Legal Definitions - ex works

"Ex works," often abbreviated as EXW, is a trade term used in both domestic and international sales contracts. It defines the minimal obligation for the seller and the maximum responsibility for the buyer regarding the delivery of goods. Under an ex works agreement, the seller's only duty is to make the goods available at their own premises, such as their factory, warehouse, or workshop, at a specified time. Once the goods are ready for collection at this location, the buyer assumes all responsibility for loading the goods, arranging and paying for transportation, handling any export or import customs procedures, and bearing all risks of loss or damage from that point onward to the final destination. Essentially, the buyer takes full control and cost from the moment the goods are made available at the seller's facility.

• Example 1: Small Business Importing Components

  A small electronics manufacturer in Canada (the buyer) orders specialized circuit boards from a supplier in Taiwan (the seller) under ex works terms. The Taiwanese supplier manufactures the circuit boards and informs the Canadian company that the order is ready for pickup at their factory in Taipei. From that moment, the Canadian manufacturer is responsible for arranging a freight forwarder to collect the circuit boards, load them onto a truck, transport them to the port, handle all export documentation and customs in Taiwan, pay for the ocean freight to Canada, manage Canadian import customs, and finally transport the goods to their factory. Any damage or loss that occurs after the circuit boards are made available at the Taiwanese factory is the Canadian buyer's responsibility.

• Example 2: Retailer Sourcing Local Products

  A large grocery store chain (the buyer) in California contracts with a local organic farm (the seller) to purchase fresh produce, agreeing to ex works terms for weekly deliveries. Each Tuesday morning, the farm harvests the agreed-upon produce and places it in a designated cool room at their facility, notifying the grocery chain that it's ready for collection. The grocery chain then dispatches its own refrigerated trucks and drivers to the farm to load the produce. The farm's responsibility ends once the produce is ready in the cool room; any issues with loading, spoilage during transit to the grocery store, or accidents on the road are the grocery chain's responsibility.

• Example 3: Industrial Equipment Purchase

  A construction company in Australia (the buyer) purchases a custom-built excavator from a heavy machinery manufacturer in Japan (the seller) with an ex works agreement. Once the excavator is assembled and tested at the Japanese manufacturer's plant, the manufacturer notifies the Australian company that it is ready for collection. The Australian construction company must then coordinate and pay for a specialized transport company to pick up the oversized equipment from the Japanese factory, transport it to a port, manage all export procedures in Japan, arrange for its shipment to Australia, handle import duties and customs clearance there, and finally deliver it to their construction site. All costs and risks associated with moving the excavator from the Japanese factory gate to the Australian site fall entirely on the construction company.