The issue of title to the goods is related to that of revenue recognition, which matters to those organisations who want the best figures in their financial reports. Revenue recognition is defined by accounting standards such as GAAP, and the point of delivery as defined by the Incoterms rule is one factor in the decision on this matter. The Incoterms edition analyses responsibilities by reference to activities associated with the export clearance process, the transport process and the import clearance process.
Responsibility for security policy rests with designated persons both at the ship level and for shipping terminals. Example 1: For some types of cargo, costs arise from stowing the cargo on the vessel. Caution: By qualifying a rule, there is the danger of introducing ambiguity. In general, the rules are silent on the matter of insurance — the buyer and the seller each decide whether they wish to insure the cargo for that part of the journey for which they bear the risk of loss or damage.
Search Incoterms Explained:. Frequently asked questions If you have any questions about Incoterms not addressed on this website, please get in touch. Call International Trade Blog. Under Incoterms , EXW can be used for any mode of transport. Using Ex Works Although EXW is frequently used for exports from the United States, it is almost universally reviled by those who make a living at training others about the use of Incoterms.
Learn More about Incoterms Rules If you are regularly involved in international trade, you need to understand the risks and responsibilities for each of the Incoterms rules, not just pick the term you always use. Subscribe to the International Trade Blog Be among the first to know every time a new article has been posted. It's absolutely free! About Us Contact Us Jobs. Shipping Solutions. Features Pricing Documents Annual Maintenance. Trade Wizards. International contract agency. Irene Damiani More posts by.
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Copyright Studio Legale Avv. Domenico Damiani Via G. Send a message. However, if the buyer requests, at its risk and cost, the seller must provide the buyer with information in its possession that the buyer needs to arrange its insurance.
If there is any information which the buyer requests that is not already known to the seller, logically the seller can, and probably would, choose to assist.
If the goods are lost or damaged in transit, and the buyer therefore refuses to pay for them, in essence breaching the contract, the seller will want to have a fall-back of being able to claim on its own marine insurance.
Despite having the risk of loss or damage to the goods from the delivery point, the buyer does not have an obligation to the seller to insure the goods. Whether the buyer chooses to insure the goods or bear the risk themselves is entirely their choice. Because the seller delivers when it makes the cargo available to the buyer to collect, the seller has no obligation to provide the buyer with any delivery or transport document.
Because the buyer receives the goods from the seller it must provide the seller with appropriate evidence of having taken delivery. The form of that evidence is a matter to be agreed in the contract of sale to suit both parties. EXW is more suited to domestic transactions rather than international transactions. In domestic transactions the seller has no obligations as there are not likely to be any clearances required.
In domestic transactions the buyer has no obligation to the seller as there are not likely to be any clearances required. The seller must also package the goods, at its own cost, unless it is usual for the trade of the goods that they are sold unpackaged, such as in the case of bulk goods. In all rules there is no obligation from the buyer to the seller as regards packaging and marking. There can in practice however be agreed exceptions, such as when the buyer provides the seller with labels, logos, or similar.
The seller must pay all costs until the goods have been delivered under A2, except any costs the buyer must pay as stated in B9. The buyer must pay all costs from the time the goods have been delivered under A2, reimburse the seller for any costs they incurred providing the buyer with any assistance or information which the buyer needed to arrange transport, insurance or export and import formalities.
The buyer must pay any and all duties, taxes, other charges and costs of any customs and other export formalities required if the goods are exported. The buyer also must pay any additional costs incurred either if they have failed to take delivery of the goods when they have been placed at their disposal or if they have failed to give the seller appropriate notice provided the seller had clearly identified the goods as being the contract goods.
The seller must give notice to the buyer which is needed for the buyer to take delivery of the goods. The form of this notice should be included in the terms and conditions of the contract, detailing whether a brief email or some manner of more formal notice is agreed.
This means for example that if the agreed delivery place is a large bulk storage facility, the buyer may nominate a particular area which is outside a restricted zone, in which it is not allowed to operate its own equipment with its own personnel, so that it can load its vehicle.
It also means for example where the delivery period is a particular calendar month, and the buyer wants to take delivery on the 17 th day of that month, the buyer must give sufficient notice of this to the seller.
Both such matters would usually be detailed in the sales contract. Its origin in common usages go back long before that.
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