Published by MBA Skool Team, Last Updated: December 02, 2015
What is Ex Works?
The term means “straight from the point/place of manufacturing, excluding the then delivery costs, commission and the costs of distribution. It is a term which is an agreement that states that vendor has to keep the item ready at his place (packed) and buyer needs to pick it up and the transportation costs are also borne by the buyer.
The agreements should be understood before such that the buyer is able to pay the cost of transportation. It can be used for any mode of transport. As we see here, the seller has the least responsibility/liability.
It is different from FOB in the fact that the seller needs to load the goods in a vessel. From here onwards, it’s the responsibility of the buyer.
E.g.: You are a seller situated in Delhi and the buyer is situated in Australia. You contacted the seller and agreed at a price of 2000$ ex-factory. All the costs from that point onward will be borne by the buyer such as the transportation costs, freight costs, etc. Buyer just pays the cost of insurance.
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