Incoterms are used to clarify which party bears costs and risks in international shipments.

• A. They set product specifications for shipments.
• B. They are only used for domestic shipments.
• C. They clarify which party bears costs and risks in international shipments.
• D. They decide the exact delivery date.

Answer: (C)

Incoterms define who bears costs and who bears risk at different stages of an international shipment and specify when the risk transfers from seller to buyer. They allocate responsibilities for transport, insurance, duties, and customs clearance based on the chosen term (such as FOB, CIF, or DAP). They are not about product specifications, they aren’t limited to domestic shipments, and they don’t fix the exact delivery date. Because they focus on who pays and who bears risk during international movement, the statement that they clarify which party bears costs and risks in international shipments is the best fit.