We are selling using the FCA rule – should we ask for this information to appear on the bill of lading for the shipment?
I am not sure what is behind this question, but there is a common misunderstanding about the role of the carrier in the application of the rules.
The chosen rule is part of the agreement between the buyer and the seller. It is not part of the agreement between the carrier and either party. Carriers will often ask about the Incoterms rule, but their purpose is simply to establish who is to be responsible for the carriage charges, and this is what the transport document will show.
So the important thing is for the seller to ensure that the intended Incoterms rule is specified on the quotation and on the subsequent purchase order, commercial agreement etc.
We are buying using Ex Works. Our supplier has informed us that as a consequence of this, title to the goods has passed to the buyer, and “while your goods are held in our facility, the risk of loss or damage and insurance liability has also now passed to you”
To put this charitably, your supplier is misinformed.
The Incoterms rules are, and always have been, silent on the matter of title to the goods. You may want to ask your supplier to quote you the portion of the Incoterms rules that supports their assertion!
We want to buy a consignment of goods, and have the seller pay all taxes and duties.
There is only one Incoterms rule that offers this – Delivered Duty Paid (DDP). However experienced exporters will try to steer clear of this if at all possible.
The problems start with the fact that many countries will only accept payment of duty and taxes from a business entity registered within their jurisdiction. Furthermore the procedures for payment of import duty etc. are often complex and obscure – and so best left to a party with good local knowledge. Follow this link for more on this
A decision by an appeals tribunal in Australia has important consequences for importers using the DDP rule, and may serve as a precedent for other jurisdictions
The background to the case was that the exporter undervalued the goods, and hence the duty payable.
The ruling was that the duty was on the goods, not the business entity – and therefore that the consignee or holder of the goods could be pursued for the shortfall if recovery from the exporter was deemed impractical.
The moral – importers cannot rely on DDP to insulate themselves from the consequences of improper behaviour by their trading partners!
An update on this issue – it is now official Australian policy that the importer may be liable for duty underpayment.
Pre-shipment inspections of goods are mandated by the authorities in some importing countries, to ensure payment of the correct import duty etc. Costs of these inspections are payable by the buyer.
This is not an Incoterms rule. It is a definition within the US Uniform Commercial Code, and bears no resemblance to FOB as defined within Incoterms 2010.
The UCC definitions are widely used for domestic transactions within the US, but are now quite problematical – see this article.
The Incoterms 2010 rules are a much better choice, and are appropriate for domestic as well as cross-border sales
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