Learning more about Incoterms®2010

Ex Works, or EXW (named place of delivery), is the first Incoterms (it is always plural) for the class ‘Rules for any Mode or Modes of Transport’, which means that it could be used irrespective of the selected mode of transport and could even be used for more than one mode of transport. This term is more suitable for domestic trade and for international trade the Free Carrier (FCA) is more suitable. (FCA is the second of the Incoterms that will be discussed.) According to the International Chamber of Commerce (ICC), the first Incoterms – 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”. 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 agreed point at the seller’s premises. Thus Ex Works of EXW (named place of delivery, and named point of delivery at place). With the changes in the Ex Works Incoterms as articulated in the “Guidance Notes”, you would be well advised to clearly specify the delivery point within the named place of delivery. The ICC recommends that extreme care be exercised when transacting in Ex Works. The ICC cites the following for its cautionary: • There is no obligation on the seller to load the buyer’s goods; • There is no obligation on the seller to provide assistances with export formalities; and • There is no obligation on the buyer to provide the seller with any information with respect to the export of the goods. The message, quite simply, is that EXW be used for domestic trade and FCA for international trade, and if EXW is selected, both the seller and buyer must exercise extreme caution and be comprehensive in their stipulation of risk and obligation in their contract. In next week’s issue we will define Ex Works (EXW) – The Seller’s Obligations.