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 incoterms 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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