Free Carrier - FCA

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What is a 'Free Carrier - FCA'

A free carrier (FCA) is a trade term designating the location the seller is to deliver goods. Most often, the destination is a named airport, terminal or other place where the carrier operates. The cost for transportation is included in the price set by the seller, and the risk of loss is initially on the seller, transferring to the buyer upon delivery to the carrier.

BREAKING DOWN 'Free Carrier - FCA'

An FCA can be used to describe any transportation point, regardless of the number of transportation modes that may be involved in the shipping process, but it must be a location within the seller’s home nation. Once the seller has the goods on premises, the liability transfers from the seller to the carrier or buyer. As part of the liability transfer, the seller is not responsible for unloading the goods but only for getting them to the specified destination. However, the seller may be responsible for ensuring the goods have properly cleared customs before the shipment may be accepted.

Terms of Sale

Contracts involving international transportation often contain abbreviated trade terms, or terms of sale, that describe matters such as the time and place of delivery and payment, when the risk of loss shifts from the seller to the buyer, and who pays the costs of freight and insurance. The details are often highly specific in nature, as identifying the exact moment when liabilities transfer and who is responsible for specified costs are key points within the agreement.

Incoterms

The most commonly known trade terms are Incoterms, which are internationally recognized standards and are published by the International Chamber of Commerce (ICC). These are often identical in form to domestic terms, such as the American Uniform Commercial Code, but may have varied official meanings. As a result, parties to a contract must expressly indicate the governing law of their terms as well as which edition of the published Incoterms are considered to be in use.

For 2010, the Incoterms includes ex works, free carrier, carriage paid to, carriage and insurance paid to, delivered at terminal, delivered at place, delivered duty paid, free alongside ship, free on board, cost and freight, and cost, insurance and freight.

It's important to realize that all terms contained in the Incoterms are legal terms, but the exact definition of the terms may differ by country. In that regard, clarity and specificity when using the terms are particularly critical. It is recommended that any party involved in international trade contact an appropriate legal professional before using any trade term within a contract.