Legal Definitions - free carrier

"Free Carrier," often abbreviated as FCA, is a widely used international trade term (Incoterm) that clearly defines the responsibilities of the buyer and seller in a contract for the sale of goods. It specifies the exact point at which the seller's obligation to deliver the goods ends, the buyer's responsibility for transportation costs begins, and the risk of loss or damage to the goods transfers from the seller to the buyer.

Under an FCA agreement, the seller is responsible for preparing the goods for export, including any necessary customs clearance, and delivering them to a carrier chosen by the buyer at a specific, named location. This location could be the seller's own premises, a warehouse, a port, or another agreed-upon point. Once the goods are handed over to the buyer's designated carrier at this agreed-upon place – either by being loaded onto the carrier's vehicle or simply made available to them – the seller has fulfilled their delivery obligation. At this precise moment, the risk of any loss or damage to the goods transfers from the seller to the buyer. From this point onward, the buyer is responsible for all costs associated with transporting the goods to their final destination, and they have complete freedom to select their preferred carrier.

• Example 1: International Furniture Sale

  A furniture manufacturer in Vietnam sells a large shipment of custom-made dining tables to a retail chain in Australia. They agree on an FCA Ho Chi Minh City Port term. The Vietnamese manufacturer is responsible for packaging the tables, clearing them for export, and transporting them to the designated container terminal at Ho Chi Minh City Port. Once the tables are loaded onto the shipping container provided by the Australian retailer's chosen shipping company at that terminal, the manufacturer's delivery obligation is complete. At this point, the risk of any damage to the tables during the sea voyage or subsequent transport transfers to the Australian retailer, who is also responsible for all shipping costs from the port to their warehouses in Australia.

• Example 2: Technology Components for Assembly

  A German supplier of specialized electronic components sells a batch of microchips to an automotive electronics assembly plant in Hungary. Their contract specifies FCA Supplier's Warehouse, Munich. The German supplier prepares the microchips, ensures they are ready for export, and makes them available at their warehouse loading dock in Munich. When the Hungarian assembly plant's chosen logistics company arrives with a truck and loads the microchips, the German supplier has fulfilled their part of the delivery. The risk of transit damage then immediately passes to the Hungarian plant, which also bears all costs for transporting the microchips from Munich to their factory in Hungary.

• Example 3: Agricultural Commodity Trade

  A coffee bean exporter in Colombia sells several tons of green coffee beans to a coffee roasting company in Canada. The terms are set as FCA Buenaventura Port Terminal. The Colombian exporter is responsible for processing the beans, packaging them in sacks, obtaining export permits, and delivering the sacks to a specific warehouse within the Buenaventura Port Terminal. Once the sacks of coffee beans are placed at the disposal of the Canadian roaster's chosen freight forwarder at that terminal, the exporter's delivery is complete. The risk of the beans spoiling or being damaged during the ocean transit to Canada then shifts to the Canadian roasting company, which also pays for the freight from Buenaventura to its facility.