GlossaryEN1 min readUpdated: Jun 19, 2026
passage of risk / transfer of risk
The passage of risk defines the moment at which responsibility for accidental loss or damage to goods shifts from the seller to the buyer.
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Source: https://iccwbo.org/business-solutions/incoterms-rules/
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Incoterms 2020 Simulator: Who bears costs & risk?
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Definition & Explanation
The passage of risk defines the moment at which responsibility for accidental loss or damage to goods shifts from the seller to the buyer. Before this threshold, the seller bears the risk; afterwards, it passes to the buyer regardless of whether ownership has already transferred. Under Incoterms, the precise moment depends on the agreed trade term: under FCA, risk passes when the seller hands the goods to the first carrier; under DAP, not until the goods are made available at the named destination. This distinction matters greatly in insurance and claims practice, as it determines which party must file a claim and against whom.
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