DAP - terms of delivery. Decoding, features, distribution of responsibilities

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

International trade has its own rules. Some of them, concerning the distribution of the obligations of the seller and the buyer for delivery, have become so universal that they have been issued in the form of a set of recommendations. In some countries, it has received the status of law. Let's consider the features of one of the main terms that exist in trade and decipher the terms of delivery of DAP 2010.

General information

Incoterms are a series of pre-defined commercial rules published by the International Chamber of Commerce (ICC) relating to international commercial law. They are used in foreign trade transactions or procurement processes, as their use is encouraged by trade councils, courts and international lawyers.

Incoterms rules consisting of three-letter trade terms relating to general contractual practicesales are designed to clearly define the tasks, costs and risks that arise in connection with the international movement of goods. The rules are often included in the foreign economic contract of sale, reflecting the agreements reached on liability, costs and risks arising from the entry of the parties into economic relations with a foreign partner. However, the normative document Incoterms is not a contract or law. It also does not affect prices and does not determine the currency of the transaction.

Keep in mind that Incoterms have been revised several times, so there are different versions. The document was last reissued in 2010. This edition is the most commonly used.

To which group of conditions can DAP be attributed

DAP Incoterms are part of DAP term group. It describes different ways of delivering goods and represents agreements with maximum responsibility (both cost and risk) for the seller, not for the buyer. There were once 5 cuts in Group D. Now there are only 3.

Previously, there were three terms in this group to indicate the conditions for the delivery of goods to a place:

• DAF - "Delivered at the border".
• DES - "Delivered from ship".
• DEQ - "Delivered on the Waterfront".

These 3 concepts are now simplified.

The place of delivery is now identified as follows: DAT - "Delivered to the terminal" or DAP - "Delivery to destination". This is due to the fact that the increase in the volume of scheduled traffic, as well as transportationgroupage cargo to the point indicated by the contract has led to the fact that other terms are obsolete.

We continue to consider the decryption. The term DDU is "Unpaid Delivery Duties". He was completely excluded. Instead, they proposed the term DDP, that is, "Payment of the duty for delivery."

Be careful because many websites still use the old abbreviations. Most likely, they have ambiguities caused by old notation. These points can be confusing, which threatens to increase costs when drawing up an international transportation contract. They may cost you more than you bargained for.

DAP Incoterms 2010 terms of delivery –explanation

Each term in Incoterms has a certain interpretation. Incoterms 2010 defines DAP terms as "Delivery to Destination". In this case, the seller is deemed to have fulfilled his obligation to transport when the goods are at the disposal of the buyer on an arriving means of transport ready for unloading at the named destination.

Such a place can be any point on the globe that the parties have agreed on. The seller delivers the goods on vehicles available to him so that the buyer can unload them. The customer accepts the cargo when he starts to unload it.

If you ask the terms of the DAP - what is it in simple terms, then the answer is simple. This is a situation where the seller hires transport, carries out customs clearance of the goods and delivers them to the place agreed upon by the parties to the transaction. unloading,customs clearance and other procedures are the responsibility of the buyer.

This concept can be applied in the case of transportation by any means of transportation, as well as for container and multimodal cargo transportation.

Who is responsible for customs clearance in the country of export

Once the goods are ready for shipment, the necessary packaging is carried out by the seller at his own expense, in order for the goods to reach their final destination safely. All necessary legal formalities in the country of export are carried out by the seller at his own risk, that is, he is fully responsible for ensuring that the goods can leave the country of export without any problems. Also, his duties include the preparation of documents for the cargo. The seller is responsible not only for export formalities, but also for possible nuances in the country of transit.

Who is responsible for customs clearance in the country of import

According to the terms of delivery of DAP Incoterms, after the goods arrive at a certain place in the country of destination, the import clearance must be carried out by the buyer himself, including the payment of all customs duties. As with DAT terms, any delay or downtime will be the responsibility of the seller.

When risk passes

According to the DAP term, the transfer of all risks associated with the goods occurs at the moment when the goods arrive at their destination. If the buyer has accepted the goods, he is already responsible for itresponsibility.

How the costs are shared between the seller and the buyer

According to DAP terms, all logistics costs are paid by the seller to the designated destination. The necessary costs for unloading the arrived goods are borne by the buyer.

If the seller decides to bear the costs of the contract of international transportation of goods he concluded with the logisticians associated with unloading at the destination, then he cannot reimburse his costs at the expense of the buyer.

If the place of delivery specified in the contract is a warehouse where the goods go from one point in the country of export to some point in the country of import, then the rule for this case is simple: the goods can be delivered without customs legalization.

If the destination is a warehouse somewhere on the border, and the goods do not go directly from the country of export to the customer, but cross the territory of third countries, then in accordance with the existing customs legislation, the cargo can be granted transit status. At the same time, it does not pass customs legalization in those territories where it was in transit.

However, difficulties may arise if the goods must pass customs clearance before delivery, and also if the goods are in transit. Close communication between the representatives of the carrier and the buyer may be required for the execution of all permits for the transportation of goods. In the event of incorrect operation or inconsistent actions, delays and disputes over demurrage may occur.

Is there a transfer of rightsproperty

It is important to know that DAP terms, like other Incoterms, do not determine the moment of transfer of ownership of the object of the international sale contract. Therefore, it is necessary to highlight this issue in a separate paragraph.

What you should pay special attention to

The parties may apply the terms of the DAP Incoterms, regardless of which transport they will use to transport the goods. It is necessary to clearly define and prescribe in the contract the point where the goods should be delivered. The risk up to this point is fully borne by the seller, so he must ensure that the name of the destination is given by the buyer as specifically as possible.

Since Incoterms as a whole does not determine the moment of transfer of ownership and does not transfer it to the goods, and also does not name the terms of payment, additional negotiations and separate agreement of both parties will be required to resolve these issues. The same is true for establishing jurisdiction. Incoterms do not apply to goods before and after delivery. It is necessary to specify in the contracts the details of the transfer, transportation and delivery of goods. Loading a container is not considered packing and must be noted separately in the sales contract.

It is important to consider that although Incoterms is not a law, in some countries, for example, in France, it is included in the legal field and has the status of a binding act. In this case, the provisions of the drawn up agreement will play a paramount role,therefore, it is necessary to prescribe in it all the points that are contrary to Incoterms, but which the customer agreed with the partner.

Obligations between the parties to the contract under the terms of delivery of DAP Incoterms are distributed as follows:

1. Responsibilities of the seller.

• Proper quality of goods.
• Prepare commercial invoice and documentation.
• Export packaging and labeling.
• Export licenses and customs formalities.
• Rent a vehicle.
• Loading.
• Delivery to destination.
• Providing proof of delivery.

2. Buyer Responsibilities.

• Unloading arrived goods.
• Import formalities and duties.
• Pay the cost of inspection before shipment.
• Delivery to your warehouse.

Thus, DAP is one of the modern and very effective conditions for the delivery of goods. It requires special attention from the seller, who bears most of the costs and obligations, when drawing up contractual relations.