Suppose an electronics seller is in San Francisco, California. The buyer is in New York, New York, New York. The buyer and seller agree on the price of these products and sign a commercial contract starting factory. The buyer wants the products back in two weeks and the seller must be ready to transport the products. However, the buyer is responsible for all other costs related to the delivery of the goods to New York. The buyer pays all transportation costs, and if the products are lost on the way, the seller is not responsible. Unlike EXW, the seller is required to deliver the goods to a destination to be delivered to a buyer-designated carrier if they are on a free on-board commercial contract (FOB). Site designation in the FOB trade agreement is the date on which the property is transferred from the seller to the buyer. Responsibility often moves to this point of arrival. The seller is responsible for transporting goods up to that date, but the buyer may be responsible for all the transport arrangements from that point to his location, according to the terms of the contract. Suppose a buyer based in Los Angeles, California, wants to buy computers from a seller in Chicago, Ill. The buyer and seller sign a FOB commercial agreement. The buyer indicates that the computers are shipped by air, and the seller is required for transportation costs related to the transportation of computers to the Los Angeles airport.
At this point, the responsibilities move and the buyer is responsible for all other costs related to transporting the computers to the final destination. The buyer is also responsible for any damage that may occur during this phase of the shipping process. A start-factory agreement is different from a free-board agreement (FOB) in which the seller pays for the transport of his goods to a shipping terminal and pays all customs costs for the receipt of the goods on board. In the meantime, the buyer still has to pay to find, bear and pay the shipping company, as well as the customs fees incurred when the goods reach their destination country. The buyer also bears the insurance costs. EX Works Incoterms: What does EXW and Table of Materials Price Mean What is EX Works (EXW) in terms of shipping? An EXWorks Incoterm agreement is an agreement that maximizes the risk and liability of the buyer by requiring most companies to use an EXW agreement if the seller cannot export or if the buyer wants to combine multiple shipments and export under one name. In practice, it is not uncommon for a seller, at the buyer`s risk and at the buyer`s expense, to load goods onto the vehicle – or even for free.