Incolearn Learning more about Incoterms 2000

EX WORKS (EXW) PART IV – Summary and Conclusion According to the International Chamber of Commerce (ICC), the first Incoterm, Ex Works (EXW), at a named place, is described as “the seller delivers when he places the goods at the disposal of the buyer at the seller’s premises or another named place (i.e. works, factory, warehouse etc) not cleared for export and not loaded on any collecting vehicle”. Previously we introduced EXW and then considered Professor Jan Ramsberg’s 10 obligations that the buyer and the seller might need to fulfil in terms of EXW. Ramsberg is the chairman of the ICC Working Party on Trade Terms. In accordance with the description of EXW for the seller, this term represents a minimum obligation while for the buyer it represents a maximum obligation since the buyer is responsible for the costs and risks for the collection and removal of the goods from the seller’s premises. If the buyer wants the seller to be responsible for the loading of the goods on the vehicle of departure and also for the costs, it should be stipulated in the contract of sale. It is imperative that such a term should only be used if the buyer is able either directly or indirectly to fulfil all export formalities. EXW is the sole E-term also known as a departure term, a multi-modal transport term which means that it can be used for any form of transport i.e. road, rail, sea and air. In summary, the seller’s primary duty is to place the goods at the disposal of the buyer at the named place, while the buyer’s primary duty is to take delivery of the goods when they have been placed at the named place. The documents required in terms of the contract of sale should be the commercial invoice and the buyer’s receipt, while other documents that could be considered for stipulation in the contract of sale could be any documents needed for the export or transit of the goods through any country or for import clearance. The three critical points of EXW are: firstly, that the buyer must arrange the carriage; secondly, that the risk transfers from the seller to the buyer when the goods are placed at the disposal of the buyer; and thirdly, that the cost transfers from the seller to the buyer when the goods are placed at the disposal of the buyer i.e. at a named place. Next week’s issue will define the second Incoterm – Free Carrier (FCA). INCOLEARN is prepared by Riaan de Lange of South African Tariff & Trade
Solutions CC (SATTS), a lecturer in Economics at the University of Pretoria.