What are Incoterms used for?

Incoterms® are primarily used for determining how the sale of equipment for delivery across international boundaries will be handled and who will pay for what in the transaction. They will not address the consequences of a breach of contract or exemptions of liability. Incoterms® 2020 relate to the terms between the exporter and importer.

Incoterms® 2020 cover the following broad points:

Delivery – Incoterms® 2020 specify when seller delivers to buyer:

Risk – Incoterms® 2020 specify when risk transfers from seller to buyer. Risk passes from seller to buyer when seller has fulfilled his obligation to deliver the goods

Costs – Responsibility of costs passes from seller to buyer at a point up to which the seller is obliged to pay transport (and insurance) costs

Our seventh Incoterms® is DAP, Delivered At Place – Incoterms® 2020

The seller delivers 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.

The seller bears all risks involved in bringing the goods to the named place 
DAP can be used in any transport mode, and the risk transfers from the seller to the buyer as soon as the goods reach the named place of destination.

In DAP, Delivery at Place, the sellers is responsible for moving the goods from origin until their delivery at the disposal place agreed with the buyer ready for unloading at destination. The seller bears the risk until delivery of goods to the named place and should obtain a contract of carriage that matches the contract of sale until the agreed delivery point. If there is an extra fee for unloading the goods, the seller cannot charge it to the buyer. This term can be used for any mode of transportation.

Quick overview

What are the seller’s obligations?

• General

The buyer must pay the price of goods as agreed.

• Taking Delivery

The buyer takes the goods at the destination point.

• Risks

All risk of loss/damage from the time or end of the period agreed for delivery. If the buyer fails to clear import customs or notify time/period, the risk is under the buyer.

• Carriage

No obligation to contract a carrier.

• Insurance

No obligation to insure the goods.

• Delivery/transport document

Accepts the proof of delivery

• Export/Import clearance

Assist with export clearance. Pay for import clearance and formalities (licenses, security, official documentation).

•  Checking

No obligation.

• Allocation of cost

Pay from the time goods delivered. Unloading. All costs for assistance. Pay duties and taxes for imports. Any additional cost if does not notify the shipment date or period.

• Notices

Time or period for receiving the goods and name the point of receiving the goods.

Important points to note

DAP Incoterms® can be used for any mode of transport as well as for multimodal transport.

Buyer is responsible for import clearance and formalities (licenses, security, official documentation) including payment of duties and taxes if applicable unless otherwise agreed differently between seller and buyer.

Whilst there is no obligation for seller to insure the goods it is recommended that whilst under the seller’s responsibility and control that insurance cover is taken out.