Incoterms – EXW

Incoterms – EXW
EXW (Ex works) means that the seller fulfils his obligation to deliver when he has made the goods available at his premises (i.e. works, factory, warehouse, etc.) to the buyer. In particular, he is not responsible for loading the goods on the vehicle provided by the buyer or for clearing the goods for export, unless otherwise agreed. The buyer bears all costs and risks involved in taking the goods from the seller’s premises to the desired destination. This term thus represents the minimum obligation for the seller and the maximum involvement of the buyer in the movement of the goods from the point of ‘works’.
The statement ‘EXW’ must be qualified to give the address of the ‘works’, which may be a factory, site or warehouse etc. Care should be taken to taken to note that the actual point of manufacture might well very from the place where the seller operates their commercial undertaking.
Under INCOTERMS 2000, risk and responsibility pass from the seller to the buyer when the cargo is made available on the ground at the ‘works’, at or on the agreed future date or future time, uncleared through customs.
The seller must give advance notice of availability (how much notice would have to be predetermined e.g. through the sales contract). This point is important as the buyer assumes liability for all risks from the time of availability on the ground and is therefore exposed from that moment up to the event of collection. During this period, the buyer is liable for all risks to the cargo, even though they are not yet under the buyer’s physical control, and this is further aggravated by the fact that the goods are generally uninsured throughout this period too.
The buyer and seller should only consider EXW when the buyer can actually arrange the customs clearing prior to export and for the immediate collection of the cargo on availability. The Seller should note that the export of the goods is NOT guaranteed under EXW and the buyer may, for example, opt to keep the goods in the country of origin.
Although EXW is a popular term it remains complex. EXW is rarely compatible with documentary credits (for example) – and the term FCA offers a more manageable alternative.