Lesson 9 DAP DDP part 2

Summary

In this lesson on Incoterms 2020, Bob Ronai continues his exploration of DAP and DDP, focusing on delivery, transport documents, and allocation of costs. He explains key rules like the seller's obligations for delivery at the agreed destination, unloading charges, and the buyer's responsibilities. Detailed examples cover airfreight logistics and the importance of clarity in the contract of sale. Ronai highlights the complexities of these terms, addressing potential issues like import formalities, customs clearance, and transportation charges. His extensive experience offers valuable insights for smoother international trade transactions.

Takeaways

• 😀 The course is designed to provide a comprehensive understanding of Incoterms 2020, with a focus on DAP and DDP rules.
• 😀 The presenter, Bob Ronai, emphasizes his experience in international trade and his role in the drafting group for Incoterms 2020.
• 😀 The lesson explores the complexities of DAP and DDP, particularly Articles A2, B2 (delivery), A6, B6 (delivery transport documents), and A9, B9 (allocation of costs).
• 😀 DAP is not suitable for airfreight at the airport because unloading is done by the buyer after the goods arrive at the airport's terminal. DPU would be more appropriate for this situation.
• 😀 In airfreight to the buyer's premises under DAP, the buyer must manage import formalities and unloading once the goods arrive at the airport terminal.
• 😀 Coordination between the seller's forwarder, the buyer's customs broker, and the trucking company is essential for smooth delivery when airfreight is involved.
• 😀 A key aspect of DAP is that the seller is responsible for all costs and risks until the goods arrive at the agreed destination point, ready for unloading.
• 😀 The buyer is responsible for all costs once the goods are delivered under DAP, including unloading and import clearance.
• 😀 The seller must provide the buyer with the necessary documents for taking delivery of the goods, which could include transport documents like bills of lading or airway bills.
• 😀 In terms of cost allocation, the seller is responsible for most costs up until delivery, but the buyer is liable for costs once the goods are delivered, including unloading and import duties.
• 😀 The next lesson will cover issues related to insurance, notices, export and import clearance, and differences between DAP and DDP, as well as letter of credit considerations.

Q & A

What is the main focus of this lesson on Incoterms 2020?

The main focus of this lesson is to explain the intricacies of DAP (Delivered at Place) and DDP (Delivered Duty Paid), with particular attention to the delivery and cost allocation issues, and the problems that may arise in these terms.

What is the role of the seller in DAP according to the script?

In DAP, the seller is responsible for delivering the goods at the agreed destination, ensuring the goods are ready for unloading. However, the seller does not handle the unloading of goods; the buyer is responsible for that.

Why is DAP not appropriate for airfreight at an airport?

DAP is not suitable for delivery at an airport because the goods would already be unloaded from the aircraft and stored in the airline's warehouse before the seller can consider it delivered. Therefore, DPU (Delivered at Place Unloaded) would be a more appropriate term in this case.

What must be clearly defined in a contract when DAP is used for airfreight to the buyer's premises?

The contract must clearly state that the buyer is responsible for unloading the goods once they arrive at the airline's terminal. It should also specify that the buyer must arrange and cover any costs for moving the goods from the terminal to the buyer's premises.

What is the risk for the seller if the buyer defaults and fails to accept delivery?

If the buyer fails to accept delivery, the seller will be responsible for any storage charges incurred by the carrier. The situation may become more complex if the goods need to be returned or sent to another country due to export restrictions.

What are the responsibilities of the buyer under DAP and DDP in terms of customs clearance?

Under DAP, the buyer must arrange and pay for import clearance and any duties or taxes. In DDP, the seller is responsible for all customs clearance, taxes, and duties, as they bear all costs until the goods are delivered to the buyer's premises.

How does the allocation of costs differ between DAP and DPU in the context of unloading charges?

Under DAP, the seller is responsible for unloading charges if those costs are covered in the contract of carriage. However, this responsibility can align more with DPU, where the seller is required to bear unloading costs at the destination.

What is the significance of transport documents in DAP and DDP?

Transport documents, such as bills of lading or airway bills, are important for the buyer to take possession of the goods. In DAP, the seller provides the necessary documents at their cost to allow the buyer to take delivery of the goods, while the buyer may need them for import formalities.

What happens if the buyer does not provide the required notice for delivery under DAP?

If the buyer fails to provide the necessary notice for delivery, they may be liable for additional costs incurred by the seller, such as storage or delivery delays. The buyer is responsible for ensuring the seller has the right details to deliver the goods.

What is the role of the seller's forwarder in airfreight deliveries under DAP?

The seller's forwarder is responsible for arranging the transport from the origin to the destination airport. The forwarder must also coordinate with customs brokers and other parties involved in handling the goods once they arrive at the destination.