When selling your goods to a distance, it’s crucial to set the transfer or delivery terms. It’s not so much for understanding who has the rewards from the ownership but the risks. If something were to happen with the goods while in transfer, someone has to bear the costs. 

If you’ve insured the shipment, it’s not an argument that you don’t bear any risks. If anything, you’ve assumed the risks as yours and as such, if you’re the seller, you shouldn’t recognize the sale until the goods are delivered to the customer and the risks of ownership have transferred to the customer. Insurance is only a mitigation of the risk, not transferring the risks.

Some examples of delivery terms often used:

o    EXW or Ex Works – the buyer bears all costs and risks involved in taking the goods from the seller’s premises to the desired destination. The seller’s obligation is to make the goods available at this premises (risks are transferred when giving away goods at your own premise);

o    FCA or Free Carrier – the seller’s obligation is to hand over the goods, cleared for export, into the charge of the carrier named by the buyer at the name place or point (risks are transferred when goods are on the carrier);

o    CPT or Carriage Paid To – the seller pays the freight for the carriage of goods to the named destination. The risk of loss or damage to the goods occurring after the delivery has been made to the carrier is transferred from the seller to the buyer.

o    CIP or Carriage and Insurance Paid To – the seller has the same obligations as under CPT, but has the responsibility of obtaining insurance against the buyer’s risk of loss or damage of goods during the carriage.

Do take the time and agree with your customers the terms most suitable for each party and to the circumstances.