Comparison Of The Seller’s Obligations And Risks Under FOB And FCA Trade Terms

International trade term is the inevitable outcome of the development ofinternational trade and it’s appearance promotes the development of internationaltrade in reverse. Because the extensive use of trade terms in actual business plays animportant role in simplifying trading procedures, shortening negotiation time andsaving costs and expenditures. Choosing different trade terms means that the buyerand the seller undertake different responsibilities, costs and risks. In view of this,selecting an appropriate trade term is very important for both the buyer and the seller.One of the most commonly used trade terms in international trade practice is theFOB term. FOB has a long history and is one of the earliest trade terms used in tradepractice, so the term is well-known by the majority of foreign trade practitioners andis frequently used by them. With the development of the international transporttechnology, especially the rapid development of container transport, the internationalmultimodal transport which combines a variety of modes of transport emerged andthe "door-to-door"delivery became more ad more common, so the InternationalChamber of Commerce put forward a new trade term named FCA in the InternationalRules for the Interpretation of Trade Terms(it’s abbreviation isINCOTERMS).Comparing these two terms, it can be found that the FCA term hasmore advantages in many ways than the FOB term, to better meet the needs of today’sinternational trade practice development. However, in the practice of internationaltrade, FCA term is not widely used, on the contrary, the use of FOB term is morefrequent.In this paper, a comparative analysis is made, intending to compare theobligations and risks of the seller under FOB and FCA terms, trying to figure out thereasons why the use the FCA term can not be promoted, and make some suggestionsbased on the analysis.In this paper, there are three parts.The first part is to explain the use of FOB andFCA trade terms under the conventions of trade terms. For the FOB term, it mainlyintroduces the explanations of INCOTERMS2010and the Revised American Foreign Trade Definitions-1941(American Definitions) and it also explains the problems ofusing FOB term under the new mode of transport. For the FCA term, it focus on theinterpretation of INCOTERMS2010, and analyzes the significance of adding FCA toINCOTERMS. This section also introduces the present situation of FOB and FCAused in China’s export enterprises.The second part is the core part of this paper,analyzing the seller’s obligations and risks under FOB and FCA trade terms. In thissection, the similarities of the seller’s obligations under the two terms are introducedand it mainly compares the differences of the seller’s obligations under the two termsand analyzing the risks of the seller resulting from the different obligations.Bycontrast, this section analyzes the advantages and the problems faced by the FCAterm. The third part is about the suggestions for reducing the seller’s risks under FCAterm. This section puts forwards suggestions from three aspects. They are the seller’sresponse measures to reduce risks, a clear explanation of the international multimodaltransport documents’ nature and strengthening the legal application of theinternational multimodal transport documents.In short, the paper, from the seller’s point of view, introduces the seller’sobligations and risks under the two terms and analyzes the advantage and theproblems of FCA term faced by the seller and makes some suggestions, hoping tohave some inspirations on international trade practice.