In international trade, deals aren’t just about moneythey’re about precision. One word in a contract can determine who bears the loss and who wins the dispute.

A recent case highlighted this vividly. The dispute involved the delivery of solar power devices under INCOTERMS rules, specifically EX WORKS (EXW) and FOB, where disagreement over delivery location and risk transfer escalated into a legal battle that reaffirmed a key principle: a contract is the law between the parties.

The buyer sought to reclaim over 1.2 million dirhams paid in advance, claiming the goods were never delivered. The seller argued the sale was under FOB terms and that the invoice stated EX WORKS – Jebel Ali, meaning risk and responsibility passed to the buyer once the goods were made available at that location.

The court’s key question: Does simply citing EX WORKS or FOB exempt the seller from liability, or does actual delivery matter?

EX WORKS requires the seller to make goods available at a specified location; risk transfers only once that happens. FOB goes further, requiring goods to be loaded onto the buyer’s ship at the port of shipment. The difference is critical: risk transfer depends on actual delivery, not just contractual terms.

Technical evidence showed the seller had received payment but failed to prove delivery at Jebel Ali. The courts confirmed: risk transfer only occurs after actual delivery. Contract clarity binds the parties, and obligations must be executed in good faith.

This case underscores a vital lesson: choosing an INCOTERMS term isn’t just formalit has serious financial consequences. EX WORKS doesn’t relieve a seller from proving actual delivery, and FOB only works if loading onto the ship is confirmed.