Delivery Terms and the Receiving Point: Why the Contract Matters

A contract line such as "FOB" or "CIF" looks like a detail of pricing, but it settles something that matters on the day of receiving: who arranged each stage of the journey, and at what point the risk of loss or damage moved from the seller to you. If you read it only when something goes wrong, you may find that the point where the risk changed hands was thousands of kilometres from your warehouse. This article is a general guide and not legal advice. The exact meaning depends on the wording of your contract, on the version of the rules it refers to and on the law, so confirm the specifics with your forwarder or your lawyer.

What the three letters usually tell you

Delivery terms are short codes, often taken from the Incoterms rules published by the International Chamber of Commerce, that divide duties between seller and buyer. In plain words:

• EXW: the seller makes the goods available at its own premises, and the buyer arranges nearly everything from there.
• FOB: the seller delivers the goods on board the vessel at the port named in the contract, and the buyer takes over the main carriage from that point.
• CIF: the seller pays for carriage and basic insurance to the destination port, but the risk of loss or damage usually passes earlier, at loading.
• Terms such as DAP, where the seller delivers to a named place, leave more of the journey with the seller.

This is a simplified picture. Terms have versions, parties amend them, and a term with no named place says very little. Read the whole clause, including the place that follows the letters.

Find your actual receiving point

The contract names a point of delivery, but the cargo passes through several hands before it reaches your gate: a port or a rail terminal, a forwarder, a carrier, perhaps a bonded store. Every handover is a place where something can happen.

Draw the chain on one page: the place, the party in charge, the document that travels with the goods, and what you can check there. Then mark two points: where the contract says the risk passed, and where you personally see the cargo for the first time. The distance between them is the part of the journey that you cannot observe but may still have to bear.

How the term changes what you do on arrival

• Under terms where risk passes early (FOB, CIF and similar), damage in transit usually has to be claimed from the carrier or through insurance, and not from the seller. That makes your own record on arrival the main evidence.
• Under EXW the buyer has often hired the carrier or forwarder, so the claim usually runs to your own contractors. Ask them for their conditions.
• Under delivery-to-place terms the seller may stay responsible until the goods reach that place, so find out where it is and whether your unloading point is the one the contract names.
• Insurance mentioned in a term may be basic. Ask who bought it, what it covers and who is entitled to claim.

In every case, the earlier the facts are recorded, the more options you keep.

A conditional example

An order is worth USD 24,000 on FOB terms. At receiving, 25 of 1,000 cartons are crushed and the contents are damaged, worth USD 600, which is 2.5% of the order. Under FOB the risk had already passed to you at loading, so your first call is likely to go to the carrier, the forwarder and the insurer, not the supplier. The supplier may still be answerable for packing that was poor when the goods left, but only the contract can say. Had the same order been agreed for delivery to your warehouse, the first call might go the other way. The numbers are the same and only the addressee changes. That is why you read the term before the cargo arrives.

In short

Delivery terms decide who answers for which part of the journey, and the only way to show which part it was is a record made at receiving. CargoChek does not interpret contracts. It counts, inspects and photographs the cargo when it arrives, and prepares the facts that you can send to your supplier, your forwarder or your lawyer.