EXW vs FCA:
dropped while loading at the factory

A familiar scene

The buyer's truck arrives at the factory. The buyer has no forklift there; the factory does. So, naturally, a factory worker loads the equipment onto the truck — and it slips off the forks and hits the floor.

If the contract was EXW, whose loss is it? Since the factory's own worker loaded it, most people assume the seller. Incoterms says the opposite.

EXW — the seller does not load

Under EXW the seller delivers by placing the goods at the buyer's disposal at its premises (or another named place). The seller has no obligation to load them onto the buyer's vehicle and no obligation to clear them for export.

So even if the seller loads as a courtesy, that loading is done at the buyer's risk and expense. The person who dropped it may work for the seller, but under Incoterms the risk has already passed to the buyer. Whether the seller's worker was negligent is a separate question of damages.

It is the mirror image of the DDP unloading article: EXW requires the buyer to load, and DDP does not require the seller to unload. At both ends of the contract, the moment of lifting is left to the other party.

FCA — it depends where delivery happens

If FCA names the seller's premises, the seller is responsible up to loading the buyer's vehicle — a forklift drop at the factory is the seller's risk. If FCA names somewhere else, such as a forwarder's warehouse or a terminal, the seller brings the goods there on its own vehicle and unloading is on the buyer's side.

If the factory's equipment and people are going to do the loading, it makes sense for the risk to sit with them. Using FCA seller's premises instead of EXW lines the contract up with what actually happens on site.

The other EXW trap — export clearance

Under EXW the buyer also handles export clearance, yet a foreign buyer often has no standing to file an export declaration in the seller's country. It is the same problem as in the Middle East DDP article, where the seller could not be the importer at destination — just reversed and moved to the origin. Here too, FCA, with the seller clearing for export, is usually the more realistic choice.

Before you sign

• Who actually loads? If it is the seller's equipment and staff, consider FCA seller's premises instead of EXW.
• If you keep EXW but want the seller to carry loading risk, write it out as a sentence in the contract rather than relying on an abbreviation.
• Check the rated capacity of the forklift or crane used for loading against the real weight of the cargo (loading and handling checklist).
• Confirm who can clear the goods for export and whether the buyer is entitled to file in the seller's country.

References

· EU Customs & Taxation Academy, Incoterms® 2020 — Course Takeaways — EXW carries no loading or export duty; FCA at seller's premises means the seller loads
· Trade Finance Global, DDP Incoterms® 2020 rule — the asymmetry: EXW requires the buyer to load, DDP does not require the seller to unload
· Wikipedia, Incoterms — if the seller loads under EXW it is at the buyer's risk and cost; loading responsibility should be spelled out

Trade terms and site risk — series

· DDP and unloading accidents
· DDP to the Middle East: who holds the import licence?
· EXW vs FCA: dropped while loading at the factory (this article)
· FOB and CIF: dropped while loading on board
· CIF vs CIP: what the insurance actually covers