Trade terms are specific phrases and definitions used in commerce to clarify the responsibilities and expectations of buyers and sellers. They help in understanding the conditions of sale, including pricing, delivery, and risk management. Common trade terms include FOB (Free on Board), CIF (Cost, Insurance, and Freight), and EXW (Ex Works), each indicating different points of responsibility in the shipping process. These terms are essential for international trade, as they help prevent misunderstandings and disputes between parties from different countries. By clearly defining who pays for shipping, insurance, and other costs, trade terms facilitate smoother transactions and foster trust in business relationships.