Trade Terms: Points of delivery in the country of the seller

One of the most important aspects of trade terms is point of delivery, that is the moment when the goods are either handed over to a carrier or place on board the collecting vehicle for onwards shipment to the buyer. As of this moment, the seller is said to have completed his obligation with regards to the delivery and the buyer is said to have taken the delivery of the said goods.

Whatever risks the goods may be exposed to or costs incurred from this point onwards are to be borne by the buyer. The trade terms are therefore be the important factor in determining the point of delivery. The point of delivery can either be in the country of the seller or in the country of the buyer. It may take place at the seller’s premises; at the factory, workplace or warehouse. It may also take place at the seaport, airport, country border or at any place where goods are customarily being loaded and unloaded.

When delivery is to be made in the country of the buyer, the goods may be collected at the seaport, airport, country border or at any named place.

Terms such as Ex-work, FCA, FAS, FOB, CFR, CIF, CPT and CIP are terms where the point of delivery is to take place in the country of the seller. There are three different methods of making a delivery by the seller when the delivery is to take place in the country of the seller.

Firstly, by having the goods ready at the buyer’s disposal by placing the goods at the seller’s premises as mentioned above. Under this condition, buyer is therefore responsible to arrange and to contract for the carriage to the final destination. This type of arrangement is represented by Ex-work term.

Secondly, by handing over to the carrier where the forwarding agent will come and collect the goods at the seller’s premises or at any named place. This type of arrangement is represented by terms such as FCA, FAS, CPT and CIP. There are two conditions apply under FCA; if the goods are to be handed over to a carrier at a named place other than the seller’s premises, buyer is responsible to unload the goods. On the other hand, if the handing over of the goods is taking place at the seller’s premises, the seller is responsible to load the goods onto the collecting vehicle. The term FCA requires the buyer to arrange and to contract for the carriage. Whereas the arrangement for transport under CPT and CIP is the obligation of the seller.

Finally, by placing the goods on board the vessel at the port of shipment. The seller must ensure that the goods are actually on board the vessel. This is where the terms FOB, CFR and CIF are used. Under the term FOB, the buyer is the party who is responsible to arrange and to contract for the transport. On the other hand, such obligation is transferred to the seller under the terms CFR and CIF.

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