Who should bear the risks of goods in entrepot trade? Come and help me analyze it!
Solved#Entrepot trade#
I have recently been involved in an entrepot trade. The goods are purchased from Country A and transshipped through Country B to Country C. During the transshipment in Country B, the goods were damaged due to force majeure. Now all parties have disputes over the risk bearing. The supplier thinks that the risks have been transferred after they delivered the goods, while the buyer believes that since the goods have not yet reached the destination, they should not bear the risks. I'd like to ask everyone, in this case, who should actually bear the risks of goods in entrepot trade?
Professional consultant answers
William YangYears of service：5Customer Rating：5.0
International logistics consultantConsult
In entrepot trade, the bearing of goods risks is mainly determined according to trade terms. If terms such as FOB, CFR, CIF are adopted, when the goods cross the ship's rail at the port of shipment (or complete the delivery obligation, which varies according to different terms), the risks are transferred from the seller to the buyer. In the situation you mentioned, if the contract stipulates the application of such terms and the supplier has completed the corresponding delivery obligation in Country A, theoretically the risks have been transferred to the buyer. Even if the goods are damaged during transshipment in Country B, it should be borne by the buyer. However, if the contract has other agreements regarding risk bearing, for example, it is clearly stipulated that the risks are borne by the seller until the goods reach the destination in Country C, then it shall be implemented according to the contract stipulations. Meanwhile, although force majeure factors can usually be exempted from liability, it also depends on whether there are special agreements in the contract regarding this and relevant legal regulations.
Therefore, it is necessary to first clarify the trade terms and the clauses in the contract regarding risk bearing and force majeure in order to accurately determine the attribution of risks.
Elizabeth LiYears of service：3Customer Rating：5.0
Compliance and risk managerConsult
Generally, it depends on how the contract is signed. If the contract is not clear, then it shall be in accordance with the. As mentioned before, it shall be in accordance with the trade terms. If the FCA term is adopted, the risks are transferred after the goods are delivered to the carrier. If the goods are delivered to the carrier in Country A, then the transshipment risks shall be borne by the buyer.
Robert ChenYears of service：6Customer Rating：5.0
Customer service consultantConsult
It depends on which party purchased the insurance in the trade process. If the buyer purchased the insurance, then the buyer may bear more risks, because insurance is to deal with risks. Once the buyer purchased the insurance, they should correspondingly bear some risk responsibilities.
James LiuYears of service：10Customer Rating：5.0
Foreign trade tax refund consultantConsult
Sometimes, the specific situation of the damaged goods also needs to be considered. For example, although it is due to force majeure, if there are problems with storage and other operations during transshipment in Country B that exacerbate the losses, then the party involved in the operations may have to bear part of the responsibilities.
David LiYears of service：6Customer Rating：5.0
Senior customs declaration consultantConsult
In actual operations, the negotiation among all parties is also very important. Even if according to the trade terms or the contract stipulations, a certain party should bear the risks, for the sake of long-term cooperation, everyone can also discuss to share the risks jointly to reduce contradictions.
Emily LiuYears of service：10Customer Rating：5.0
Settlement and payment expertConsult
It also depends on whether the transshipment party has fulfilled its due responsibilities in Country B. If the transshipment party is at fault and causes the goods to be damaged, the transshipment party shall also bear the responsibilities.
Amanda YangYears of service：3Customer Rating：5.0
Cost control consultantConsult
From a legal perspective, if there are no special agreements, the transfer of risks generally follows international trade practices. For example, for the C group terms, the seller is responsible for transporting the goods to the specified destination, and during the transportation, the risks may still be borne by the seller.
Jennifer WangYears of service：4Customer Rating：5.0
Market development consultantConsult
See if there are any applicable international conventions. Some international conventions have clear rules regarding risk bearing, and when the conditions are met, the provisions of the conventions shall be applied preferentially.
Michelle ChenYears of service：3Customer Rating：5.0
Business coordination consultantConsult
If the transaction involves a letter of credit, there may be implications or stipulations regarding risk bearing in the clauses of the letter of credit. It is necessary to study them carefully.