What do incoterms like EXW and DDP primarily define in cross-border shipments?

• A. They define responsibilities, costs, and risks during cross-border shipments for buyers and sellers.
• B. They specify payment terms.
• C. They determine product packaging standards.
• D. They set breach remedies.

Answer: (A)

Incoterms primarily allocate who is responsible for what, who pays for each leg of the journey, and who bears risk at different points during cross-border shipments. Terms like EXW and DDP illustrate this spectrum: EXW puts most obligations on the buyer—the seller makes the goods available and minimal steps are taken by the seller—while the buyer handles export/import clearance, transport, insurance, and duties. DDP does the opposite, with the seller taking on nearly all costs and responsibilities up to delivering the goods to the named destination with duties paid. In other words, these terms define responsibilities, costs, and risks for buyer and seller. They do not set payment terms, packaging standards, or breach remedies.