[TIPS] Who Owns the Risk? Understanding Incoterms, FCA & RePO

Host: Lalo Solorzano
Guest(s): Arthur O’Meara
Published: September 8, 2026
Length: ~15 minutes
Presented by: Global Training Center

When goods are damaged in transit, who owns the problem—the seller or the buyer? The answer may not be as straightforward as who owns or physically possesses the goods.

In this Trade Tips episode of Simply Trade, host Lalo Solorzano welcomes longtime Global Training Center instructor Arthur O’Meara for a practical conversation about Incoterms® and one of the most important distinctions in an international transaction: the difference between responsibility, possession, and ownership.

Arthur shares a real-world FCA scenario involving goods shipped from the United States to Canada that were damaged by rain while in transit. Although title to the goods had not yet transferred to the buyer, the Incoterms® rule told a different story about who was responsible for the risk at the time of the damage.

To make these concepts easier to remember, Arthur introduces his RePO framework: Responsibility, Possession, and Ownership. He explains why these three concepts need to be understood separately—and why the paperwork, the parties’ intentions, and what actually happens operationally should all align.

The key lesson: don’t wait until something goes wrong to discover what your contract actually says.

This episode focuses on understanding how Incoterms® address the transfer of possession and risk between seller and buyer—and why that should not be confused with the transfer of ownership or title.

Arthur uses the mnemonic RePO: Responsibility, Possession, and Ownership to distinguish three concepts that can transfer at different points in a transaction.

Using an FCA seller’s facility example, Arthur explains how risk can transfer to the buyer once the seller loads the goods onto the collecting vehicle, even though ownership may not yet have transferred. When the shipment in his example was damaged by rain on its way to Canada, understanding the agreed Incoterms® rule helped determine which party bore the risk.

The broader lesson applies beyond FCA: companies should regularly compare their contracts and documentation with their actual operational practices and confirm that they accurately reflect what the buyer and seller intend.

• Remember RePO: Responsibility, Possession, and Ownership are separate concepts and should be addressed accordingly in the transaction.

• Incoterms® do not determine ownership: They address important responsibilities between buyer and seller, including delivery and the transfer of risk, but title or ownership must be addressed separately.

• Know when risk transfers: Under FCA at the seller’s facility, the point at which the seller delivers the goods to the buyer’s carrier can determine when risk shifts from seller to buyer.

• Test your paperwork before there’s a problem: Create a hypothetical failure or damaged-shipment scenario, pull out the documentation, and determine whether the written agreement matches the parties’ intentions and actual operations.

• O'Meara and Associates

• Global Training Center

• The Way Things Work: Newly Revised Edition by David Macaulay — Arthur recommends this illustrated reference as an approachable way for trade professionals to better understand mechanical and engineering concepts useful in areas such as tariff classification.

• Whose Problem Is It? Scenario of Incoterms FCA (RePO) — Explore Arthur’s RePO concept and an Incoterms® FCA scenario in more detail.

Host:
Lalo Solorzano

Guest(s):
Arthur O’Meara - LinkedIn

Producer:
Lalo Solorzano

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