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What Is 'Free Carrier - FCA'?

Free carrier is a trade term where the seller is responsible for the delivery of goods to a specific destination. Typically, the destination is a named airport, terminal or other place where the carrier operates. The seller includes transportation costs in its price, and the seller assumes the risk of loss until the carrier receives the goods. At this point, the buyer assumes all responsibility.

BREAKING DOWN 'Free Carrier - FCA'

Traders can use an FCA to describe any transportation point, regardless of the number of transportation modes involved in the shipping process, but it must be a location within the seller’s home country. Once the seller delivers the goods to the agreed port or area, the liability transfers from the seller to the carrier or buyer. As part of the liability transfer, the seller is only responsible for delivery to the specified destination, not unloading the goods. However, the seller may be responsible for ensuring the goods have 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 shipment specifics such as the time and place of delivery, payment, the point at which the risk of loss shifts from the seller to the buyer and the party responsible for freight and insurance costs. The details are highly specific in nature because identifying the exact moment when liabilities and cost responsibilities transfer are key points within the agreement.

Incoterms

The most commonly known trade terms are Incoterms, which are internationally recognized standards published by the International Chamber of Commerce. These are often identical in form to domestic terms, such as the Uniform Commercial Code, but they may have slight differences in their official interpretations. As a result, parties to a contract must expressly indicate the governing law of their terms and which edition of the published Incoterms they are using.

The latest Incoterms, which the ICC updated in 2010, include 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.

All Incoterms are legal terms, but their exact definitions may differ by country. Therefore, clarity and specificity when using Incoterms are particularly critical. Experts recommend that any party involved in international trade contact an appropriate legal professional before using any trade term within a contract.

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