Incoterms 2010: EXW

Incoterms (the ICC rules on the use of domestic and international trade terms) constitute a critical part of an international sales contract.  Their most important contribution to the contract consist of a clear delineation of the parties’ respective obligations, thereby reducing the risk of misunderstanding and litigation.  Moreover, Incoterms are regularly updated and, therefore, incorporate the recent developments in global trade.  The latest update occurred in 2010 and, today, Incoterms 2010 constitute an invaluable part of an international trade attorney’s vocabulary.

In this essay, I want to provide a very brief overview of one of the most unfamiliar Incoterms 2010 – EXW.

EXW (Ex Works) means that the seller delivers the goods to the buyer when the seller places the goods at the disposal of the buyer on the seller’s premises (or at another specific named location).  The seller does not need to load the goods on any collecting transport.  It also does not need to clear the goods for export.

If EXW is used, the buyer bears all costs and risks when it takes the goods from the agreed point (usually, the seller’s premises).

In other words, among all of the Incoterms 2010, the seller has minimum obligations if EXW is used.

While EXW may appeal to the seller, one should use this Incoterm very carefully.  In addition to the fact that it is not easy to get the buyer to agree to EXW, there are certain disadvantages to using EXW.  For example, the obligation of the buyer to supply to seller the information regarding exports is very limited even though the seller may actually need this information for tax or export control compliance purposes.

Moreover, Incoterms do spell out certain conditions that may actually broaden the seller’s obligations. For example, the seller is obligated to supply the buyer with certain information necessary for security-clearance purposes.

Thus, despite all of its apparent simplicity, EXW should be used only where the situation warrants its use.  It is well advised that a non-professional should not engage in using Incoterms, such as EXW.  Rather, such decisions should be left to an international contract attorney who will have a better understanding of when to utilize EXW.

Contact Sherayzen Law Office for Help with Contract Drafting

If you are about to engage in a transaction involving an international delivery of goods, contract Sherayzen Law Office for legal help.  Our experienced international contract firm can assist you at every stage of your contract: negotiation, drafting and enforcement. We will provide a rigorous representation of your interests, protect your contractual rights, and strive to ensure that the contemplated transaction goes as smoothly as planned.