Transaction Mode

Transaction Mode in foreign trade specifically refers to the trade terms (Incoterms) agreed upon by the buyer and seller, such as FOB, CIF, EXW, etc., to clarify the place of delivery, the point of risk transfer, responsibilities for transportation and insurance, and cost bearing. It directly determines the quotation structure and contract terms, and is a core element of foreign trade contracts. Usage scenarios include quoting, signing contracts, arranging logistics, and handling disputes. Notes: The Incoterms version (e.g., Incoterms 2020) must be specified to avoid misunderstandings of responsibilities due to version differences; Transaction Mode is not equivalent to payment method (e.g., T/T, L/C), which is a method of fund settlement; the seller's obligations vary greatly under different transaction modes, e.g., EXW imposes the least responsibility on the seller, while DDP imposes the most. It is often used interchangeably with 'price terms', but Transaction Mode emphasizes the full picture of trade conditions. Correct selection of transaction mode can control risks and reduce costs, and must be decided comprehensively based on transportation capacity, cargo characteristics, and buyer requirements.