EX WORKS (EXW) PART I – Introducing Ex Works According to the International Chamber of Commerce (ICC) the first Incoterm – Ex Works (EXW), at a named place, is defined as “the seller delivers when he places the goods at the disposal of the buyer at the seller’s premises or another named placed (i.e. works, factory, warehouse, etc) not cleared for export and not loaded on any collecting vehicle”. It is evident from this description that for the seller the term Ex Works represents a minimum obligation while for the buyer it represents a maximum obligation since the buyer is responsible for the costs and risks related to 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 contact 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. Ex Works is the sole E-term also known as a departure term, and is also a multi-modal transport term which means that it can be used for any form of transport i.e. road, rail, sea and air. According to Professor Jan Ramsberg, the chairman of the ICC Working Part on Trade Terms, 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 (3) critical points of Ex Works 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. In next week’s column we will focus on the seller’s obligations under Ex Works.
