An exporter has shipped product to a customer overseas under ExWork\'s Shipper\'
ID: 459354 • Letter: A
Question
An exporter has shipped product to a customer overseas under ExWork's Shipper's Dock terms. When the product arrived one of the boxes from the shipment is severely damaged and the product inside is broken beyond use or repair. Based on the ICO term used, who would file the freight claim with the 3PL company that shipped the product? Explain how you arrived at that decision. If the customer is asking for product to be shipped to them to replace the damaged product. Based on the ICO term, should the customer receive free product? Explain your justification.
Explanation / Answer
The INCOTERM used is ExWorks, which means the ownership and liability of the goods is transferred from seller (supplier) to buyer (customer), the moment the goods are loaded onto the truck and leave the factory/warehouse premises of the seller.
Therefore in case of transit damage, customer would file the freight claim with the 3PL company that shipped the product.
No, the liability of 3PL is company is limited to the amount of freight. For recovery of loss of product, the customer needs to file a claim with the insurance company. The insurance company typically makes payment up to the cost of the product. It does not replace the damaged product.
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