What is normal goods

EXW

Abbreviation for Ex Works ... Named Place, ex works (named place of delivery), contractual formula of the Incoterms developed by the ICC for foreign trade transactions. (In practice, too Ex factory (Factory) or Ex Mill (Mill), Plantation (Plantation), Warehouse (Warehouse) etc. used. Nevertheless, the addition EXW [ICC 2010 or Incoterms®2010] would always be advisable).

As a collection clause, EXW is the minimum obligation for the seller; for this, EXW is in fact a domestic transaction. He must deliver the goods on his premises (sellers premises) or at a customary place at the agreed or customary time in packaging suitable for transport (e.g. suitable for sea transport) ready for loading. The costs of packaging are therefore to be borne by the seller (Clause text A.9). The seller must notify the buyer of everything necessary so that he can take over the goods - this will relate to the place and time at which the goods are to be made available (Clause A.7). In the purchase contract, however, it can also be agreed that the buyer himself determines the place and time of acceptance (B.7) - this depends on the individual case; then he must notify the seller in an appropriate manner. “Appropriate” means that the fastest possible and timely communication method is to be chosen, nowadays probably by e-mail or fax, and in advance by telephone. Within most European countries, normal mail should be sufficient, but certainly not for overseas traffic.

The place of acceptance (place of delivery) (see the addition "ex works") should be determined as precisely as possible, e.g. "ex works (EXW), Reutlingen branch, ramp 5, Incoterms® 2010" - with time details if necessary. A well-known factory in a small town would also be found without specification (it gets more difficult if this is the administrative headquarters, but the collection point is completely different), but if a less well-known exporter says "EXW Berlin", then the buyer would have solve a search task. Consequently: the more precise the location, the better - this applies to all Incoterms.

Making available does not mean loading; this is basically a matter for the buyer (clause text EXW A.4). Since the seller usually has the necessary loading equipment (e.g. a forklift), he will in practice also leave this to the buyer - formally at his own expense and risk, because the risk of loss and damage and costs are already transferred to the buyer if the seller has made the goods available for collection (clause text EXW A.5 / B.5). This requires, among other things, the clear specification (segregation) of which of the large number of boxes stored on ramp 5 belong to the lot to be loaded.

In practice, EXW is often agreed, but delivery as under FCA, i.e. the seller often takes on deliveries to the carrier as a free service, even outside his factory premises. not infrequently he even organizes the freight contract. Regardless of this, this is done at the risk of the buyer. An addition such as “EXW loaded” does not change anything, because the risk is transferred according to the text of the clause when it is made available. If the exporter helps with loading (or his people), the risk lies solely with the buyer, which is very often not known. In order to avoid problems, FCA would be wiser, because then the risk of the loading process is clearly regulated (see FCA) and there are no misunderstandings.

The buyer must take over the goods as announced and prove this to the seller in a suitable manner (i.e. not the other way around), e.g. by means of a receipt (B.8). This results in the obligation to pay the purchase price because the goods have been delivered (A4 / B4). In the case of EXW, the exporter will have to ensure that he receives a reliable export certificate from the buyer / forwarder, if necessary, because the delivery of goods is otherwise subject to value added tax.

The buyer is responsible for loading, removal and clearance at both the export and exit customs office (A.2 / B.2). This can be problematic if, for example, an export permit is required that only a resident in Germany can obtain (because of the possible sanctions for violations). The application note on EXW also explicitly states that the clause is suitable for national trade in goods and that FCA is more suitable for international trade.

If the loading is delayed, storage costs may arise for the buyer (B.6). The clause should therefore not be agreed if it is not possible for the buyer to directly or indirectly complete the export formalities. It is not uncommon for an agreement to be made “EXW, cleared for export” so that the seller does the export clearance. This is particularly useful if the exporter is a so-called approved consignor / exporter and is allowed to carry out the export clearance himself.

Any quality checks prior to loading (pre-shipment inspection, PSI) that are not required for acceptance (e.g. import-related controls) are borne by the buyer, unless the sales contract stipulates otherwise (A.9 / B.9). The seller must provide him with any assistance in obtaining the necessary documents, but can demand reimbursement for this (A.10 / B.10). Duties, taxes and other charges must be borne by the buyer (B.6). (For example, the importer would have to pay for the issuance of a certificate of origin as well as the legalization costs of documents at the consulate of the importing country. In practice, this is often "given", ie the exporter does not invoice this separately. However, these costs are often insufficiently calculated - that is then deducted from the margin.)

With regard to the transport and insurance contract, neither side has any obligations (A.3 / B.3). EXW means that the buyer should bear the risk and costs of the entire transport as well as carry out the export and import processing. This is useful, for example, if the buyer wants to combine various consignments of goods in the exporting country into a single consignment. EXW therefore assumes that the buyer can actually handle the export. This can be problematic, for example, if an export permit is required that non-residents cannot obtain. Then one could agree on the addition “Exporter makes export clearance” - but then an F-clause would be more suitable.
–Exw is less important in international trade (but does not occur often) because the need for export clearance by the buyer usually means a considerable obstacle to processing.

From the point of view of the customs administration, the exporter is always responsible for the export clearance - regardless of the specifically agreed Incoterm. According to EC customs law, the export declaration can only be submitted by a customs participant resident in the EC, i.e. if the buyer is not based in the EC, he cannot submit a valid (export) customs declaration in his own name and on his own account. He can be represented (indirect representation in the representative's own name, but on behalf of a third party), whereby the forwarder is the declarant and the buyer is the actual exporter. However, the Customs Code says (Art. 788 II ZK-DVO) that in this case the buyer's contractual partner resident in the EC, i.e. the exporter, is considered to be the exporter and is used accordingly under customs and foreign trade law (!) The fact that EXW regulates this differently is irrelevant.

In any problem cases relating to customs or foreign trade law, the customs administration or the Federal Office for Economics and Export Control (BAFA) will therefore always refer to the exporter who cannot excuse himself by pointing out the responsibility that has been transferred to the buyer. This is often misunderstood and can lead to significant and unexpected problems for the exporter. This can be avoided by agreeing on FCA instead of EXW. In any case, delivery under EXW is de facto as with FCA, if the exporter prepares the export documents for the collector or buyer and, on the other hand, loads the goods onto the buyer's means of transport in his plant. Under EXW this is voluntary and at the risk of the buyer, under FCA it is an obligation of the seller at his own risk. It would therefore be systematically cleaner to agree on FCAs.

At EXW, as an exporter, you have no certainty that the customer will actually pick up the goods. In this case, no letter of credit against confirmation of acceptance would be of any use, because you do not receive a confirmation of acceptance. Whether the seller then sues for the damage should depend on the individual case. The legal claim is undoubtedly there. An F-clause is better for letters of credit (except FOB, because you cannot load on board if, for example, there is no ship; see also FOB) or a C-clause.

EXW is less important in international trade because the need for export clearance by the buyer can usually mean a considerable obstacle to processing. The clause is useful, however, if a buyer in the exporting country has several suppliers and he puts the goods together in order to transport them together.

See also FCA, FAS, FOB, CFR, CIF, CPT, CIP, DAT, DAP, DDP, Incoterms, F-Clauses, C-Clauses, D-Clauses, ICC.