What is EXW? – EXW incoterms 2020 (Ex Works) is the latest version of EXW ICC’s Incoterms. Ex Works is belong to group E (Departure), the seller makes the goods available to the buyer at the delivery point indicated by the seller. The seller is not obliged either to customs or export clearance and does not bear the risk and costs of loading.
What is EXW – Ex Works?
Ex Works means that the seller delivers the goods to the buyer:
- When it places the goods at the disposal of the buyer at a named place (like a factory or warehouse), and
- That named place may or may not be the seller’s
For delivery to occur, 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.
This rule may be used irrespective of the mode or modes of transport, if any, selected.
The parties need only name the place of delivery. However, the parties are well-advised also to specify as clearly as possible the precise point within the named place of delivery. A named precise point of delivery makes it clear to both parties when the goods are delivered and when risk transfers to the buyer; such precision also marks the point at which costs are for the buyer’s account.
If the parties do not name the point of delivery, then they are taken to have left it to the seller to select the point “that best suits its purpose.” This means that the buyer may incur the risk that the seller may choose a point just before the point at which goods are lost or damaged. It is best for the buyer therefore to select the precise point within a place where delivery will occur.
EXW is the Incoterms rule which imposes the least set of obligations on the seller. From the buyer’s perspective, therefore, the rule should be used with care for different reasons as set out below.
In Incoterms 2020 EXW delivery happens and risk transfers when the goods are placed, not loaded, at the buyer’s disposal. However, risk of loss or of damage to the goods occurring while the loading operation is carried out by the seller, as it may well be, might arguably lie with the buyer, who has not physically participated in the loading. Given this possibility, it would be advisable, where the seller is to load the goods, for the parties to agree in advance who is to bear the risk of any loss of or damage to the goods during loading.
This is a common situation simply because the seller is more likely to have the necessary loading equipment at its own premises or because applicable safety or security rules prevent access to the seller’s premises by unauthorized personnel. Where the buyer is keen to avoid any risk during loading at the seller’s premises, then the buyer ought to consider choosing the FCA rule (under which, if the goods are delivered at the seller’s premises, the seller owes the buyer an obligation to load, with operation remaining with the seller). Seller has no obligation to organize export clearance of clearance within third countries through which the goods pass in transit.
Indeed, EXW may be suitable for domestic trades, where there is no intention at all to export the goods. The seller’s participation in export clearance is limited to providing assistance in obtaining such documents and information as the buyer may require for the purpose of exporting the goods. Where the buyer intends to export the goods and where it anticipates difficulty in obtaining export clearance, the buyer would be better advised to choose the FCA rule, under which the obligation and cost of obtaining export clearance lies with the seller.
EXW’s – Ex Works’ Cost and obligation
Blue: Cost/ Yellow: Risk/ Orange: Insurance
The seller bears the costs
- Checking operations (checking quality, measuring, weighing, counting the goods);
- Additional, related to the damage to the goods before delivery;
- Packaging and labeling, unless they are not required by the chosen type of transport. The seller’s obligations are presented below:
- The seller delivers the goods to the place specified by the buyer, on the agreed date or within the agreed period.
- The seller delivers the goods together with the commercial invoice in accordance with the contract of sale and any other evidence of conformity with the documents, which were mentioned in the contract (in paper or electronic form).
- At the buyer’s request, provides the risk and cost of assistance in obtaining the authorization necessary for the export of goods
- Notifies the buyer of the date the goods are left at the buyer’s disposal.
- Provides the buyer with all assistance in obtaining any documents necessary for completing export, import, or transit clearance formalities.
- The seller provides the buyer with any information necessary for obtaining insurance (at this expense and request).
The buyer bears costs
- Related to import, export, and transit clearance formalities;
- Related to the goods from the moment of its delivery following the contract by the seller;
- Customs duties, taxes, and other charges;
- Additional, incurred by failing to take delivery of the goods;
- In addition, the buyer reimburses the seller for the costs incurred by providing to the buyer assistance with documentation for export, import or transit
The buyer’s obligations
- The buyer, at his own risk and cost, obtains documentation authorizing him to export and carry out all for export, import, or transit clearance formalities
- Carriers out all import, export, and transit clearance formalities
- Organizes the transport of goods from the place of delivery.
- Takes the delivery of the goods and provides the seller with evidence of having taken delivery.
- From the moment the goods are delivered in accordance with the contract, he bears all the costs and risks of the goods.
- Unloads and loads the goods in the export and import
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