EXW | Ex Works

EXW (insert named place of delivery) Incoterms® 2020

EXPLANATORY NOTES FOR USERS

1. Delivery and risk—“Ex Works” means that the seller delivers the goods to the buyer

  • when it places the goods at the disposal of the buyer at a named place (like a factory or warehouse), and
  • that named place may or may not be the seller’s premises.

For delivery to occur, the seller does not need to load the goods on any collecting vehicle, nor does it need to clear the goods for export, where such clearance is applicable.

2. Mode of transport—This rule may be used irrespective of the mode or modes of transport, if any, selected.

3. Place or precise point of delivery—The parties need only name the place of delivery. However, the parties are well advised also to specify as clearly as possible the precise point within the named place of delivery. A named precise point of delivery makes it clear to both parties when the goods are

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delivered and when risk transfers to the buyer; such precision also marks the point at which costs are for the buyer’s account. If the parties do not name the point of delivery, then they are taken to have left it to the seller to select the point “that best suits its purpose”. This means that the buyer may incur the risk that the seller may choose a point just before the point at which goods are lost or damaged. Best for the buyer therefore to select the precise point within a place where delivery will occur.

4. A note of caution to buyers—EXW is the Incoterms® rule which imposes the least set of obligations on the seller. From the buyer’s perspective, therefore, the rule should be used with care for different reasons as set out below.

5. Loading risks— Delivery happens—and risk transfers—when the goods are placed, not loaded, at the buyer’s disposal. However, risk of loss of or damage to the goods occurring while the loading operation is carried out by the seller, as it may well be, might arguably lie with the buyer, who has not physically participated in the loading. Given this possibility, it would be advisable, where the seller is to load the goods, for the parties to agree in advance who is to bear the risk of any loss of or damage to the goods during loading. This is a common situation simply because the seller is more likely to have the necessary loading equipment at its own premises or because applicable safety or security rules prevent access to the seller’s premises by unauthorised personnel. Where the buyer is keen to avoid any risk during loading at the seller’s premises, then the buyer ought to consider choosing the FCA rule (under which, if the goods are delivered at the seller’s premises, the seller owes the buyer an obligation to load, with the risk of loss of or damage to the goods during that operation remaining with the seller).

6. Export clearance—With delivery happening when the goods are at the buyer’s disposal either at the seller’s premises or at another named point typically within the seller’s jurisdiction or within the same Customs Union, there is no obligation on the seller to organise export clearance or clearance within third countries through which the goods pass in transit. Indeed, EXW may be suitable for domestic trades, where there is no intention at all to export the goods. The seller’s participation in export clearance is limited to providing assistance in obtaining such documents and information as the buyer may require for the purpose of exporting the goods. Where the buyer intends to export the goods and where it anticipates difficulty in obtaining export clearance, the buyer would be

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better advised to choose the FCA rule, under which the obligation and cost of obtaining export clearance lies with the seller.

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A THE SELLER’S OBLIGATIONS

A1 General obligations

The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.

Any document to be provided by the seller may be in paper or electronic form as agreed or, where there is no agreement, as is customary.

A2 Delivery

The seller must deliver the goods by placing them at the disposal of the buyer at the agreed point, if any, at the named place of delivery, not loaded on any collecting vehicle. If no specific point has been agreed within the named place of delivery, and if there are several points available, the seller may select the point that best suits its purpose. The seller must deliver the goods on the agreed date or within the agreed period.

A3 Transfer of risks

The seller bears all risks of loss of or damage to the goods until they have been delivered in accordance with A2, with the exception of loss or damage in the circumstance described in B3.

A4 Carriage

The seller has no obligation to the buyer to make a contract of carriage.

However, the seller must provide the buyer, at the buyer’s request, risk and cost, with any information in the possession of the seller, including transport-related security requirements, that the buyer needs for arranging carriage.

A5 Insurance

The seller has no obligation to the buyer to make a contract of insurance. However, the seller must provide the buyer, at the buyer’s request, risk and cost with information in the possession of the seller that the buyer needs for obtaining insurance.

A6 Delivery/transport document

The seller has no obligation to the buyer.

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B THE BUYER’S OBLIGATIONS

B1 General obligations

The buyer must pay the price of the goods as provided in the contract of sale.

Any document to be provided by the buyer may be in paper or electronic form as agreed or, where there is no agreement, as is customary.

B2 Taking delivery

The buyer must take delivery of the goods when they have been delivered under A2 and notice given under A10.

B3 Transfer of risks

The buyer bears all risks of loss of or damage to the goods from the time they have been delivered under A2.

If the buyer fails to give notice in accordance with B10, then the buyer bears all risks of loss of or damage to the goods from the agreed date or the end of the agreed period for delivery, provided that the goods have been clearly identified as the contract goods.

B4 Carriage

It is up to the buyer to contract or arrange at its own cost for the carriage of the goods from the named place of delivery.

B5 Insurance

The buyer has no obligation to the seller to make a contract of insurance.

B6 Proof of delivery

The buyer must provide the seller with appropriate evidence of having taken delivery.

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A THE SELLER’S OBLIGATIONS

A7 Export/import clearance

Where applicable, the seller must assist the buyer, at the buyer’s request, risk and cost, in obtaining any documents and/or information related to all export/transit/import clearance formalities required by the countries of export/transit/import, such as:

  • export/transit/import licence;
  • security clearance for export/transit/import;
  • pre-shipment inspection; and
  • any other official authorisation.

A8 Checking/packaging/marking

The seller must pay the costs of those checking operations (such as checking quality, measuring, weighing, counting) that are necessary for the purpose of delivering the goods in accordance with A2.

The seller must, at its own cost, package the goods, unless it is usual for the particular trade to transport the type of goods sold unpackaged. The seller must package and mark the goods in the manner appropriate for their transport, unless the parties have agreed on specific packaging or marking requirements.

A9 Allocation of costs

The seller must pay all costs relating to the goods until they have been delivered in accordance with A2, other than those payable by the buyer under B9.

A10 Notices

The seller must give the buyer any notice needed to enable the buyer to take delivery of the goods.

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B THE BUYER’S OBLIGATIONS

B7 Export/import clearance

Where applicable, it is up to the buyer to carry out and pay for all export/transit/import clearance formalities required by the countries of export/transit/import, such as:

  • export/transit/import licence;
  • security clearance for export/transit/import;
  • pre-shipment inspection; and
  • any other official authorisation.

B8 Checking/packaging/marking

The buyer has no obligation to the seller.

B9 Allocation of costs

The buyer must:

a) pay all costs relating to the goods from the time they have been delivered under A2;

b) reimburse all costs and charges incurred by the seller in providing assistance or information under A4, A5, or A7;

c) pay, where applicable, all duties, taxes and other charges, as well as the costs of carrying out customs formalities payable upon export; and

d) pay any additional costs incurred by failing either to take delivery of the goods when they have been placed at its disposal or to give appropriate notice in accordance with B10, provided that the goods have been clearly identified as the contract goods.

B10 Notices

The buyer must, whenever it is agreed that the buyer is entitled to determine the time within an agreed period and/or the point of taking delivery within the named place, give the seller sufficient notice.

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FCA | Free Carrier

FCA (insert named place of delivery) Incoterms® 2020

EXPLANATORY NOTES FOR USERS

1. Delivery and risk—“Free Carrier (named place)” means that the seller delivers the goods to the buyer in one or other of two ways.

First, when the named place is the seller’s premises, the goods are delivered

  • when they are loaded on the means of transport arranged by the buyer.

Second, when the named place is another place, the goods are delivered

  • when, having been loaded on the seller’s means of transport,
  • they reach the named other place and
  • are ready for unloading from that seller’s means of transport and
  • at the disposal of the carrier or of another person nominated by the buyer.

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Whichever of the two is chosen as the place of delivery, that place identifies where risk transfers to the buyer and the time from which costs are for the buyer’s account.

2. Mode of transport—This rule may be used irrespective of the mode of transport selected and may also be used where more than one mode of transport is employed.

3. Place or point of delivery—A sale under FCA can be concluded naming only the place of delivery, either at the seller’s premises or elsewhere, without specifying the precise point of delivery within that named place. However, the parties are well advised also to specify as clearly as possible the precise point within the named place of delivery. A named precise point of delivery makes it clear to both parties when the goods are delivered and when risk transfers to the buyer; such precision also marks the point at which costs are for the buyer’s account. Where the precise point is not identified, however, this may cause problems for the buyer. The seller in this case has the right to select the point “that best suits its purpose”: that point becomes the point of delivery, from which risk and costs transfer to the buyer. If the precise point of delivery is not identified by naming it in the contract, then the parties are taken to have left it to the seller to select the point “that best suits its purpose”. This means that the buyer may incur the risk that the seller may choose a point just before the point at which goods are lost or damaged. Best for the buyer therefore to select the precise point within a place where delivery will occur.

4. ‘or procure goods so delivered’—The reference to “procure” here caters for multiple sales down a chain (string sales), particularly, although not exclusively, common in the commodity trades.

5. Export/import clearance—FCA requires the seller to clear the goods for export, where applicable. However, the seller has no obligation to clear the goods for import or for transit through third countries, to pay any import duty or to carry out any import customs formalities.

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6. Bills of lading with an on-board notation in FCA sales—We have already seen that FCA is intended for use irrespective of the mode or modes of transport used. Now if goods are being picked up by the buyer’s road-haulier in Las Vegas, it would be rather uncommon to expect a bill of lading with an on-board notation to be issued by the carrier from Las Vegas, which is not a port and which a vessel cannot reach for goods to be placed on board. Nonetheless, sellers selling FCA Las Vegas do sometimes find themselves in a situation where they need a bill of lading with an on-board notation (typically because of a bank collection or a letter of credit requirement), albeit necessarily stating that the goods have been placed on board in Los Angeles as well as stating that they were received for carriage in Las Vegas. To cater for this possibility of an FCA seller needing a bill of lading with an on-board notation, FCA Incoterms® 2020 has, for the first time, provided the following optional mechanism. If the parties have so agreed in the contract, the buyer must instruct its carrier to issue a bill of lading with an on-board notation to the seller. The carrier may or may not, of course, accede to the buyer’s request, given that the carrier is only bound and entitled to issue such a bill of lading once the goods are on board in Los Angeles. However, if and when the bill of lading is issued to the seller by the carrier at the buyer’s cost and risk, the seller must provide that same document to the buyer, who will need the bill of lading in order to obtain discharge of the goods from the carrier. This optional mechanism becomes unnecessary, of course, if the parties have agreed that the seller will present to the buyer a bill of lading stating simply that the goods have been received for shipment rather than that they have been shipped on board. Moreover, it should be emphasised that even where this optional mechanism is adopted, the seller is under no obligation to the buyer as to the terms of the contract of carriage. Finally, when this optional mechanism is adopted, the dates of delivery inland and loading on board will necessarily be different, which may well create difficulties for the seller under a letter of credit.

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A THE SELLER’S OBLIGATIONS

A1 General obligations

The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.

Any document to be provided by the seller may be in paper or electronic form as agreed or, where there is no agreement, as is customary.

A2 Delivery

The seller must deliver the goods to the carrier or another person nominated by the buyer at the named point, if any, at the named place, or procure goods so delivered.

The seller must deliver the goods

1. on the agreed date or

2. at the time within the agreed period notified by the buyer under B10(b)

or,

3. if no such time is notified, then at the end of the agreed period.

Delivery is completed either:

  1. If the named place is the seller’s premises, when the goods have been loaded on the means of transport provided by the buyer;or
  2. In any other case, when the goods are placed at the disposal of the carrier or another person nominated by the buyer on the seller’s means of transport ready for unloading.

If no specific point has been notified by the buyer under B10(d) within the named place of delivery, and if there are several points available, the seller may select the point that best suits its purpose.

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B THE BUYER’S OBLIGATIONS

B1 General obligations

The buyer must pay the price of the goods as provided in the contract of sale.

Any document to be provided by the buyer may be in paper or electronic form as agreed or, where there is no agreement, as is customary.

B2 Taking delivery

The buyer must take delivery of the goods when they have been delivered under A2.

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A THE SELLER’S OBLIGATIONS

A3 Transfer of risks

The seller bears all risks of loss of or damage to the goods until they have been delivered in accordance with A2, with the exception of loss or damage in the circumstances described in B3.

A4 Carriage

The seller has no obligation to the buyer to make a contract of carriage. However, the seller must provide the buyer, at the buyer’s request, risk and cost, with any information in the possession of the seller, including transport-related security requirements, that the buyer needs for arranging carriage.

If agreed, the seller must contract for carriage on the usual terms at the buyer’s risk and cost.

The seller must comply with any transport-related security requirements up to delivery.

A5 Insurance

The seller has no obligation to the buyer to make a contract of insurance. However, the seller must provide the buyer, at the buyer’s request, risk and cost, with information in the possession of the seller that the buyer needs for obtaining insurance.

A6 Delivery/transport document

The seller must provide the buyer at the seller’s cost with the usual proof that the goods have been delivered in accordance with A2.

The seller must provide assistance to the buyer, at the buyer’s request, risk and cost, in obtaining a transport document.

Where the buyer has instructed the carrier to issue to the seller a transport document under B6, the seller must provide any such document to the buyer.

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B THE BUYER’S OBLIGATIONS

B3 Transfer of risks

The buyer bears all risks of loss of or damage to the goods from the time they have been delivered under A2.

If:

  1. the buyer fails to nominate a carrier or another person under A2 or to give notice in accordance with B10; or
  2. the carrier or person nominated by the buyer under B10(a) fails to take the goods into its charge,

then, the buyer bears all risks of loss of or damage to the goods:

  1. from the agreed date, or in the absence of an agreed date,
  2. from the time selected by the buyer under B10(b); or, if no such time has been notified,
  3. from the end of any agreed period for delivery,

provided that the goods have been clearly identified as the contract goods.

B4 Carriage

The buyer must contract or arrange at its own cost for the carriage of the goods from the named place of delivery, except when the contract of carriage is made by the seller as provided for in A4.

B5 Insurance

The buyer has no obligation to the seller to make a contract of insurance.

B6 Delivery/transport document

The buyer must accept the proof that the goods have been delivered in accordance with A2.

If the parties have so agreed, the buyer must instruct the carrier to issue to the seller, at the buyer’s cost and risk, a transport document stating that the goods have been loaded (such as a bill of lading with an onboard notation).

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A THE SELLER’S OBLIGATIONS

A7 Export/import clearance

a) Export clearance

Where applicable, the seller must carry out and pay for all export clearance formalities required by the country of export, such as:

  • export licence;
  • security clearance for export;
  • pre-shipment inspection; and
  • any other official authorisation.

b) Assistance with import clearance

Where applicable, the seller must assist the buyer, at the buyer’s request, risk and cost, in obtaining any documents and/or information related to all transit/import clearance formalities, including security requirements and pre-shipment inspection, needed by any country of transit or the country of import.

A8 Checking/packaging/marking

The seller must pay the costs of those checking operations (such as checking quality, measuring, weighing, counting) that are necessary for the purpose of delivering the goods in accordance with A2.

The seller must, at its own cost, package the goods, unless it is usual for the particular trade to transport the type of goods sold unpackaged. The seller must package and mark the goods in the manner appropriate for their transport, unless the parties have agreed on specific packaging or marking requirements.

A9 Allocation of costs

The seller must pay:

  1. all costs relating to the goods until they have been delivered in accordance with A2, other than those payable by the buyer under B9;
  2. the costs of providing the usual proof to the buyer under A6 that the goods have been delivered;
  3. where applicable, duties, taxes and any other costs related to export clearance under A7(a); and
  4. the buyer for all costs and charges related to providing assistance in obtaining documents and information in accordance with B7(a).

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B THE BUYER’S OBLIGATIONS

B7 Export/import clearance

a) Assistance with export clearance

Where applicable, the buyer must assist the seller at the seller’s request, risk and cost in obtaining any documents and/or information related to all export clearance formalities, including security requirements and pre-shipment inspection, needed by the country of export.

b) Import clearance

Where applicable, the buyer must carry out and pay for all formalities required by any country of transit and the country of import, such as:

  • import licence and any licence required for transit;
  • security clearance for import and any transit;
  • pre-shipment inspection; and
  • any other official authorisation.

B8 Checking/packaging/marking

The buyer has no obligation to the seller.

B9 Allocation of costs

The buyer must pay:

a) all costs relating to the goods from the time they have been delivered under A2, other than those payable by the seller under A9;

b) the seller for all costs and charges related to providing assistance in obtaining documents and information in accordance with A4, A5, A6 and A7(b);

c) where applicable, duties, taxes and any other costs related to transit or import clearance under B7(b); and

d) any additional costs incurred, either because:

  1. the buyer fails to nominate a carrier or another person under B10, or
  2. the carrier or person nominated by the buyer under B10 fails to take the goods into its charge,

provided that the goods have been clearly identified as the contract goods.

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A THE SELLER’S OBLIGATIONS

A10 Notices

The seller must give the buyer sufficient notice either that the goods have been delivered in accordance with A2 or that the carrier or another person nominated by the buyer has failed to take the goods within the time agreed.

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B THE BUYER’S OBLIGATIONS

B10 Notices

The buyer must notify the seller of

  1. the name of the carrier or another person nominated within sufficient time as to enable the seller to deliver the goods in accordance with A2;
  2. the selected time, if any, within the period agreed for delivery when the carrier or person nominated will receive the goods;
  3. the mode of transport to be used by the carrier or the person nominated including any transport-related security requirements; and
  4. the point where the goods will be received within the named place of delivery.

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CPT | Carriage Paid To

CPT (insert named place of destination) Incoterms® 2020

EXPLANATORY NOTES FOR USERS

1. Delivery and risk—“Carriage Paid To” means that the seller delivers the goods—and transfers the risk—to the buyer

  • by handing them over to the carrier
  • contracted by the seller
  • or by procuring the goods so delivered.
  • The seller may do so by giving the carrier physical possession of the goods in the manner and at the place appropriate to the means of transport used.

Once the goods have been delivered to the buyer in this way, the seller does not guarantee that the goods will reach the place of destination in sound condition, in the stated quantity or indeed at all. This is because risk transfers from seller to buyer when the goods are delivered to the buyer by handing them over to the carrier; the seller must nonetheless contract for the carriage of the goods from delivery to the agreed destination. Thus, for example, goods are handed over to a carrier in Las Vegas (which is not a port) for carriage to Southampton (a port) or to Winchester (which is not a port). In either case, delivery transferring risk to the buyer happens in Las Vegas, and the seller must make a contract of carriage to either Southampton or Winchester.

2. Mode of transport—This rule may be used irrespective of the mode of transport selected and may also be used where more than one mode of transport is employed.

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3. Places (or points) of delivery and destination—In CPT, two locations are important: the place or point (if any) at which the goods are delivered (for the transfer of risk) and the place or point agreed as the destination of the goods (as the point to which the seller promises to contract for carriage).

4. Identifying the place or point of delivery with precision—The parties are well advised to identify both places, or indeed points within those places, as precisely as possible in the contract of sale. Identifying the place or point (if any) of delivery as precisely as possible is important to cater for the common situation where several carriers are engaged, each for different legs of the transit from delivery to destination. Where this happens and the parties do not agree on a specific place or point of delivery, the default position is that risk transfers when the goods have been delivered to the first carrier at a point entirely of the seller’s choosing and over which the buyer has no control. Should the parties wish the risk to transfer at a later stage (e.g. at a sea or river port or at an airport), or indeed an earlier one (e.g. an inland point some way away from a sea or river port), they need to specify this in their contract of sale and to carefully think through the consequences of so doing in case the goods are lost or damaged.

5. Identifying the destination as precisely as possible—The parties are also well advised to identify as precisely as possible in the contract of sale the point within the agreed place of destination, as this is the point to which the seller must contract for carriage and this is the point to which the costs of carriage fall on the seller.

6. or procuring the goods so delivered’—The reference to “procure” here caters for multiple sales down a chain (string sales), particularly common in the commodity trades.

7. Costs of unloading at destination—If the seller incurs costs under its contract of carriage related to unloading at the named place of destination, the seller is not entitled to recover such costs separately from the buyer unless otherwise agreed between the parties.

8. Export/import clearance—CPT requires the seller to clear the goods for export, where applicable. However, the seller has no

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obligation to clear the goods for import or for transit through third countries, or to pay any import duty or to carry out any import customs formalities.

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A THE SELLER’S OBLIGATIONS

A1 General obligations

The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.

Any document to be provided by the seller may be in paper or electronic form as agreed or, where there is no agreement, as is customary.

A2 Delivery

The seller must deliver the goods by handing them over to the carrier contracted in accordance with A4 or by procuring the goods so delivered. In either case the seller must deliver the goods on the agreed date or within the agreed period.

A3 Transfer of risks

The seller bears all risks of loss of or damage to the goods until they have been delivered in accordance with A2, with the exception of loss or damage in the circumstance described in B3.

A4 Carriage

The seller must contract or procure a contract for the carriage of the goods from the agreed point of delivery, if any, at the place of delivery to the named place of destination or, if agreed, any point at that place. The contract of carriage must be made on usual terms at the seller’s cost and provide for carriage by the usual route in a customary manner of the type normally used for carriage of the type of goods sold. If a specific point is not agreed or is not determined by practice, the seller may select the point of delivery and the point at the named place of destination that best suit its purpose.

The seller must comply with any transport-related security requirements for transport to the destination.

A5 Insurance

The seller has no obligation to the buyer to make a contract of insurance. However, the seller must provide the buyer, at the buyer’s request, risk and cost, with information in the possession of the seller that the buyer needs for obtaining insurance.

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B THE BUYER’S OBLIGATIONS

B1 General obligations

The buyer must pay the price of the goods as provided in the contract of sale.

Any document to be provided by the buyer may be in paper or electronic form as agreed or, where there is no agreement, as is customary.

B2 Taking delivery

The buyer must take delivery of the goods when they have been delivered under A2 and receive them from the carrier at the named place of destination or if agreed, at the point within that place.

B3 Transfer of risks

The buyer bears all risks of loss of or damage to the goods from the time they have been delivered under A2.

If the buyer fails to give notice in accordance with B10, then the buyer bears all risks of loss of or damage to the goods from the agreed date or the end of the agreed period for delivery, provided that the goods have been clearly identified as the contract goods.

B4 Carriage

The buyer has no obligation to the seller to make a contract of carriage.

B5 Insurance

The buyer has no obligation to the seller to make a contract of insurance.

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A THE SELLER’S OBLIGATIONS

A6 Delivery/transport document

If customary or at the buyer’s request, the seller must provide the buyer, at the seller’s cost, with the usual transport document[s] for the transport contracted in accordance with A4.

This transport document must cover the contract goods and be dated within the period agreed for shipment. If agreed or customary, the document must also enable the buyer to claim the goods from the carrier at the named place of destination and enable the buyer to sell the goods in transit by the transfer of the document to a subsequent buyer or by notification to the carrier.

When such a transport document is issued in negotiable form and in several originals, a full set of originals must be presented to the buyer.

A7 Export/import clearance

a) Export clearance

Where applicable, the seller must carry out and pay for all export clearance formalities required by the country of export, such as:

  • export licence;
  • security clearance for export;
  • pre-shipment inspection; and
  • any other official authorisation.

b) Assistance with import clearance

Where applicable, the seller must assist the buyer, at the buyer’s request, risk and cost, in obtaining any documents and/or information related to all transit/import clearance formalities, including security requirements and pre-shipment inspection, needed by any country of transit or the country of import.

A8 Checking/packaging/marking

The seller must pay the costs of those checking operations (such as checking quality, measuring, weighing, counting) that are necessary for the purpose of delivering the goods in accordance with A2.

The seller must, at its own cost, package the goods, unless it is usual for the particular trade to transport the type of goods sold unpackaged. The seller must package and mark the goods in the manner appropriate for their transport, unless the parties have agreed on specific packaging or marking requirements.

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B THE BUYER’S OBLIGATIONS

B6 Delivery/transport document

The buyer must accept the transport document provided under A6 if it is in conformity with the contract.

B7 Export/import clearance

a) Assistance with export clearance

Where applicable, the buyer must assist the seller at the seller’s request, risk and cost in obtaining any documents and/or information related to all export clearance formalities, including security requirements and pre-shipment inspection, needed by the country of export.

b) Import clearance

Where applicable, the buyer must carry out and pay for all formalities required by any country of transit and the country of import, such as:

  • import licence and any licence required for transit;
  • security clearance for import and any transit;
  • pre-shipment inspection; and
  • any other official authorisation.

B8 Checking/packaging/marking

The buyer has no obligation to the seller.

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A THE SELLER’S OBLIGATIONS

A9 Allocation of costs

The seller must pay:

a) all costs relating to the goods until they have been delivered in accordance with A2, other than those payable by the buyer under B9;

b) transport and all other costs resulting from A4, including the costs of loading the goods and transport-related security costs;

c) any charges for unloading at the agreed place of destination but only if those charges were for the seller’s account under the contract of carriage;

d) the costs of transit that were for the seller’s account under the contract of carriage;

e) the costs of providing the usual proof to the buyer under A6 that the goods have been delivered;

f) where applicable, duties, taxes and any other costs related to export clearance under A7(a); and

g) the buyer for all costs and charges related to providing assistance in obtaining documents and information in accordance with B7(a).

A10 Notices

The seller must notify the buyer that the goods have been delivered in accordance with A2.

The seller must give the buyer any notice required to enable the buyer to receive the goods.

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B THE BUYER’S OBLIGATIONS

B9 Allocation of costs

The buyer must pay:

  1. all costs relating to the goods from the time they have been delivered under A2, other than those payable by the seller under A9;
  2. the costs of transit, unless such costs were for the seller’s account under the contract of carriage;
  3. unloading costs, unless such costs were for the seller’s account under the contract of carriage;
  4. the seller for all costs and charges related to providing assistance in obtaining documents and information in accordance with A5 and A7(b);
  5. where applicable, duties, taxes and any other costs related to transit or import clearance under B7(b); and
  6. any additional costs incurred if it fails to give notice in accordance with B10, from the agreed date or the end of the agreed period for shipment, provided that the goods have been clearly identified as the contract goods.

B10 Notices

The buyer must, whenever it is agreed that the buyer is entitled to determine the time for dispatching the goods and/or the point of receiving the goods within the named place of destination, give the seller sufficient notice.

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CIP | Carriage and Insurance Paid To

CIP (insert named place of destination) Incoterms® 2020

EXPLANATORY NOTES FOR USERS

1. Delivery and risk—“Carriage and Insurance Paid To” means that the seller delivers the goods—and transfers the risk—to the buyer

  • by handing them over to the carrier
  • contracted by the seller
  • or by procuring the goods so delivered.
  • The seller may do so by giving the carrier physical possession of the goods in the manner and at the place appropriate to the means of transport used.

Once the goods have been delivered to the buyer in this way, the seller does not guarantee that the goods will reach the place of destination in sound condition, in the stated quantity or indeed at all. This is because risk transfers from seller to buyer when the goods are delivered to the buyer by handing them over to the carrier; the seller must nonetheless contract for the carriage of the goods from delivery to the agreed destination. Thus, for example, goods are handed over to a carrier in Las Vegas (which is not a port) for carriage to Southampton (a port) or to Winchester (which is not a port). In either case, delivery transferring risk to the buyer happens in Las Vegas, and the seller must make a contract of carriage to either Southampton or Winchester.

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2. Mode of transport—This rule may be used irrespective of the mode of transport selected and may also be used where more than one mode of transport is employed.

3. Places (or points) of delivery and destination—In CIP two locations are important: the place or point at which the goods are delivered (for the transfer of risk) and the place or point agreed as the destination of the goods (as the point to which the seller promises to contract for carriage).

4. Insurance—The seller must also contract for insurance cover against the buyer’s risk of loss of or damage to the goods from the point of delivery to at least the point of destination. This may cause difficulty where the destination country requires insurance cover to be purchased locally: in this case the parties should consider selling and buying under CPT. The buyer should also note that under the CIP Incoterms® 2020 rule the seller is required to obtain extensive insurance cover complying with Institute Cargo Clauses (A) or similar clause, rather than with the more limited cover under Institute Cargo Clauses (C). It is, however, still open to the parties to agree on a lower level of cover.

5. Identifying the place or point of delivery with precision—The parties are well advised to identify both places, or indeed points within those places, as precisely as possible in the contract of sale. Identifying the place or point (if any) of delivery as precisely as possible is important to cater for the common situation where several carriers are engaged, each for different legs of the transit from delivery to destination. Where this happens and the parties do not agree on a specific place or point of delivery, the default position is that risk transfers when the goods have been delivered to the first carrier at a point entirely of the seller’s choosing and over which the buyer has no control. Should the parties wish the risk to transfer at a later stage (e.g. at a sea or river port or at an airport), or indeed an earlier one (e.g. an inland point some way away from a sea or river port), they need to specify this in their contract of sale and to carefully think through the consequences of so doing in case the goods are lost or damaged.

6. Identifying the destination as precisely as possible—The parties are also well advised to identify as precisely as possible in the contract of sale the point within the agreed place of

[Page53:]

destination, as this is the point to which the seller must contract for carriage and insurance and this is the point to which the costs of carriage and insurance fall on the seller.

7. or procuring the goods so delivered’—The reference to “procure” here caters for multiple sales down a chain (string sales), particularly common in the commodity trades.

8. Costs of unloading at destination—If the seller incurs costs under its contract of carriage related to unloading at the named place of destination, the seller is not entitled to recover such costs separately from the buyer unless otherwise agreed between the parties.

9. Export/import clearance—CIP requires the seller to clear the goods for export, where applicable. However, the seller has no obligation to clear the goods for import or for transit through third countries, or to pay any import duty or to carry out any import customs formalities.

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A THE SELLER’S OBLIGATIONS

A1 General obligations

The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.

Any document to be provided by the seller may be in paper or electronic form as agreed or, where there is no agreement, as is customary.

A2 Delivery

The seller must deliver the goods by handing them over to the carrier contracted in accordance with A4 or by procuring the goods so delivered. In either case the seller must deliver the goods on the agreed date or within the agreed period.

A3 Transfer of risks

The seller bears all risks of loss of or damage to the goods until they have been delivered in accordance with A2, with the exception of loss or damage in the circumstance described in B3.

A4 Carriage

The seller must contract or procure a contract for the carriage of the goods from the agreed point of delivery, if any, at the place of delivery to the named place of destination or, if agreed, any point at that place. The contract of carriage must be made on usual terms at the seller’s cost and provide for carriage by the usual route in a customary manner of the type normally used for carriage of the type of goods sold. If a specific point is not agreed or is not determined by practice, the seller may select the point of delivery and the point at the named place of destination that best suit its purpose.

The seller must comply with any transport-related security requirements for transport to the destination.

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B THE BUYER’S OBLIGATIONS

B1 General obligations

The buyer must pay the price of the goods as provided in the contract of sale.

Any document to be provided by the buyer may be in paper or electronic form as agreed or, where there is no agreement, as is customary.

B2 Taking delivery

The buyer must take delivery of the goods when they have been delivered under A2 and receive them from the carrier at the named place of destination or if agreed, at the point within that place.

B3 Transfer of risks

The buyer bears all risks of loss of or damage to the goods from the time they have been delivered under A2.

If the buyer fails to give notice in accordance with B10, then the buyer bears all risks of loss of or damage to the goods from the agreed date or the end of the agreed period for delivery, provided that the goods have been clearly identified as the contract goods.

B4 Carriage

The buyer has no obligation to the seller to make a contract of carriage.

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A THE SELLER’S OBLIGATIONS

A5 Insurance

Unless otherwise agreed or customary in the particular trade, the seller must obtain at its own cost cargo insurance complying with the cover provided by Clauses (A) of the Institute Cargo Clauses (LMA/IUA) or any similar clauses as appropriate to the means of transport used. The insurance shall be contracted with underwriters or an insurance company of good repute and entitle the buyer, or any other person having an insurable interest in the goods, to claim directly from the insurer.

When required by the buyer, the seller must, subject to the buyer providing any necessary information requested by the seller, provide at the buyer’s cost any additional cover, if procurable, such as cover complying with the Institute War Clauses and/or Institute Strikes Clauses (LMA/IUA) or any similar clauses (unless such cover is already included with the cargo insurance described in the preceding paragraph).

The insurance shall cover, at a minimum, the price provided in the contract plus 10% (i.e. 110%) and shall be in the currency of the contract.

The insurance shall cover the goods from the point of delivery set out in A2 to at least the named place of destination.

The seller must provide the buyer with the insurance policy or certificate or any other evidence of insurance cover.

Moreover, the seller must provide the buyer, at the buyer’s request, risk and cost, with information that the buyer needs to procure any additional insurance.

A6 Delivery/transport document

If customary or at the buyer’s request, the seller must provide the buyer, at the seller’s cost, with the usual transport document[s] for the transport contracted in accordance with A4.

This transport document must cover the contract goods and be dated within the period agreed for shipment. If agreed or customary, the document must also enable the buyer to claim the goods from the carrier at the named place of destination and enable the buyer to sell the goods in transit by the transfer of the document to a subsequent buyer or by notification to the carrier.

When such a transport document is issued in negotiable form and in several originals, a full set of originals must be presented to the buyer.

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B THE BUYER’S OBLIGATIONS

B5 Insurance

The buyer has no obligation to the seller to make a contract of insurance. However, the buyer must provide the seller, upon request, with any information necessary for the seller to procure any additional insurance requested by the buyer under A5.

B6 Delivery/transport document

The buyer must accept the transport document provided under A6 if it is in conformity with the contract.

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A THE SELLER’S OBLIGATIONS

A7 Export/import clearance

a) Export clearance

Where applicable, the seller must carry out and pay for all export clearance formalities required by the country of export, such as:

  • export licence;
  • security clearance for export;
  • pre-shipment inspection; and
  • any other official authorisation.

b) Assistance with import clearance

Where applicable, the seller must assist the buyer, at the buyer’s request, risk and cost, in obtaining any documents and/or information related to all transit/import clearance formalities, including security requirements and pre-shipment inspection, needed by any country of transit or the country of import.

A8 Checking/packaging/marking

The seller must pay the costs of those checking operations (such as checking quality, measuring, weighing, counting) that are necessary for the purpose of delivering the goods in accordance with A2.

The seller must, at its own cost, package the goods, unless it is usual for the particular trade to transport the type of goods sold unpackaged. The seller must package and mark the goods in the manner appropriate for their transport, unless the parties have agreed on specific packaging or marking requirements.

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B THE BUYER’S OBLIGATIONS

B7 Export/import clearance

a) Assistance with export clearance

Where applicable, the buyer must assist the seller at the seller’s request, risk and cost in obtaining any documents and/or information related to all export clearance formalities, including security requirements and pre-shipment inspection, needed by the country of export.

b) Import clearance

Where applicable, the buyer must carry out and pay for all formalities required by any country of transit and the country of import, such as:

  • import licence and any licence required for transit;
  • security clearance for import and any transit;
  • pre-shipment inspection; and
  • any other official authorisation.

B8 Checking/packaging/marking

The buyer has no obligation to the seller.

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A THE SELLER’S OBLIGATIONS

A9 Allocation of costs

The seller must pay:

a) all costs relating to the goods until they have been delivered in accordance with A2, other than those payable by the buyer under B9;

b) transport and all other costs resulting from A4, including the costs of loading the goods and transport-related security costs;

c) any charges for unloading at the agreed place of destination but only if those charges were for the seller’s account under the contract of carriage;

d) the costs of transit that were for the seller’s account under the contract of carriage;

e) the costs of providing the usual proof to the buyer under A6 that the goods have been delivered;

f) the costs of insurance resulting from A5;

g) where applicable, duties, taxes and any other costs related to export clearance under A7(a); and

h) the buyer for all costs and charges related to providing assistance in obtaining documents and information in accordance with B7(a).

A10 Notices

The seller must notify the buyer that the goods have been delivered in accordance with A2.

The seller must give the buyer any notice required to enable the buyer to receive the goods.

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B THE BUYER’S OBLIGATIONS

B9 Allocation of costs

The buyer must pay:

  1. all costs relating to the goods from the time they have been delivered under A2, other than those payable by the seller under A9;
  2. the costs of transit, unless such costs were for the seller’s account under the contract of carriage;
  3. unloading costs, unless such costs were for the seller’s account under the contract of carriage;
  4. the costs of any additional insurance procured at the buyer’s request under A5 and B5;
  5. the seller for all costs and charges related to providing assistance in obtaining documents and information in accordance with A5 and A7(b);
  6. where applicable, duties, taxes and any other costs related to transit or import clearance under B7(b); and
  7. any additional costs incurred if it fails to give notice in accordance with B10, from the agreed date or the end of the agreed period for shipment, provided that the goods have been clearly identified as the contract goods.

B10 Notices

The buyer must, whenever it is agreed that the buyer is entitled to determine the time for dispatching the goods and/or the point of receiving the goods within the named place of destination, give the seller sufficient notice.

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DAP | Delivered at Place

DAP (insert named place of destination) Incoterms® 2020

EXPLANATORY NOTES FOR USERS

1. Delivery and risk—“Delivered at Place” means that the seller delivers the goods—and transfers risk—to the buyer

  • when the goods are placed at the disposal of the buyer
  • on the arriving means of transport ready for unloading
  • at the named place of destination or
  • at the agreed point within that place, if any such point is agreed.

The seller bears all risks involved in bringing the goods to the named place of destination or to the agreed point within that place. In this Incoterms® rule, therefore, delivery and arrival at destination are the same.

2. Mode of transport—This rule may be used irrespective of the mode of transport selected and may also be used where more than one mode of transport is employed.

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3. Identifying the place or point of delivery/destination precisely—The parties are well advised to specify the destination place or point as clearly as possible and this for several rea- sons. First, risk of loss of or damage to the goods transfers to the buyer at that point of delivery/destination—and it is best for the seller and the buyer to be clear about the point at which that critical transfer happens. Secondly, the costs before that place or point of delivery/destination are for the account of the seller and the costs after that place or point are for the account of the buyer. Thirdly, the seller must contract or arrange for the carriage of the goods to the agreed place or point of delivery/ destination. If it fails to do so, the seller is in breach of its obligations under the Incoterms® DAP rule and will be liable to the buyer for any ensuing loss. Thus, for example, the seller would be responsible for any additional costs levied by the carrier to the buyer for any additional on-carriage.

4. or procuring the goods so delivered’—The reference to “procure” here caters for multiple sales down a chain (string sales), particularly common in the commodity trades.

5. Unloading costs—The seller is not required to unload the goods from the arriving means of transportation. However, if the seller incurs costs under its contract of carriage related to unloading at the place of delivery/destination, the seller is not entitled to recover such costs separately from the buyer unless otherwise agreed between the parties.

6. Export/import clearance—DAP requires the seller to clear the goods for export, where applicable. However, the seller has no obligation to clear the goods for import or for post-delivery transit through third countries, to pay any import duty or to carry out any import customs formalities. As a result, if the buyer fails to organise import clearance, the goods will be held up at a port or inland terminal in the destination country. Who bears the risk of any loss that might occur while the goods are thus held up at the port of entry in the destination country? The answer is the buyer: delivery will not have occurred yet, B3(a) ensuring that the risk of loss of or damage to the goods is with the buyer until transit to a named inland point can be resumed. If, in order to avoid this scenario, the parties intend the seller to clear the goods for import, pay any import duty or tax and carry out any import customs formalities, the parties might consider using DDP.

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A THE SELLER’S OBLIGATIONS

A1 General obligations

The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.

Any document to be provided by the seller may be in paper or electronic form as agreed or, where there is no agreement, as is customary.

A2 Delivery

The seller must deliver the goods by placing them at the disposal of the buyer on the arriving means of transport ready for unloading at the agreed point, if any, at the named place of destination or by procuring the goods so delivered. In either case the seller must deliver the goods on the agreed date or within the agreed period.

A3 Transfer of risks

The seller bears all risks of loss of or damage to the goods until they have been delivered in accordance with A2, with the exception of loss or damage in the circumstances described in B3.

A4 Carriage

The seller must contract or arrange at its own cost for the carriage of the goods to the named place of destination or to the agreed point, if any, at the named place of destination. If a specific point is not agreed or is not determined by practice, the seller may select the point at the named place of destination that best suits its purpose. The seller must comply with any transport-related security requirements for transport to the destination.

A5 Insurance

The seller has no obligation to the buyer to make a contract of insurance.

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B THE BUYER’S OBLIGATIONS

B1 General obligations

The buyer must pay the price of the goods as provided in the contract of sale.

Any document to be provided by the buyer may be in paper or electronic form as agreed or, where there is no agreement, as is customary.

B2 Taking delivery

The buyer must take delivery of the goods when they have been delivered under A2.

B3 Transfer of risks

The buyer bears all risks of loss of or damage to the goods from the time they have been delivered under A2.

If:

a) the buyer fails to fulfil its obligations in accordance with B7, then it bears all resulting risks of loss of or damage to the goods; or

b) the buyer fails to give notice in accordance with B10, then it bears all risks of loss of or damage to the goods from the agreed date or the end of the agreed period for delivery,

provided that the goods have been clearly identified as the contract goods.

B4 Carriage

The buyer has no obligation to the seller to make a contract of carriage.

B5 Insurance

The buyer has no obligation to the seller to make a contract of insurance. However, the buyer must provide the seller, at the seller’s request, risk and cost, with information that the seller needs for obtaining insurance.

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A THE SELLER’S OBLIGATIONS

A6 Delivery/transport document

The seller must provide the buyer, at the seller’s cost, with any document required to enable the buyer to take over the goods.

A7 Export/import clearance

a) Export and transit clearance

Where applicable, the seller must carry out and pay for all export and transit clearance formalities required by the country of export and any country of transit (other than the country of import), such as:

  • export/transit licence;
  • security clearance for export/transit;
  • pre-shipment inspection; and
  • any other official authorisation.

b) Assistance with import clearance

Where applicable, the seller must assist the buyer, at the buyer’s request, risk and cost, in obtaining any documents and/or information related to all import clearance formalities, including security requirements and pre-shipment inspection, needed by the country of import.

A8 Checking/packaging/marking

The seller must pay the costs of those checking operations (such as checking quality, measuring, weighing, counting) that are necessary for the purpose of delivering the goods in accordance with A2.

The seller must, at its own cost, package the goods, unless it is usual for the particular trade to transport the type of goods sold unpackaged. The seller must package and mark the goods in the manner appropriate for their transport, unless the parties have agreed on specific packaging or marking requirements.

A9 Allocation of costs

The seller must pay:

  1. all costs relating to the goods and their transport until they have been delivered in accordance with A2, other than those payable by the buyer under B9;
  2. any charges for unloading at the place of destination but only if those charges were for the seller’s account under the contract of carriage;
  3. the cost of providing the delivery/transport document under A6;
  4. where applicable, duties, taxes and any other costs related to export and any transit clearance under A7(a); and
  5. the buyer for all costs and charges related to providing assistance in obtaining documents and information in accordance with B5 and B7(a).

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B THE BUYER’S OBLIGATIONS

B6 Delivery/transport document

The buyer must accept the document provided under A6.

B7 Export/import clearance

a) Assistance with export and transit clearance

Where applicable, the buyer must assist the seller at the seller’s request, risk and cost in obtaining any documents and/or information related to all export/transit clearance formalities, including security requirements and pre-shipment inspection, needed by the country of export and any country of transit (other than the country of import).

b) Import clearance

Where applicable, the buyer must carry out and pay for all formalities required by the country of import, such as:

  • import licence;
  • security clearance for import;
  • pre-shipment inspection; and
  • any other official authorisation.

B8 Checking/packaging/marking

The buyer has no obligation to the seller.

B9 Allocation of costs

The buyer must pay:

  1. all costs relating to the goods from the time they have been delivered under A2;
  2. all costs of unloading necessary to take delivery of the goods from the arriving means of transport at the named place of destination, unless such costs were for the seller’s account under the contract of carriage;
  3. the seller for all costs and charges related to providing assistance in obtaining documents and information in accordance with A7(b);
  4. where applicable, duties, taxes and any other costs related to import clearance under B7(b); and
  5. any additional costs incurred by the seller if the buyer fails to fulfil its obligations in accordance with B7 or to give notice in accordance with B10, provided that the goods have been clearly identified as the contract goods.

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A THE SELLER’S OBLIGATIONS

A10 Notices

The seller must give the buyer any notice required to enable the buyer to receive the goods.

[Page71:]

B THE BUYER’S OBLIGATIONS

B10 Notices

The buyer must, whenever it is agreed that the buyer is entitled to determine the time within an agreed period and/or the point of taking delivery within the named place of destination, give the seller sufficient notice.

[Page73:]

DPU | Delivered at Place Unloaded

DPU (insert named place of destination) Incoterms® 2020

EXPLANATORY NOTES FOR USERS

1. Delivery and risk—“Delivered at Place Unloaded” means that the seller delivers the goods—and transfers risk—to the buyer

  • when the goods,
  • once unloaded from the arriving means of transport,
  • are placed at the disposal of the buyer
  • at a named place of destination or
  • at the agreed point within that place, if any such point is agreed.

The seller bears all risks involved in bringing the goods to and unloading them at the named place of destination. In this Incoterms® rule, therefore, the delivery and arrival at destination are the same. DPU is the only Incoterms® rule that requires the seller to unload goods at destination. The seller should therefore ensure that it is in a position to organise unloading at the named place. Should the parties intend the seller not to bear the risk and cost of unloading, the DPU rule should be avoided and DAP should be used instead.

2. Mode of transport—This rule may be used irrespective of the mode of transport selected and may also be used where more than one mode of transport is employed.

[Page74:]

3. Identifying the place or point of delivery/destination precisely—The parties are well advised to specify the destination place or point as clearly as possible and this for several reasons. First, risk of loss of or damage to the goods transfers to the buyer at that point of delivery/destination—and it is best for the seller and the buyer to be clear about the point at which that critical transfer happens. Secondly, the costs before that place or point of delivery/destination are for the account of the seller and the costs after that place or point are for the account of the buyer. Thirdly, the seller must contract or arrange for the carriage of the goods to the agreed place or point of delivery/ destination. If it fails to do so, the seller is in breach of its obligations under this rule and will be liable to the buyer for any ensuing loss. The seller would, for example, be responsible for any additional costs levied by the carrier to the buyer for any additional on-carriage.

4. or procuring the goods so delivered’—The reference to “procure” here caters for multiple sales down a chain (string sales), particularly common in the commodity trades.

5. Export/import clearance—DPU requires the seller to clear the goods for export, where applicable. However, the seller has no obligation to clear the goods for import or for post-delivery transit through third countries, to pay any import duty or to carry out any import customs formalities. As a result, if the buyer fails to organise import clearance, the goods will be held up at a port or inland terminal in the destination country. Who bears the risk of any loss that might occur while the goods are thus held up at the port of entry in the destination country? The answer is the buyer: delivery will not have occurred yet, B3(a) ensuring that the risk of loss of or damage to the goods is with the buyer until transit to a named inland point can be resumed. If, in order to avoid this scenario, the parties intend the seller to clear the goods for import, pay any import duty or tax and carry out any import customs formalities, the parties might consider using DDP.

[Page76:]

A THE SELLER’S OBLIGATIONS

A1 General obligations

The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.

Any document to be provided by the seller may be in paper or electronic form as agreed or, where there is no agreement, as is customary.

A2 Delivery

The seller must unload the goods from the arriving means of transport and must then deliver them by placing them at the disposal of the buyer at the agreed point, if any, at the named place of destination or by procuring the goods so delivered. In either case the seller must deliver the goods on the agreed date or within the agreed period.

A3 Transfer of risks

The seller bears all risks of loss of or damage to the goods until they have been delivered in accordance with A2, with the exception of loss or damage in the circumstances described in B3.

A4 Carriage

The seller must contract or arrange at its own cost for the carriage of the goods to the named place of destination or to the agreed point, if any, at the named place of destination. If a specific point is not agreed or is not determined by practice, the seller may select the point at the named place of destination that best suits its purpose. The seller must comply with any transport-related security requirements for transport to the destination.

A5 Insurance

The seller has no obligation to the buyer to make a contract of insurance.

[Page77:]

B THE BUYER’S OBLIGATIONS

B1 General obligations

The buyer must pay the price of the goods as provided in the contract of sale.

Any document to be provided by the buyer may be in paper or electronic form as agreed or, where there is no agreement, as is customary.

B2 Taking delivery

The buyer must take delivery of the goods when they have been delivered under A2.

B3 Transfer of risks

The buyer bears all risks of loss of or damage to the goods from the time they have been delivered under A2.

If:

  1. the buyer fails to fulfil its obligations in accordance with B7, then it bears all resulting risks of loss of or damage to the goods; or
  2. the buyer fails to give notice in accordance with B10, then it bears all risks of loss of or damage to the goods from the agreed date or the end of the agreed period for delivery,

provided that the goods have been clearly identified as the contract goods.

B4 Carriage

The buyer has no obligation to the seller to make a contract of carriage.

B5 Insurance

The buyer has no obligation to the seller to make a contract of insurance. However, the buyer must provide the seller, at the seller’s request, risk and cost, with information that the seller needs for obtaining insurance.

[Page78:]

A THE SELLER’S OBLIGATIONS

A6 Delivery/transport document

The seller must provide the buyer, at the seller’s cost, with any document required to enable the buyer to take over the goods.

A7 Export/import clearance

a) Export and transit clearance

Where applicable, the seller must carry out and pay for all export and transit clearance formalities required by the country of export and any country of transit (other than the country of import), such as:

  • export/transit licence;
  • security clearance for export/transit;
  • pre-shipment inspection; and
  • any other official authorisation.

b) Assistance with import clearance

Where applicable, the seller must assist the buyer, at the buyer’s request, risk and cost, in obtaining any documents and/or information related to all import clearance formalities, including security requirements and pre-shipment inspection, needed by the country of import.

A8 Checking/packaging/marking

The seller must pay the costs of those checking operations (such as checking quality, measuring, weighing, counting) that are necessary for the purpose of delivering the goods in accordance with A2.

The seller must, at its own cost, package the goods, unless it is usual for the particular trade to transport the type of goods sold unpackaged. The seller must package and mark the goods in the manner appropriate for their transport, unless the parties have agreed on specific packaging or marking requirements.

A9 Allocation of costs

The seller must pay:

  1. all costs relating to the goods and their transport until they have been unloaded and delivered in accordance with A2, other than those payable by the buyer under B9;
  2. the cost of providing the delivery/transport document under A6;
  3. where applicable, duties, taxes and any other costs related to export and any transit clearance under A7(a); and
  4. the buyer for all costs and charges related to providing assistance in obtaining documents and information in accordance with B5 and B7(a).

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B THE BUYER’S OBLIGATIONS

B6 Delivery/transport document

The buyer must accept the document provided under A6.

B7 Export/import clearance

  1. Assistance with export and transit clearance
    Where applicable, the buyer must assist the seller at the seller’s request, risk and cost in obtaining any documents and/or information related to all export/transit clearance formalities, including security requirements and pre-shipment inspection, needed by the country of export and any country of transit (other than the country of import).

  1. Import clearance
    Where applicable, the buyer must carry out and pay for all formalities required by the country of import, such as:
  • import licence;
  • security clearance for import;
  • pre-shipment inspection; and
  • any other official authorisation.

B8 Checking/packaging/marking

The buyer has no obligation to the seller.

B9 Allocation of costs

The buyer must pay:

  1. all costs relating to the goods from the time they have been delivered under A2;
  2. the seller for all costs and charges related to providing assistance in obtaining documents and information in accordance with A7(b);
  3. where applicable, duties, taxes and any other costs related to import clearance under B7(b); and
  4. any additional costs incurred by the seller if the buyer fails to fulfil its obligations in accordance with B7 or to give notice in accordance with B10, provided that the goods have been clearly identified as the contract goods.

[Page80:]

A THE SELLER’S OBLIGATIONS

A10 Notices

The seller must give the buyer any notice required to enable the buyer to receive the goods.

[Page81:]

B THE BUYER’S OBLIGATIONS

B10 Notices

The buyer must, whenever it is agreed that the buyer is entitled to determine the time within an agreed period and/or the point of taking delivery within the named place of destination, give the seller sufficient notice.

[Page83:]

DDP | Delivered Duty Paid

DDP (insert named place of destination) Incoterms® 2020

EXPLANATORY NOTES FOR USERS

  1. Delivery and risk—“Delivered Duty Paid” means that the seller delivers the goods to the buyer

  • when the goods are placed at the disposal of the buyer,
  • cleared for import,
  • on the arriving means of transport,
  • ready for unloading,
  • at the named place of destination or at the agreed point within that place, if any such point is agreed.

The seller bears all risks involved in bringing the goods to the named place of destination or to the agreed point within that place. In this Incoterms® rule, therefore, delivery and arrival at destination are the same.

  1. Mode of transport—This rule may be used irrespective of the mode of transport selected and may also be used where more than one mode of transport is employed.

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  1. A note of caution to sellers: maximum responsibility—DDP, with delivery happening at destination and with the seller being responsible for the payment of import duty and applicable taxes is the Incoterms® rule imposing on the seller the maximum level of obligation of all eleven Incoterms® rules. From the seller’s perspective, therefore, the rule should be used with care for different reasons as set out in paragraph 7.
  2. Identifying the place or point of delivery/destination precisely—The parties are well advised to specify the destination place or point as clearly as possible and this for several reasons. First, risk of loss of or damage to the goods transfers to the buyer at that point of delivery/destination—and it is best for the seller and the buyer to be clear about the point at which that critical transfer happens. Secondly, the costs before that place or point of delivery/destination are for the account of the seller, including the costs of import clearance, and the costs after that place or point, other than the costs of import, are for the account of the buyer. Thirdly, the seller must contract or arrange for the carriage of the goods to the agreed place or point of delivery/destination. If it fails to do so, the seller is in breach of its obligations under the Incoterms® rule DDP and will be liable to the buyer for any ensuing loss. Thus, for example, the seller would be responsible for any additional costs levied by the carrier to the buyer for any additional on-carriage.
  3. or procuring the goods so delivered’—The reference to “procure” here caters for multiple sales down a chain (string sales), particularly common in the commodity trades.
  4. Unloading costs—If the seller incurs costs under its contract of carriage related to unloading at the place of delivery/destination, the seller is not entitled to recover such costs separately from the buyer unless otherwise agreed between the parties.
  5. Export/import clearance—As set out in paragraph 3, DDP requires the seller to clear the goods for export, where applicable, as well as for import and to pay any import duty or to carry out any customs formalities. Thus if the seller is unable to obtain import clearance and would rather leave that side of things in the buyer’s hands in the country of import, then the seller should consider choosing DAP or DPU, under which rules delivery still happens at destination, but with import clearance being left to the buyer. There may be tax implications and this tax may not be recoverable from the buyer: see A9(d).

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A THE SELLER’S OBLIGATIONS

A1 General obligations

The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.

Any document to be provided by the seller may be in paper or electronic form as agreed or, where there is no agreement, as is customary.

A2 Delivery

The seller must deliver the goods by placing them at the disposal of the buyer on the arriving means of transport ready for unloading at the agreed point, if any, at the named place of destination or by procuring the goods so delivered. In either case the seller must deliver the goods on the agreed date or within the agreed period.

A3 Transfer of risks

The seller bears all risks of loss of or damage to the goods until they have been delivered in accordance with A2, with the exception of loss or damage in the circumstances described in B3.

A4 Carriage

The seller must contract or arrange at its own cost for the carriage of the goods to the named place of destination or to the agreed point, if any, at the named place of destination. If a specific point is not agreed or is not determined by practice, the seller may select the point at the named place of destination that best suits its purpose.

The seller must comply with any transport-related security requirements for transport to the destination.

A5 Insurance

The seller has no obligation to the buyer to make a contract of insurance.

A6 Delivery/transport document

The seller must provide the buyer, at the seller’s cost, with any document required to enable the buyer to take over the goods.

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B THE BUYER’S OBLIGATIONS

B1 General obligations

The buyer must pay the price of the goods as provided in the contract of sale.

Any document to be provided by the buyer may be in paper or electronic form as agreed or, where there is no agreement, as is customary.

B2 Taking delivery

The buyer must take delivery of the goods when they have been delivered under A2.

B3 Transfer of risks

The buyer bears all risks of loss of or damage to the goods from the time they have been delivered under A2. If:

a) the buyer fails to fulfil its obligations in accordance with B7, then it bears all resulting risks of loss of or damage to the goods; or

b) the buyer fails to give notice in accordance with B10, then it bears all risks of loss of or damage to the goods from the agreed date or the end of the agreed period for delivery,

provided that the goods have been clearly identified as the contract goods.

B4 Carriage

The buyer has no obligation to the seller to make a contract of carriage.

B5 Insurance

The buyer has no obligation to the seller to make a contract of insurance. However, the buyer must provide the seller, at the seller’s request, risk and cost, with information that the seller needs for obtaining insurance.

B6 Delivery/transport document

The buyer must accept the document provided under A6.

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A THE SELLER’S OBLIGATIONS

A7 Export/import clearance

Where applicable, the seller must carry out and pay for all export/transit/import clearance formalities required by the countries of export, transit and import, such as:

  • export/transit/import licence;
  • security clearance for export/transit/import;
  • pre-shipment inspection; and
  • any other official authorisation.

A8 Checking/packaging/marking

The seller must pay the costs of those checking operations (such as checking quality, measuring, weighing, counting) that are necessary for the purpose of delivering the goods in accordance with A2.

The seller must, at its own cost, package the goods, unless it is usual for the particular trade to transport the type of goods sold unpackaged. The seller must package and mark the goods in the manner appropriate for their transport, unless the parties have agreed on specific packaging or marking requirements.

A9 Allocation of costs

The seller must pay:

  1. all costs relating to the goods and their transport until they have been delivered in accordance with A2, other than those payable by the buyer under B9;
  2. any charges for unloading at the place of destination but only if those charges were for the seller’s account under the contract of carriage;
  3. the cost of providing the delivery/transport document under A6;
  4. where applicable, duties, taxes and any other costs related to export, transit and import clearance under A7; and
  5. the buyer for all costs and charges related to providing assistance in obtaining documents and information in accordance with B5 and B7.

A10 Notices

The seller must give the buyer any notice required to enable the buyer to receive the goods.

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B THE BUYER’S OBLIGATIONS

B7 Export/import clearance

Where applicable, the buyer must assist the seller, at the seller’s request, risk and cost. in obtaining any documents and/or information related to all export/transit/import clearance formalities required by the countries of export/transit/import, such as:

  • export/transit/import licence;
  • security clearance for export, transit and import;
  • pre-shipment inspection; and
  • any other official authorisation.

B8 Checking/packaging/marking

The buyer has no obligation to the seller.

B9 Allocation of costs

The buyer must pay:

  1. all costs relating to the goods from the time they have been delivered under A2;
  2. all costs of unloading necessary to take delivery of the goods from the arriving means of transport at the named place of destination, unless such costs were for the seller’s account under the contract of carriage; and
  3. any additional costs incurred by the seller if the buyer fails to fulfil its obligations in accordance with B7 or to give notice in accordance with B10, provided that the goods have been clearly identified as the contract goods.

B10 Notices

The buyer must, whenever it is agreed that the buyer is entitled to determine the time within an agreed period and/or the point of taking delivery within the named place of destination, give the seller sufficient notice.