A wine importer refused to pay after finding damaged goods. The court made them pay anyway. Here's what every buyer sourcing on EXW terms needs to understand.
EXW Doesn't Protect You From Quality Problems — But It Does Put the Inspection Duty on You
If you import goods on EXW (Ex Works) terms, one legal reality can quietly destroy an otherwise valid quality claim: you are expected to inspect the goods at origin, and if you wait until they arrive to discover an obvious defect, you may lose the right to complain at all.
A recent case makes this painfully concrete. An importer bought wine, arranged its own shipping from the seller's premises, and only opened the boxes months later, at the destination warehouse. The bottle caps were extensively damaged. The importer refused to pay.
The court ordered the importer to pay anyway — not because the goods were fine, but because the buyer had inspected too late and lost the right to claim non-conformity.
Here's how that happened, and how to avoid being in the same position.
The Case in Brief
A Chinese importer purchased roughly 34,000 bottles of French wine, worth about EUR 99,000, on EXW terms — meaning the goods were made available at the French winery, and the buyer took responsibility for transport from there.
The seller handed the goods to the buyer's freight agent at the end of November 2023. The shipment then travelled for roughly 70 days — through Spain, Greece, Singapore, and multiple Chinese ports — before arriving and clearing customs, then being trucked to a warehouse.
The buyer opened and inspected the goods in late February 2024. It found the bottle caps damaged — cracked, dented, broken. It raised a quality complaint the next day and refused to pay for the goods.
By that point, nearly three months had passed since the goods were handed to the buyer's freight agent.
The seller sued for the price. Across first instance and appeal, the buyer's quality defense largely failed, and it was ordered to pay — with only a small deduction the seller had separately agreed to.
The Two Rulings Every Buyer Should Understand
1. EXW governs risk transfer — not the seller's quality obligation
The buyer argued that because the contract was on EXW terms, risk had passed to the buyer at delivery, so the seller shouldn't be liable for problems discovered afterward.
The court rejected this reasoning — and this part is actually favorable to buyers, so understand it clearly.
Incoterms like EXW define when risk transfers — that is, who bears the loss if goods are damaged or destroyed by an accident during transit. They do not define whether the goods conformed to the contract in the first place. Under the CISG (the UN Convention on Contracts for the International Sale of Goods), a seller remains responsible for any lack of conformity that existed at the time risk transferred, even if that defect only becomes apparent later.
In plain terms: if you can prove a defect existed at the moment of delivery, EXW does not let the seller off the hook. EXW is not a quality waiver.
So why did the buyer still lose? Because of the second ruling.
2. The buyer inspected too late — and lost the right to claim
This is the ruling that decided the case.
Under CISG Articles 38 and 39:
- A buyer must examine the goods within as short a period as is practicable in the circumstances (Article 38); and
- A buyer must notify the seller of any lack of conformity within a reasonable time after it discovered, or ought to have discovered, the defect — or it loses the right to rely on that lack of conformity (Article 39).
The damaged bottle caps were an externally visible defect — the kind you'd see the moment you opened a box. The goods were handed to the buyer's freight agent in France in November 2023. At that point — at the origin, or before loading — the buyer could have inspected the goods itself, or commissioned a third party to do so.
It didn't.
Instead, the defect surfaced only after three months of transit and after the goods reached a warehouse in China. The court's reasoning was decisive: for a visible defect like this, the moment the buyer "ought to have discovered" the problem was the point of delivery — not the day it happened to open the boxes months later. Three months exceeded a reasonable time. The buyer had lost its right to claim non-conformity for the bulk of the goods, and the goods were treated as conforming.
The buyer also argued it couldn't inspect because the goods were shipped in sealed containers. The court didn't accept this: under EXW, the buyer arranged transport and could have inspected at the winery or before loading. "It was in a sealed container" was not a valid excuse for delaying notice.
If you are dealing with a CISG quality claim or inspection-deadline dispute, see our international trade services.
Why This Matters So Much for EXW and FCA Buyers
When you buy on EXW (or FCA), you take control of the goods at origin. That control is not just a logistical fact — it carries a legal consequence: the window to inspect, and to preserve evidence, opens the moment the goods are handed over, and it's your window.
If you choose to skip inspection at origin — to save cost, or for convenience — understand the risk you're accepting:
- If the goods develop a problem in transit, you'll struggle to prove the defect existed at delivery rather than arising during shipping.
- If the defect is externally visible, a court may find you "ought to have discovered" it at delivery — starting the clock on your notice deadline from that date, not from the day you opened the boxes.
- Miss that reasonable window, and your quality claim can be treated as waived, even where the defect is real.
The best protection is straightforward: inspect at the point of delivery — yourself or through a professional third-party inspection service — and catch visible defects before the goods leave origin, rather than discovering them at the destination and then arguing about who caused them.
A Related Trap: The Duty to Mitigate
The case carried one more lesson worth noting.
The seller had acknowledged a defect in a portion of the caps and offered to send replacement caps from France. The buyer didn't respond — and instead bought more expensive replacement caps on its own, then claimed the full cost, along with storage, labor, and other expenses.
The court limited the buyer's recovery. It found the buyer had failed to mitigate its loss: it couldn't show that accepting the seller's offer would have cost more time or money, yet it chose a pricier solution and enlarged its own loss. The enlarged portion was the buyer's to bear.
Takeaway for buyers: when a seller proposes a reasonable remedy, engage with it and keep a record. Ignoring a reasonable offer and unilaterally running up costs can cut down what you're able to recover.
What This Means for Your Sourcing Operation
The practical lessons for any company importing goods, especially on EXW or FCA terms:
Inspect at origin — it's a duty, not an option. For visible defects, courts may treat the delivery date as the point you "ought to have discovered" the problem. Skipping inspection at origin quietly shrinks your window to claim.
Preserve evidence at handover. Photos, signed delivery records, and third-party inspection reports at origin are what let you prove a defect existed at delivery rather than arose in transit. Without them, a valid claim can become unprovable.
Don't rely on Incoterms as a quality shield or a quality trap. EXW doesn't waive the seller's quality obligation — but it does place the inspection duty and the evidentiary burden on you as the buyer. Know which side of that line each of your contracts puts you on.
Engage with reasonable remedies. If a seller offers a fix, respond and document it. Enlarging your own loss by ignoring a reasonable offer can reduce your recovery.
Address inspection and notice terms in the contract. You can define inspection periods, notice deadlines, and quality-claim procedures in your contract. Doing so before a dispute is far more effective than arguing about "reasonable time" afterward.
Frequently Asked Questions
Does EXW mean the seller isn't responsible for quality?
No. EXW governs when risk of loss transfers, not whether the goods conformed to the contract. Under the CISG, a seller remains liable for defects that existed at the time of delivery, even if discovered later — provided the buyer inspects and gives notice in time.
How quickly do I have to inspect goods under the CISG?
Article 38 requires examination within as short a period as is practicable in the circumstances. For externally visible defects, courts often treat the point of delivery as when you "ought to have discovered" the problem — which is why inspection at origin matters so much on EXW terms.
What happens if I inspect and complain too late?
Under CISG Article 39, if you don't notify the seller of a defect within a reasonable time after you discovered or ought to have discovered it, you lose the right to rely on that lack of conformity — and the goods may be treated as conforming, even if they weren't.
Can I claim I couldn't inspect because the goods were in sealed containers?
That argument often fails on EXW terms, where the buyer arranges transport and could inspect at origin or before loading. Courts have rejected "it was sealed" as an excuse for delayed notice in these circumstances.
What's the safest way to protect a quality claim on EXW terms?
Inspect at the point of delivery — yourself or via a third-party inspection agency — document the condition of the goods at handover, and raise any defect promptly. Define inspection and notice terms in your contract as well.