Module: | MODULE A: INTERNATIONAL BANKING
Q103: Consider the following statements regarding Ex Works and Delivered Duty Paid shipping terms:
Statement 1: Under the Ex Works term, the seller bears the maximum responsibility, including paying for international freight, marine insurance, and import customs duties in the destination country.
Statement 2: Under the Delivered Duty Paid term, the seller assumes all costs and risks involved in delivering the goods to the named place in the country of the buyer, including paying the import customs duties.
Statement 3: Ex Works represents the minimum obligation for the seller, as they only need to make the goods available at their own premises for the buyer to collect.
Statement 2: Under the Delivered Duty Paid term, the seller assumes all costs and risks involved in delivering the goods to the named place in the country of the buyer, including paying the import customs duties.
Statement 3: Ex Works represents the minimum obligation for the seller, as they only need to make the goods available at their own premises for the buyer to collect.
✅ Correct Answer: B
The correct option is B. Only 2 and 3 are correct.
Concept Definition: Ex Works and Delivered Duty Paid represent the two extreme opposite ends of the spectrum in international shipping responsibilities.
These terms define exactly how much work and financial risk the seller assumes versus the buyer.
Structural Breakdown: In Ex Works, the buyer handles almost the entire logistics chain.
In Delivered Duty Paid, the seller operates almost like a modern parcel delivery service, handling everything until the box reaches the front door of the buyer.
Historical/Related Context: These terms are published by the International Chamber of Commerce to provide standardized rules.
This prevents expensive confusion over who pays the port fees or who pays the taxes at the border.
Causal Reasoning: Statement 1 is completely incorrect.
It describes the exact opposite of Ex Works.
Statement 3 correctly defines Ex Works.
The seller only has to pack the goods and leave them at their factory loading dock.
The buyer must arrange the truck, the ship, and the customs clearance.
Statement 2 correctly defines Delivered Duty Paid.
It is the maximum obligation for the seller, requiring them to handle both export and import logistics, including paying foreign taxes.
Concept Definition: Ex Works and Delivered Duty Paid represent the two extreme opposite ends of the spectrum in international shipping responsibilities.
These terms define exactly how much work and financial risk the seller assumes versus the buyer.
Structural Breakdown: In Ex Works, the buyer handles almost the entire logistics chain.
In Delivered Duty Paid, the seller operates almost like a modern parcel delivery service, handling everything until the box reaches the front door of the buyer.
Historical/Related Context: These terms are published by the International Chamber of Commerce to provide standardized rules.
This prevents expensive confusion over who pays the port fees or who pays the taxes at the border.
Causal Reasoning: Statement 1 is completely incorrect.
It describes the exact opposite of Ex Works.
Statement 3 correctly defines Ex Works.
The seller only has to pack the goods and leave them at their factory loading dock.
The buyer must arrange the truck, the ship, and the customs clearance.
Statement 2 correctly defines Delivered Duty Paid.
It is the maximum obligation for the seller, requiring them to handle both export and import logistics, including paying foreign taxes.