What are the incoterms?
Incoterms are nothing but some
International Commercial terms published by International Chamber of Commerce
to clearly communicate the associated risks,costs,tasks etc. evolved with
international procurement and logistics. Which are widely accepted by legal
authorities, governments and involved parties with the commercial transactions .
Incoterms usually help to reduce
uncertainties and for that reason are incorporated in Letter of Credit, Sales
Contract etc. in the whole world. Incoterms are last amended/published by ICC
on January 01, 2013.Some essential incoterms are highlighted below:
Ex Works (Named place)
The incoterm EXW can be defined as
an agreement between a buyer and a seller that after production completed and
left warehouse of the seller, seller is not responsible for cost and liability
for the product.
Incoterms FOB and EXW can be used
interchangeably while consider terms and agreement between buyer and seller. Buyer
responsibilities include loading, transport, import and export, unloading and
insurance of the goods. In case among buyer and seller, one may get advantage
of concentrating on production, another may get advantage on transportation.
Seller is not responsible for loading
the goods unless specified otherwise and buyer is responsible for doing
insurance for EXW shipments under the buyer’s Ocean Cargo Policy. The insurance
Policy covers warehouse to warehouse. When purchasing goods under EXW buyer
should seek an insurer that will give coverage during this situation.
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