Learning more about Incoterms 2000

FREE ALONGSIDE SHIP (FAS) PART III – The Buyer’s Obligations According to the International Chamber of Commerce (ICC) the third Incoterm Free Alongside Ship (FAS), at a named port of shipment, is described as “the seller delivers when the goods are placed alongside the vessel at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of, or damage to, the goods from that moment”. Professor Jan Ramsberg, the chairman of the ICC Working Party on Trade Terms, identified 10 obligations that the buyer might need to fulfil in term of Free Alongside Ship: (1) the payment of the price; (2) licences, authorisations, and formalities; (3) contacts of carriage and insurance; (4) taking delivery; (5) transfer of risks; (6) division of costs; (7) notice to the seller; (8) proof of delivery, transport documents or equivalent electronic message; (9) inspection of the goods; and (10) other obligations. The payment of the price requires the buyer to pay the price stipulated in the contract of sale. In respect of the licences, authorisations and formalities, the buyer is required at his own risk and cost to obtain any import licence or such documentation and authorisation, for their transit through any country. The buyer must contract the carriage for the goods at his own expense from the named port of shipment. The buyer has no obligation in respect of the contracts of insurance. The buyer must take delivery of the goods when it has been delivered in accordance to the contract of sale. As for the transfer of risks, the buyer bears all risks of loss of or damage of goods from the time of delivery, and from the agreed delivery date. In relation to the division of costs the buyer is responsible for all costs relating to its delivery. This includes any additional costs incurred due to his failure to nominate a carrier, or the nominated person fails to take delivery of the goods or if the buyer fails to give sufficient notice to the seller, and, where applicable, all duties, taxes and other charges payable upon import of the goods and for their transit through any country. The buyer must give sufficient notice to the seller of the vessel name, loading point and required delivery time. The buyer must accept the proof of delivery in accordance with the contract of sale. The buyer must pay the costs of any pre-shipment inspection of the goods, except when the authorities of the country of export, mandate such inspection. As for other obligations, the buyer must pay all costs incurred to obtain the relevant documentation or equivalent electronic messages and reimburse the seller for any costs incurred in rendering such assistance. Next week’s issue we will provide a summary of the Free Alongside Ship (FAS) term.