Under FCA at the seller’s premises the seller carries risk up to and including loading onto the buyer’s nominated vehicle; from that point the risk is the buyer’s. That is the Incoterms position on risk of loss or damage. It is not the whole answer for temperature, because a temperature failure caused by product that left the cold store warm is a conformity failure of the goods, not a transit loss, and conformity is a matter for the sales contract rather than for the Incoterms rule.
The two questions that get confused
- Who bears the risk that something happens to the goods in transit? FCA answers this: the buyer, from loading.
- Were the goods conforming when the risk passed? FCA says nothing. The sales contract has to.
If the recorder shows the load never came down to temperature because the pallets went in at minus eight, the buyer bore the transit risk but the seller delivered non-conforming goods. If the recorder shows a clean loading temperature and a unit failure two days later, that is the buyer’s risk and a claim against the carrier or the cargo insurer.
What to write into the contract
- The maximum product core temperature at the moment of loading, and who measures it.
- That the seller provides the loading temperature record and the cold store record for the preceding period on request.
- That the buyer’s nominated carrier presents an ATP-classified, pre-cooled trailer, and that the seller may refuse to load a trailer that is not at set point.
- Who pays for a refused loading and a re-scheduled truck.
- The evidence hierarchy: recorder trace, probe reading, visual clumping check.
A seller who loads a warm trailer because refusing it would delay the order has given away the argument in advance. Make the right to refuse explicit, and use it.
Related: Incoterms 2020 for frozen food and what to do when a logger shows a break.