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An Overview: EXW ( Ex Works')

International Commercial Terms (Incoterms) are standardized trade terms used in sales contracts to clarify responsibilities around transportation costs, insurance, taxes/duties, and risk of loss or damage. There are different Incoterms depending on mode of transportation, such as sea/waterways versus other modes. Some common Incoterms include EXW (seller's premises), FCA (named place), CPT (carriage paid to), CIP (carriage and insurance paid), DAT (delivered at terminal), DAP (delivered at place), and DDP (delivered duty paid).

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Abhishek Singh Chauhan
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141 views4 pages

An Overview: EXW ( Ex Works')

International Commercial Terms (Incoterms) are standardized trade terms used in sales contracts to clarify responsibilities around transportation costs, insurance, taxes/duties, and risk of loss or damage. There are different Incoterms depending on mode of transportation, such as sea/waterways versus other modes. Some common Incoterms include EXW (seller's premises), FCA (named place), CPT (carriage paid to), CIP (carriage and insurance paid), DAT (delivered at terminal), DAP (delivered at place), and DDP (delivered duty paid).

Uploaded by

Abhishek Singh Chauhan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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An overview

International Commercial Terms (‘Incoterms’) are internationally recognized standard trade terms used in sales
contracts. They’re used to make sure buyer and seller know:

 Who is responsible for the cost of transporting the goods, including insurance, taxes and duties
 Where the goods should be picked up from and transported to
 Who is responsible for the goods at each step during transportation

What the terms mean

Incoterms are used in contracts in a 3-letter format followed by the place specified in the contract (e.g. the port
or where the goods are to be picked up).

There are different terms for sea and inland waterways (e.g. rivers and canals) compared to all other modes of
transport.

EXW (‘Ex Works’)

The seller makes the goods available to be collected at their premises and the buyer is responsible for all
other risks, transportation costs, taxes and duties from that point onwards. This term is commonly used when
quoting a price.

Example
Goods are being picked up by the buyer from the seller’s premises in Birmingham. The term used in the contract is ‘EXW
Birmingham’.

FCA (‘Free Carrier’)

The seller gives the goods, cleared for export, to the buyer’s carrier at a specified place. The buyer is then
responsible for getting transported to the specified place of final delivery. This term is commonly used for
containers travelling by more than one mode of transport.

CPT (‘Carriage Paid To’)

The seller pays to transport the goods to the specified destination. Responsibility for the goods transfers to the
buyer when the seller passes them to the first carrier.

CIP (‘Carriage and Insurance Paid’)

The seller pays for insurance as well as transport to the specified destination. Responsibility for the goods
transfers to the buyer when the seller passes them to the first carrier.

CIP (‘Carriage and Insurance Paid’) is commonly used for goods being transported by container by more than
one mode of transport. If transporting only by sea, CIF is often used (see below).

DAT (‘Delivered at Terminal’)

The seller pays for transport to a specified terminal at the agreed destination. The buyer is responsible for the
cost of importing the goods. The buyer takes responsibility once the goods are unloaded at the terminal.
DAP (‘Delivered at Place’)

The seller pays for transport to the specified destination, but the buyer pays the cost of importing the goods.
The seller takes responsibility for the goods until they’re ready to be unloaded by the buyer.

DDP/DTP (‘Delivered Duty Paid’)

The seller is responsible for delivering the goods to the named destination in the buyer’s country, including all
costs involved.

FAS (‘Free Alongside Ship’)

The seller puts the goods alongside the ship at the specified port they’re going to be shipped from. The seller
must get the goods ready for export, but the buyer is responsible for the cost and risk involved in loading them.

This term is commonly used for heavy-lift or bulk cargo (e.g. generators, boats), but not for goods transported
in containers by more than one mode of transport (FCA is usually used for this).
FOB (‘Free on Board’)

The seller must get the goods ready for export and load them onto the specified ship. The buyer and seller
share the costs and risks when the goods are on board. This term is not used for goods transported in
containers by more than one mode of transport (FCA is usually used for this).

CFR (‘Cost and Freight’)

The seller must pay the costs of bringing the goods to the specified port. The buyer is responsible for risks
when the goods are loaded onto the ship.

CIF (‘Cost, Insurance and Freight’)

The seller must pay the costs of bringing the goods to the specified port. They also pay for insurance. The
buyer is responsible for risks when the goods are loaded onto the ship.

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