (marked “Depends” on our rule pages).

This guide is general information. For high-value or unusual shipments, take advice from a freight forwarder, customs broker or lawyer.