Legal Definitions - EXW

EXW stands for EX WORKS. It is an international commercial term (Incoterm) that defines the seller's minimum obligation in a transaction. Under EXW terms, the seller's responsibility ends when the goods are made available at their own premises, such as their factory, warehouse, or workshop. The buyer then assumes all costs and risks associated with loading the goods, transporting them to their final destination, and handling any customs formalities, export licenses, or import duties.

Essentially, EXW means the buyer takes full responsibility for the goods from the moment they are picked up at the seller's location.

• Example 1: Custom Furniture Maker

  A small custom furniture maker in North Carolina sells a unique dining table to a design studio in New York. The contract specifies EXW terms. Once the table is completed, packaged, and ready for pickup at the furniture maker's workshop in North Carolina, their obligation is fulfilled. The design studio is then responsible for arranging and paying for the freight company to collect the table, load it onto the truck, insure it during transit, and cover all transportation costs until it arrives at their studio in New York.

  This illustrates EXW because the seller (furniture maker) completes their duty by making the goods available at their premises. All subsequent costs and risks, including loading and transportation, fall entirely to the buyer (design studio).

• Example 2: Industrial Component Manufacturer

  A manufacturer of specialized electronic components in Japan sells a large batch of parts to an automotive assembly plant in Thailand. The agreement is EXW. The Japanese manufacturer ensures the components are properly packed and ready for collection at their factory in Tokyo. The Thai assembly plant then takes on the responsibility for hiring a freight forwarder, paying for the loading of the goods, managing all international shipping, handling export customs in Japan, import customs in Thailand, and all associated transportation costs until the components reach their plant in Thailand.

  Here, the Japanese manufacturer's responsibility concludes at their factory gate. The buyer (Thai assembly plant) assumes the extensive logistical and financial burden of international shipping and customs, highlighting the buyer's significant obligations under EXW.

• Example 3: Local Craft Brewery

  A craft brewery in Colorado sells a bulk order of kegs to a restaurant chain with multiple locations across the state. The terms are EXW. The brewery prepares the order and notifies the restaurant chain that the kegs are ready for collection at their brewing facility. The restaurant chain then dispatches its own delivery trucks or contracts a third-party logistics company to pick up the kegs, bearing all costs and risks associated with loading the kegs and transporting them to their various restaurant locations.

  This demonstrates EXW in a domestic business-to-business context. The brewery's duty is simply to have the goods ready at their location. The restaurant chain takes on the entire burden of collection, transport, and any risks once the kegs leave the brewery's premises.