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CHAPTER 8
Ex works (EXW):
Incoterm ‘Ex works’ means that the supplier fulfills his obligation
to deliver when he has made the goods available at his premises
(i.e., works, factory, warehouse, etc.) to the buyer. In particular, he
is not responsible for loading the goods on the vehicle provided
by the buyer or for clearing the goods for export, unless otherwise
agreed. The buyer bears all costs and risks involved in taking the
goods from the supplier’s premises to the desired destination. This
term thus represents the minimum obligation for the supplier. This
term should not be used when the buyer cannot carry out directly
or indirectly the export formalities. In such circumstances, the FCA
term should be used. See also Incoterms.
FAS:
See Free Alongside Ship.
FCA:
See Free Carrier.
Final acceptance:
The buyer grants technical acceptance upon expiry of the
guarantee period provided the supplier has met all his obligations.
For items replaced, repaired or modified, the guarantee period
shall be prolonged by a period equal to that during which they are
unavailable. See also Acceptance and Provisional Acceptance.
Firm tender/offer:
A definite price proposal as differentiated from an estimated cost
tender/offer. It binds the tenderer for the validity time of his tender/
offer. See also tender.
Fixed price contract:
See Contract, Firm/fixed price.
FOB:
See Free On Board.
Follow-up:
In procurement, to monitor the implementation of the contract and
to take necessary action if warranted. See also Contract Scheduling
and Expedite.
Force majeure:
A contract term which implies circumstances beyond one’s control,
the occurrence of which can be pleaded as a legal excuse for non-
fulfillment of contract. Previously the term referred largely to Acts
of God (earthquakes, floods, etc.) However, the term is now used
somewhat more flexibly to include government decrees, edicts,
strikes, etc. To avoid problems of interpretation, in the event of a
dispute, it will be helpful if the buyer and the supplier can agree at
the contract stage itself to define what circumstances will constitute
force majeure.
Forward purchasing:
Purchasing of quantities in excess of immediate requirements, a
procurement strategy which may be adopted when indications are
that the supplies in the international market may become short and/
or when prices are expected to rise sharply. See also Economies
of scale.
GLOSSARY