Are International Commerce Terms (Incoterms) used in Japan?

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International Commerce Terms (or Incoterms as they are often called) are a set of pre-defined commercial terms that are commonly used in international contracts between businesses.  Many of the terms are three letter abbreviations that appear as common clauses in commercial contracts.  Japanese business that rely on import or export of goods will regularly include these standard terms in agreements with foreign buyers or suppliers.

Incoterms are especially useful regarding the shipping of products internationally.  For example, shipping products on an CIF basis indicates that the cost and risk of shipping the products will be borne by the seller and the seller must also provide insurance for the products during transit.  On the other hand, shipping products on a FOB basis means that once seller loads the products onto the ship for transport, the rest is the buyer’s responsibility.

Understanding and correctly interpreting Incoterms is an important part of any international business transaction and it is always best to consult with legal counsel before signing any contract that includes them.  If you have any questions about contracting in Japan, please contact our office to set up a legal consultation.