Logistics is a complex but highly profitable business. It’s not easy for beginners in it, since most of the entire industry is already occupied by “veterans” who have long since created a name known to their customers. The only way to achieve success in this field is strict adherence to contracts and rules so that all potential customers can verify the reliability of your company.
In this respect, the FCA delivery condition is especially important, in terms of the quality of which it is possible to draw conclusions with confidence about the business qualities of the company. If you don’t know what this one is, it’s time to consider this issue in full detail.
What it is?
FCA (Free Carrier) is a delivery condition under which the buyer is responsible for almost all transportation. He can choose transport, use his delivery channels, conclude contracts for the supply of goods. This makes delivery on FCA terms different from all standard transportation methods accepted both in our country and around the world.
The seller fully fulfills its obligations if the following conditions are met:
- As soon as the customs export clearance was completed.
- If the goods were delivered to the next carrier, which was indicated by the buyer.
- Upon delivery to the place specified in the contract.
This is the FCA delivery condition . Theoretically, the main responsibility lies with the buyer, but in practice everything turns out a little differently.
The indicated place is very important, since the obligations of the parties largely depend on this clause in the contract. So, if it is planned to start loading on the territory of the supplier, the latter bears all responsibility for it. On the contrary, if you start to load the goods in any other place, the seller himself does not bear any responsibility. But! This is true only if some other terms of delivery of goods (FCA) were not previously agreed upon in the contract.
Specific conditions
As a rule, in practice all these conditions are significantly specified. Be sure to indicate the type of vehicle, its carrying capacity, other characteristics. In the event that at the initial point of loading the goods are not enough for a full load of transport, the buyer has the right to agree with the supplier on changing the route in order to check into some other locality, call at another port to
consolidate cargo and minimize losses from an empty flight .
This is especially important in conditions of maritime transport, when each unplanned advance call to the port is fraught with serious costs. However, in our country the conditions of railway supplies are no less strict.
This is what FCA delivery terms are for practical conditions.
As the person who is responsible for the acceptance of the goods, the buyer can appoint any representative. Please note that upon delivery of the goods to the intermediary, which was appointed by the buyer, all obligations of the supplier are considered fully fulfilled. Again, unless otherwise provided in advance to the contract. At this point, special attention should be paid, since unscrupulous suppliers and buyers often use this loophole.
Other options
Almost every FCA delivery condition can be fulfilled regardless of the type of transport and in the form of international transport, and in this case, you need to find answers to the following questions in the international transport agreement in advance:
- How and on what grounds will the goods be shipped to the buyer?
- What will be the carrier’s responsibility if he has to cross the borders of other states?
- To what specific border will liability be directly borne by the carrier?
Important Nuances
There are some points that it is extremely important to clarify in advance with the seller or his forwarder. This is especially true for the direct characteristics of the transported goods. In addition, the volume of transported cargo, its weight characteristics and exactingness to the conditions of transportation often need clarification. This FCA delivery is practically no different from other logistics operations.
Of course, the seller must provide information on where and when loading will be done on time and at the first request. It is extremely important for the parties to timely agree on the type of vehicle used, as well as the weight of one consignment of cargo (which is especially important when deliveries are made in batches). It is better to coordinate the delivery time of the transport not only for a specific day, but also with the indication of the exact time of the start of loading.
As a rule, a condition is entered into the contract according to which, if the accuracy of the transport is not fulfilled, the agreement can be terminated unilaterally by any of the participants.
Both parties are responsible for the transfer of all the data necessary for the proper execution of customs inspections and other documents in proportion to their participation in the transportation.
What should be in a real supply contract ?
To make the article as informative as possible, let's give an example of those items that must necessarily be in a standard supply contract. Of course, one should also consider the standard conditions on which all this will be based. Such an FCA contract is concluded in most percent of cases if the parties act in a generally accepted manner.
Immediate terms of delivery
Firstly, this clause should contain an indication of when and under what conditions the responsibility for the goods passes to the buyer (as a rule, when transferring it to a representative or loading onto his transport). For the date of such delivery or acceptance, a stamp is accepted on the railway, ship (or other) waybill, certified by the seal and / or signature of the buyer's authorized representative.
The time period within which the goods are sent to the buyer must be agreed. As a rule, this period is approximately five calendar days from the date of transfer of funds to the account or transfer of cash to the seller.
If the goods must be delivered in batches, it is necessary to schedule the delivery schedule, specifying also the type of vehicle for each (if the goods are of different types). The buyer must send the certified schedule to the supplier no earlier than 20 days before the start of delivery (the period may be different). In addition, by agreement of the parties, the schedule can be changed at any stage.
If this is the buyer's desire, then the supplier himself can agree on a schedule and route, but at the same time, the customer himself bears the responsibility. This FCA delivery of goods differs from standard types of contracts.
What data must the buyer provide?
As a rule, the buyer should provide the supplier with a list of the following necessary data at least 10 days before the start of delivery:
- Name and volume of cargo to be shipped.
- Full and abbreviated designations of consignees.
- Their full addresses. Attention! If the house does not have apartments, this should be discussed additionally.
- Consignee codes are also required.
- If delivery to railway stations is planned , their codes must also be indicated separately.
- Again, for railway supplies, you need to specify the access numbers.
- Other information that will help the carrier deliver the paid freight on time.
If the buyer does not provide such information?
In this case, the contract should include a clause providing for the suspension of supplies until all necessary information is received. If you have to return the transport, all costs are also borne by the buyer. If the customer did not provide a quality certificate when transferring the cargo, up to five calendar days are given for its shipment.
The procedure for the transfer of delivered goods
Most often, an invoice in the form of No.TORG-12 is used to accept the received cargo. It must be signed by the financially responsible persons of both parties to the contract, and also certified by their seals. In addition, representatives of the buyer and supplier must be present at the time of acceptance. If this does not happen, all the flaws will be paid by the party whose representatives were not.
Some claims claims
Claims for the discrepancy between the amount of paid goods and their actual volume at the unloading point are not accepted if losses are within the limits of the natural loss assigned to this cargo in GOST. In this case, the acceptance documents indicate the quantity of goods that was originally paid.
The same is true for the FCA company Incoterms 2000. The delivery conditions are such that both parties must keep an independent record of the goods shipped. If a multi-month delivery is planned, then the reports are most often verified on the first day of each month.
Reconciliation acts must be adopted by the parties no later than within five days from the established date of verification. If the delivery data does not match, a complete cessation of delivery is possible to clarify all the details. In the event that disagreements cannot be resolved, the parties may agree on a premature termination of the contract.
Information about possible termination
If the payment has not been received within the time period specified in the contract, the supplier shall have the right not to carry out the delivery, having previously notified the customer thereof. When the latter receives notice, the contract shall be officially considered terminated.
In the event that such an item is in the contract, the buyer can not use the goods for other purposes. If so, then the supplier must again send a formal notice. As in the previous case, from the moment the buyer receives the document, the contract will be considered terminated. In the case when the full volume of the goods is not delivered for reasons depending on the buyer, the supplier can again terminate the contract unilaterally. Again, a special notice is required for the customer. These are the prerequisites for FCA delivery (we have already found out what it is).
Any of the parties through whose fault the delivery fell through is obliged to fully reimburse all costs. If such is established by the contract, interest may be charged for each day of the penalty after the expiration of the period by which the contracting party was obliged to pay. Important! Payment of the penalty and interest thereon does not exempt the contractor from providing the goods or their acceptance with subsequent payment.
Force majeure situations
Please note that any FCA delivery condition may not be fulfilled if the party to the contract proves that the non-fulfillment was caused by factors outside its competence that could not be foreseen (force majeure).
Such cases are equated to all natural disasters and epidemics (as well as epizootics), a suddenly changed political situation, accidents or terrorist attacks on transport infrastructure facilities; decisions of regional authorities that make it impossible to fulfill contractual obligations.
If you give a concrete example, then many agricultural producers once massively violated FCA terms of delivery: 2010 turned out to be extremely unsuccessful, and therefore the losses were multimillion.
Any of the parties that refers to force majeure is obliged to notify this no more than two days after the onset of such obligations, having previously certified the documents in any territorial branch of the Chamber of Commerce and Industry of the Russian Federation. If these circumstances continue for more than three months, any of the parties to the contract may refuse to fulfill its obligations by notifying the partner in advance and paying for the delivered goods.
How are disputes between the parties resolved?
If disputes arise between the parties to the supply, then they must be resolved through negotiation. In the case when it is not possible to agree, they must seek the help of the Arbitration Court. All disputes must be resolved there in compliance with the claims procedure.
So we reviewed the FCA delivery terms. This means that from now on you have the most important ideas about this delivery method, which is becoming more and more popular every year.