In international trade, there are special rules for conducting INCOTERMS transactions. The current edition is from 2010. These rules govern compliance by the parties to the contract with their own obligations. Within these rules, there are several categories (E, F, C, D), which are typical for each type of cargo transportation. Let's talk about category F. One of its main conditions is that the seller does not pay for the main transportation. The same delivery condition is also typical for FCA INCOTERMS 2010. This term will be discussed in more detail below.
Allocation of risks and responsibilities under FCA terms
It should be noted that the choice of place of delivery under FCA will affect the obligations to load and unload the goods at that location. If delivery takes place at the seller's premises or other agreed location, the seller is responsible for loading the goods. It is recommended to clearly define the point of delivery, because the risk passes from the seller to the buyer at that point.
What is a free carrier?
The term "free carrier" in the interpretation of Incoterms 2010 means the delivery by the seller of goods, cleared through customs, to the free place and its transfer to the carrier hired by the buyer. In the contract, this concept is used with an indication of the exact address for loading the goods.
Let's say a plant has entered into a contract with a buyer from the USA. In the terms of delivery, the place of the “free carrier” is indicated as follows: “The transfer point is the warehouse of Elite Parquet LLC at the address: 10, building 3, st. Syromyatnicheskaya Nizh., Moscow, Russian Federation”, if this is the territory of the seller. But you can also indicate the terminal in Domodedovo, if the buyer has determined, under the terms of FCA, this territory for transferring the cargo to the carrier. Then you need to formalize it as follows: “The transfer point is the cargo terminal of Domodedovo Airport at the address: s. 7/1, Domodedovo Airport, Moscow region, Russian Federation.”
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Responsibilities under the FCA basic terms of delivery (FSA)
Delivery basis FCA Incoterms 2010
imposes obligations on the seller to load the goods onto transport at the place of shipment and to carry out export customs procedures for the export of goods with payment of export duties and other fees, but the seller is not obliged to carry out customs formalities for the import of goods, pay import customs duties or perform other import customs procedures upon import. If the parties intend to impose on the seller the costs of delivering the goods to the buyer, it is advisable to use the CPT Incoterms 2010 rule.
The term FCA can be used for transportation by any mode of transport, including multimodal transport. The word “Carrier” means any person who, on the basis of a contract of carriage, undertakes to carry out or ensure the transportation of goods by rail, road, air, sea and inland waterway transport or a combination of these modes of transport. If the buyer trusts another person, who is not a carrier, to accept the goods, then the seller is considered to have fulfilled his obligations to deliver the goods from the moment of transferring them to this person.
Incoterms 2010 classification
Terms of delivery of goods for any type of transport
EXW / Ex Works – Ex-factory
FCA / Free Carrier - Free carrier
CPT / Carriage Paid to - Carriage paid to
CIP / Carriage and Insurance Paid to - Transportation and insurance paid to
DAT / Delivered at Terminal
DAP / Delivered at Place
DDP / Delivered Duty Paid
Terms of delivery of goods for sea and inland water transport
FAS / Free Alongside Ship - Free along the side of the ship
FOB / Free on Board - Free on board
CFR / Cost and Freight - Cost and freight
CIF / Cost Insurance and Freight - Cost, insurance and freight
FCA price, payment terms and transfer of ownership
FCA price means that the contract (invoice or customs) price for a product includes the sum of the cost of the product itself and export customs clearance of this product with payment of export duties and other fees, without the cost of delivery (freight) to the buyer.
Delivery terms FCA Incoterms
do not indicate the price for the goods and the method of payment, do not regulate the transfer of ownership of the goods or the consequences of violation of the contract. The price and transfer of ownership must be determined in the terms of the purchase and sale agreement. The FCA trade term indicates which party to the sales contract must carry out the necessary actions for transportation and customs clearance, when and where the seller transfers the goods to the buyer, and what costs each party bears.
Differences between FCA and EXW delivery conditions
The difference between FCA and EXW delivery conditions is the obligation to load the goods into the vehicle and perform export customs clearance. In simple words, according to FCA delivery conditions : goods that have undergone export customs clearance at the seller’s expense are loaded by the seller into the buyer’s vehicle. According to the delivery basis EXW Incoterms 2010: goods without export customs clearance and without loading are provided by the seller at the seller’s warehouse, the buyer must load the goods into the vehicle at his own expense. The differences between the FCA delivery terms and other terms are presented in the table of differences in Incoterms 2010.
Important nuances
There are some points that are extremely important to clarify in advance with the seller himself or his forwarder.
This is especially true for the direct characteristics of the goods being transported. In addition, the volume of cargo transported, its weight characteristics and requirements for transportation conditions often need clarification. In this way, delivery under FCA terms is practically no different from other logistics operations. Of course, the seller must promptly and upon request provide information about where and when the loading will take place. It is extremely important for the parties to timely agree on the type of vehicle used, as well as the weight of one shipment (which is especially important when deliveries are made in batches). It is better to coordinate the delivery time of transport not only for a specific day, but also with an indication of the exact start time of loading.
As a rule, a condition is included in the contract according to which, in the event of failure to accurately deliver the transport, the agreement can be terminated by any of the participants unilaterally.
Both parties are responsible for the transfer of all data necessary for the correct execution of customs inspections and other documents, in proportion to their participation in the transportation.
Relevance of using the FCA basis
Today, the delivery conditions of FCA Incoterms as amended in 2010 are considered outdated, because On January 1, 2021, the new rules of Incoterms 2021 came into force. However, the International Chamber of Commerce only recommends, but does not oblige, the use of the FCA Incoterms 2021 delivery terms, therefore, in supply contracts you can refer to the FCA Incoterms 2010 delivery basis.
Previously, the FRC delivery basis . The FRC delivery terms were introduced in 1980 and were renamed the FCA delivery basis in the 1990 edition of Incoterms. The term FRC replaced the basic terms of delivery FOT (Free on Truck), FOR (Free on Rail) and FOA (Free on Airport).
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Responsibilities of the seller under the terms of the FCA (FSA) | Obligations of the buyer under the terms of the FCA (FSA) |
| A.1. DELIVERY OF GOODS IN ACCORDANCE WITH THE AGREEMENT The Seller is obliged, in accordance with the purchase agreement, to provide the buyer with the goods, a commercial invoice or equivalent electronic communication, and any other evidence of compliance that may be required under the terms of the purchase agreement. | B.1. PAYMENT OF THE PRICE The buyer is obliged to pay the price of the goods stipulated in the purchase and sale agreement. |
| A.2. LICENSES, CERTIFICATES AND FORMALITIES The seller must, at his own expense and risk, obtain any export license or other official certificate and, if required, complete all customs formalities necessary for the export of the goods. | B.2. LICENSES, CERTIFICATES AND FORMALITIES The Buyer must, at his own expense and risk, obtain any import license or other official certificate and, if required, complete all customs formalities for the import of goods as well as for their transit through third countries. |
| A.3. CONTRACTS OF CARRIAGE AND INSURANCE a) Contract of carriage - no obligations. However, either at the buyer's request or as a matter of commercial practice, unless the buyer has given other instructions in advance, the seller may contract for carriage on normal terms at the buyer's expense and risk. The seller may also refuse to enter into such an agreement. In this case, he must immediately notify the buyer about this. b) Insurance contract - no obligations. | B.3. CONTRACTS OF CARRIAGE AND INSURANCE a) Contract of carriage. The buyer is obliged, at his own expense, to enter into a contract for the carriage of goods from the named place, unless the contract of carriage is concluded by the seller in accordance with Article A.3.a). b) Insurance contract - no obligations. |
| A.4. DELIVERY OF GOODS The seller must deliver the goods to the carrier or other person designated by the buyer or selected by the seller in accordance with Article A.3.a) at the named place on the date or time specified. Delivery is deemed to be made: a) if the named place of delivery is at the seller's premises: when the goods are loaded into the vehicle of a carrier named by the buyer or another person acting on his behalf b) if the named place is outside the seller's premises: when unloaded from the seller's vehicle the goods are placed at the disposal of the carrier or other person designated by the buyer or selected by the seller in accordance with Article A.3.a). If the parties have not agreed on any specific point at the named place of delivery and if there are several such points, the seller may choose the point most suitable for him. If the seller does not have precise instructions from the buyer, he may deliver the goods for further transportation in such a way as the given mode of transport and/or quantity and/or nature of the goods require. | B.4. ACCEPTANCE OF DELIVERY The Buyer is obliged to accept delivery of the goods when it is made in accordance with Article A.4. |
| A.5. TRANSFER OF RISK The Seller is obliged to take into account the provisions of Article B.5. bear all risks of loss or damage to the goods until they are delivered in accordance with Article A.4. | B.5. PASSION OF RISK The buyer must bear all risks of loss or damage to the goods—from the time the goods are delivered to him in accordance with Article A.4., and—from the agreed date or from the expiration of the agreed period for delivery, which arise either from his failure to comply with the obligation to indicate carrier or other person in accordance with Article A.4., or because the carrier or other person named by him could not take the goods into his possession within the agreed time or he himself could not give notice in accordance with Article B.7. The condition, however, is that the goods comply properly with the contract. This means that the goods must be properly identified, that is, clearly separated or otherwise identified as the goods that are the subject of the contract. |
| A.6. ALLOCATION OF COSTS The seller is obliged, subject to the provisions of Article B.6.: to bear all costs associated with the goods until they are delivered in accordance with paragraph A.4., and to pay, if required, all duties, taxes and other charges, and expenses for completing customs formalities payable upon export. | B.6. DISTRIBUTION OF COSTS The Buyer is obliged to: bear all costs associated with the goods from the moment of delivery of the goods in accordance with Article A.4., and bear all additional costs or if he fails to fulfill the obligation to indicate the carrier or other person in accordance with Article A.4., either because the carrier or other person nominated by him was unable to take possession of the goods within the agreed time or because he himself was unable to give notice in accordance with Article B.7. The condition, however, is that the goods comply properly with the contract. This means that the goods must be properly identified, that is, clearly separated or otherwise identified as the goods that are the subject of this contract, and pay, if required, all duties, taxes and other charges, as well as the costs of completing customs formalities, payable upon import of goods, and, if necessary, for their transit through third countries. |
| A.7. NOTICE TO THE BUYER The Seller must give the Buyer sufficient notice of delivery of the goods in accordance with Article A.4. If the carrier is unable to accept the goods within the agreed time in accordance with Article A.4, the seller is obliged to notify the buyer accordingly. | B.7. NOTICE TO SELLER The buyer must give the seller sufficient notice of the name of the carrier or other person specified in Article A.4. and, where necessary, the method of transportation and the date or time of delivery to him of the goods, and, if necessary, the point at the place , where the goods must be handed over to the carrier or other person. |
| A.8. PROOF OF DELIVERY, TRANSPORT DOCUMENTS OR EQUIVALENT ELECTRONIC COMMUNICATIONS The Seller must provide the buyer at his expense with the usual transport documents in accordance with Article A.4 as proof of delivery of the goods. In the event that such evidence referred to above is not a transport document, the seller must provide the buyer, at his request, expense and risk, with all possible assistance in obtaining the transport document (for example, a negotiable bill of lading, a non-negotiable sea waybill, evidence of inland waterway transport , air waybill, railway or road waybill or multimodal transport waybill). In the event that the seller and buyer have agreed to use electronic communications, the documents mentioned above may be replaced by equivalent electronic messages (EDI). | B.8. PROOF OF DELIVERY, TRANSPORT DOCUMENTS OR EQUIVALENT ELECTRONIC MESSAGES The Buyer must accept proof of delivery in accordance with Article A.8. |
| A.9. INSPECTION - PACKAGING - LABELING The seller must bear the costs associated with the inspection of the goods (e.g. quality, size, weight, quantity) necessary to deliver the goods in accordance with Article A.4. The seller is obliged to pay at his own expense the costs of packaging necessary for the carriage of the goods (except in cases where it is customary in this branch of trade to send the contract goods without packaging). The latter is carried out to the extent that the circumstances relating to transportation (for example, methods of transportation, destination) were known to the seller before concluding the sales contract. The packaging must be properly labeled. | B.9. GOODS INSPECTION The Buyer shall bear the costs of any pre-shipment inspection of the goods unless such inspection is required by the authorities of the country of export. |
| A.10. OTHER OBLIGATIONS The seller is obliged, at the buyer's request, to provide the latter, at his expense and risk, with full assistance in obtaining any documents or equivalent electronic messages (other than those mentioned in Article A.8.) issued or used in the country of delivery and/or in the country of origin goods that the buyer may need to import the goods, or, if necessary, for their transit through third countries. The seller is obliged to provide the buyer, upon his request, with all the information necessary for the implementation of insurance. | B.10. OTHER OBLIGATIONS The Buyer must bear all costs and fees associated with the receipt of documents or equivalent electronic messages, as provided in Article A.10., and also reimburse the seller for expenses incurred by the latter as a result of his assistance to the Buyer in the execution of the contract of carriage in accordance with Article A.3. The buyer is obliged to give the seller the necessary instructions in cases where the seller’s assistance is required in concluding a contract of carriage in accordance with Article A.3.a). |
What information is the buyer required to provide?
As a rule, the buyer must provide the supplier with a list of the following required data at least 10 days before the start of deliveries:
- Name and volume of cargo to be sent.
- Full and abbreviated designations of consignees.
- Their full addresses. Attention! If the house does not have apartments, this should be stated additionally.
- Consignee codes are also required.
- If delivery to railway stations is planned, then their codes must also be indicated separately.
- Again, for rail deliveries, track numbers must be provided.
- Other information that will help the carrier deliver the paid cargo on time.
