Incoterms 2020 DDP Leave a comment

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Incoterms 2020 DDP

Incoterms are rules of trade. They specify who (buyer or seller) incurs transport costs, export, and import charges or risks associated with the transport of goods. The Incoterms 2010 are currently applied; however, new ones come into force on 1 January 2020. Incoterms 2020 DDP means “Delivered Duty Paid.” The seller is responsible for organizing transport and paying duties and taxes. The exporter bears a higher risk. Comparing DDP 2010 and DDP 2020, we can see that there have been a few changes. Some issues have been further clarified to avoid misunderstandings.
So from cost, obligation, delivery, insurance and conclusion to understand this term, Let’s finish this rule.

Incoterms 2020 DDP Cost-sharing

What’s cost The seller must pay :
1. The seller pay all costs of control activities (quality control, measurement, weighing of goods);
2. The seller pay costs for all formalities related to customs clearance, export, import, and transit. If buyer is unable to pay for import clearance and would prefer to leave it in the hands of the buyer, then the seller should consider Incoterms DAP or DPU;
3. The seller pay costs for unloading at the destination, if it was included in the contract of carriage (the seller is not entitled to recover these charges unless otherwise was agreed by the parties);
4.The seller pay cost of delivery of the delivery note;
5.The seller charges paid by the buyer in connection with the assistance in the provision of documents relating to the transport.

What’s cost The buyer must pay :
1. The buyer must pay the cost of the products according to the contract of sale;
2. The buyer must charges relating to goods after the delivery;
3.The buyer pay the unloading costs (unless these costs have been taken into account by the seller under the contract of carriage);
4. The buyer pay any additional costs incurred by the seller if the buyer does not comply with the obligation to assist in obtaining the necessary documents or if he does not inform the exporter of the time and place of delivery.

Incoterms 2020 DDP Obligations

What are the obligations of the seller?
1. The seller is obliged to deliver the goods and all necessary documents to a destination agreed upon by both parties and at a specified date (the documents may be in paper or electronic form),
2. The seller must properly pack and label the goods so that they can be transported
3. The seller must provide the buyer with all the information/documents required to enable the buyer to take delivery of the goods.

What are the obligations of the buyer?
1. The buyer is obliged to collect the goods,
2. The buyer is not obliged to conclude the insurance contract, but must provide the seller (at his request) the information he needs to obtain insurance,
3. The buyer is obliged to assist the seller (at his request) in obtaining all documentation related to import, export and transit,
4. If both parties agree that the buyer is obliged to determine the time and place of delivery, buyer must also notify the seller in advance.

Incoterms 2020 DDP Delivery Of Goods

Delivery of goods
It is recommended that the parties precisely specify the destination of the shipment. There are several reasons:

1.The risk of loss or damage of the goods passes to the buyer exactly from the moment the products are delivered to the agreed place. Buyers and sellers must be clear when and where the risk is taken over,
2. Until the goods are delivered, all costs are borne by the seller. From the moment the goods are delivered, the buyer bears all costs. It is equally important to know when the replacement takes place,
3. The seller must conclude a contract and arrange the transport of goods to the designated destination. If he does not do so, he violates the DDP rules and be liable to the buyer for all his losses.

Incoterms 2020 DDP Insurance and Transport

The seller is not obliged to the buyer to conclude the insurance contract. The buyer also has no such obligation. However, the buyer must provide the seller (at his request) information about the risks and costs that are needed to obtain insurance.

Incoterms 2020 DDP in transport

The DDP 2020 rules can be applied to all modes of transport. Also, it can be implemented in more than one mode of transport.

Incoterms 2020 DDP Final Conclusion

DDP 2020 and other Incoterms rules
Using Incoterms DDP, the seller has the greatest responsibility. This rule is often misinterpreted. For example, many exporters do not fully understand this rule and often misuse it. That can cause a lot of trouble.
Therefore, when you are importing from outside like China, we recommend considering other Incoterms rules.

Untill Now, the all Incoterm 2020 4 Group for 11 Rule are all finished.Hope those content can help you understand the next decade buyer and seller transport costs, export, and import charges or risks associated with the transport of goods.
And this can help you to doing undestand and guide you doing better in international trade business. Next International Basic Knowledge series is “International Organization and Certifications” part, we will discuss the most international organzation and certifications to help you understand this.

End of Incoterm 2020 part,
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DDP

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.

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.

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.

B2 TAKING DELIVERY
The buyer must take delivery of the goods when they have been delivered under A2.

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.

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.

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.

B4 CARRIAGE
The buyer has no obligation to the seller to make a contract of carriage.

A5 INSURANCE
The seller has no obligation to the buyer to make a contract of insurance.

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.

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.

B6 DELIVERY/TRANSPORT DOCUMENT
The buyer must accept the document provided under A6.

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

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.

A8 CHECKING/PACKING/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 good in the manner appropriate for their transport, unless the parties have agreed on specific packaging or marking requirements.

B8 CHECKING/PACKING/MARKING
The buyer has no obligation to the seller.

A9 ALLOCATION OF COSTS
The seller must pay:
a)all costs relating to the goods and their transport until they have been delivered in accordance with A, other than those payable by the buyer under B9;
b) 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;
c)the cost of providing the delivery/transport document under A6;
d) where applicable, duties, taxes and any other costs related to export, transit and import clearance under A7; and
e) the buyer for all costs and charges related to providing assistance in obtaining documents and information in accordance with B5 and B7.

B9 ALLOCATION OF COSTS
The buyer must pay:
a) all costs relating to the goods from the time they have been delivered under A2;
b) 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
c)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.

A10 NOTICES
The seller must give the buyer any notice required to enable the buyer to receive the 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.

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