Learning more about Incoterms®2010

According to the International Chamber of Commerce (ICC) the first Incoterm – Ex Works (EXW), at a named place of delivery – means that “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). The seller does not need to load the goods on any collecting vehicle, nor does it need to clear the goods for export, where such clearance is applicable”. The ICC’s Incoterms®2010 identifies ten obligations that the buyer might need to fulfil in terms of Ex Works: (1) general obligations of the buyer; (2) licences, authorisations, security clearances and other formalities; (3) contract of carriage and insurance; (4) taking delivery; (5) transfer of risks; (6) allocation of costs; (7) notices to the seller; (8) proof of delivery; (9) inspection of goods; and (10) assistance with information and related costs. The general obligations of the seller are essentially the payment of the price as stipulated in the contract of sale, and providing any stipulated documents or their electronic equivalent. In respect of licences, authorisations, security clearances and other formalities, the buyer is required as his own risk and cost, to obtain such. The buyer has no obligation with respect to the contract of carriage, or to the contract of insurance. As for taking delivery, the buyer must take delivery of the goods when they have been delivered in accordance with the contract of sale. As for the transfer of risks, all risks of loss or damage subsequent from the time of delivery are the buyer’s. In relation to the allocation of costs, the buyer is responsible for all costs relating to the goods subsequent to their delivery, he must settle any additional costs incurred as a result of the buyer’s failure to take delivery, settle any charge of duty with respect to export, and also settle any costs incurred by the seller for assistance provided. The buyer must, if entitled by the contract of sale, give sufficient notice to the seller as to when and where the goods must be placed at his disposal. As for the proof of delivery, the seller must be provided with “appropriate evidence” by the buyer that the latter did indeed take delivery. In line with the security stipulations that have been incorporated in the latest revision, the buyer is responsible for any costs associated with the inspection of the goods. As for the assistance with respect to information and related costs, the buyer must advise the seller of any security-related requirements. The cost of such compliance would, through reimbursement, be for the buyer’s account. In next week’s issue we will provide a summary of Ex Works (EXW).