Legal Definitions - ex-works price

The term ex-works price refers to a pricing agreement in international trade where the seller's responsibility for the goods ends when they are made available at the seller's own premises, such as their factory, warehouse, or workshop. This means the stated price covers only the cost of the goods themselves, ready for collection.

Under an ex-works agreement, the buyer assumes all subsequent costs and risks from that point onward. These responsibilities typically include loading the goods onto transport, arranging and paying for transportation, insurance, export customs clearance, and any other expenses required to get the goods to their final destination. It represents the minimum obligation for the seller and the maximum responsibility for the buyer in a transaction.

• Example 1: International Manufacturing
  A bicycle manufacturer in Taiwan sells a large shipment of mountain bikes to a sports retailer in Canada. They agree on an ex-works price for the bikes. This means the Taiwanese manufacturer will produce the bikes and make them available, packaged and ready, at their factory in Taipei. The Canadian retailer is then responsible for arranging and paying for the bikes to be loaded onto a truck, transported to the port, cleared for export, shipped across the Pacific Ocean, cleared through Canadian customs, and finally delivered to their distribution center. The price paid to the Taiwanese manufacturer only covers the cost of the bikes themselves, as they sit ready at the factory gate.
• Example 2: Specialized Industrial Equipment
  A company in Germany that builds custom industrial robots sells a unique welding robot to an automotive factory in Mexico. The contract specifies an ex-works price for the robot. Once the robot is fully assembled, tested, and ready at the German company's facility, the Mexican automotive factory must arrange for its specialized logistics team to dismantle, package, load, transport, insure, and handle all customs procedures to get the robot from Germany to their plant in Mexico. The German seller's obligation ends once the robot is available for pickup at their factory.
• Example 3: Agricultural Produce
  A large farm in California sells several tons of fresh produce to a restaurant chain in New York. They agree on an ex-works price for the vegetables. The farm harvests, cleans, and packages the produce, making it ready for collection at their packing facility. The restaurant chain then sends its own refrigerated trucks to the farm to pick up the produce, transport it across the country, and bears all risks and costs associated with the journey, including fuel, driver wages, and potential spoilage during transit. The price paid to the farm covers only the cost of the produce itself, prepared for pickup.