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Ex-Works or Exw

1. Carriage to be arranged by the buyer.


2. Risk transfer from the seller to the buyer when the goods are at the disposal of the
purchaser.
3. Cost of assignment from the vendor to the buyer when the goods are at the disposal of
the buyer.

This arrangement is extremely favourable to the seller at the buyer's expense. The seller is
only responsible for packaging the goods and making them available at a designated
location, such as the seller's warehouse. He or she must also help the buyer obtain export
licenses or other necessary documentation, but only at the buyer's request and expense.

Once the goods have been placed at the buyer's disposal, the buyer is responsible for all
costs and risks related to the goods. In practice, this means loading them onto a truck,
transferring them to a train, ship or plane, perhaps multiple times, handling customs
procedures, unloading them at their destination and storing, using or reselling them, as
the case may be. Even if the seller does help the buyer by loading the goods onto a truck,
for example, the buyer is the one liable for damage during this process.

Ex Works in Context
Ex works costs are calculated by businesses that may be able to cut costs from their
purchases by eliminating the seller's value added for shipping. If, for example, company
Alpha Inc. prices a shipment of widgets from Beta Inc. at $100, but the ex works cost is
$50; and if Alpha Inc. thinks they can use their in-house shipping or a third party for $40
per unit, they save $10 per unit by making an ex works deal with Beta Inc.

A variation of the ex works agreement is the Free On Board (FOB) agreement, in which the
seller assumes the cost of getting its goods to a shipping terminal and pays all the customs
costs to get the goods on board, but the buyer still assumes the cost of finding, contracting
and paying the shipping company and the customs costs incurred when the goods reach
their country of destination. The buyer also pays all insurance costs.

Ex works agreements should only be undertaken if the buyer is able to bear all the costs
and risks involved in the transaction, including import and export documentation and
taxes. Though the seller is obligated to help in procuring shipping and customs documents
and making sure they accurately reflect the contents of the packages to be shipped, once
the delivery has taken place at the seller's location of choice, all costs related to damages
or export violations will be incurred by the buyer.

In practice, Ex Works is sometimes not a viable option due to certain jurisdictions' customs
rules. In the European Union, for example, a non-resident individual or corporation cannot
complete the export declaration documents, so the buyer may be left stranded. In such
circumstances, the Free Carrier (FCA) term is preferable.
The seller makes the goods available at their premises, or at another named place. This term
places the maximum obligation on the buyer and minimum obligations on the seller. The Ex
Works term is often used while making an initial quotation for the sale of goods without any
costs included.
EXW means that a buyer incurs the risks for bringing the goods to their final destination. Either
the seller does not load the goods on collecting vehicles and does not clear them for export,
or if the seller does load the goods, he does so at buyer's risk and cost. If the parties agree
that the seller should be responsible for the loading of the goods on departure and to bear
the risk and all costs of such loading, this must be made clear by adding explicit wording to
this effect in the contract of sale.
There is no obligation for the seller to make a contract of carriage, but there is also no
obligation for the buyer to arrange one either - the buyer may sell the goods on to their own
customer for collection from the original seller's warehouse. However, in common practice
the buyer arranges the collection of the freight from the designated location, and is
responsible for clearing the goods through Customs. The buyer is also responsible for
completing all the export documentation, although the seller does have an obligation to
obtain information and documents at the buyer's request and cost.
These documentary requirements may result in two principal issues. Firstly, the stipulation
for the buyer to complete the export declaration can be an issue in certain jurisdictions (not
least the European Union) where the customs regulations require the declarant to be either
an individual or corporation resident within the jurisdiction. If the buyer is based outside of
the customs jurisdiction they will be unable to clear the goods for export, meaning that the
goods may be declared in the name of the seller by the buyer, even though the export
formalities are the buyer's responsibility under the EXW term.
Secondly, most jurisdictions require companies to provide proof of export for tax purposes.
In an EXW shipment, the buyer is under no obligation to provide such proof to the seller, or
indeed to even export the goods. In a customs jurisdiction such as the European Union, this
would leave the seller liable to a sales tax bill as if the goods were sold to a domestic customer.
It is therefore of utmost importance that these matters are discussed with the buyer before
the contract is agreed. It may well be that another Incoterm, such as FCA seller's premises,
may be more suitable, since this puts the onus for declaring the goods for export onto the
seller, which provides for more control over the export process.[