In business transactions where transportation costs are huge, a few important standard arrangements can come as a relief to both the buyer and seller and that is about the clear demarcation of duties and responsibilities of both parties. When the responsibilities are clearly defined, and the standards were met, the transactions become less tedious and cumbersome. Each party knows what role it is required to play thus imparting transparency in the entire scenario.
International Chamber of Commerce has coned 11 Incoterms, and Delivery at Place is one amongst these.
The 11 types of incoterms 2010 are
- EXW (Ex Works)
- FCA (Free Carrier)
- FAS (Free Alongside Ship)
- FOB (Free on Board)
- CFR (Cost and Freight)
- CIF (Cost, Insurance and Freight)
- CPT (Carriage Paid to)
- CIP (Carriage and Insurance Paid To)
- DAT (Delivered at Terminal)
- DAP (Delivered at Place)
- DDP (Delivered Duty Paid)
Meaning of Delivery At Place
As it is clear from the name itself, Delivery at Place makes the work highly simplified for the buyer because it is the seller who is responsible for transferring the goods from the place of origin to the place of destination. Here the term destination means the final point of delivery until the goods are unloaded.
DAP is used for all means of transport and can include a combination of any as well. An important consideration is to mention the desired point of destination where the goods have to be unloaded and furnishing of all the documents to avoid demurrage which is a charge levied if the goods are not unloaded on time because of the failure in producing the documents. The International Business fraternity is still divided over the charge of demurrage, and no one party can be held liable for it because it is difficult to find on whose part the delay has been caused.
Responsibilities of Buyer and Seller for DAP
- He is responsible for delivering the goods as per the terms of the contract along with the documentation and commercial invoice.
- The seller has to procure an export license and adhere to custom formalities for the safe transfer of goods from the country of origin.
- Delivery charges till the place of destination are upon the shoulders of the seller
- Loading charges at point of origin have to be paid by the seller
- The seller has to pay for the insurance of the goods.
- Any risk which happens during transit is the sole obligation of the seller.
- All the expenses related to operations, packaging, labeling, quality check are borne by the seller.
Note: The various costs incurred are:
- Export fees
- Insurance and transportation costs
- Loading charges at place of origin.
- Make the payment as per the terms of the contract.
- Responsible for all sorts of import formalities and duties when the goods arrive.
- He has to take the delivery of the goods once they arrive.
- The costs the buyer has to incur are:
- Unloading costs at destination
- Import customs duties and taxes.
- Once the goods have reached the destination, the risk gets transferred to the buyer.
- Insurance and carriage charges are not the responsibility of the buyer.
DAP makes the terms of the contract crystal clear with the seller delivering the goods at the agreed point at the destination and if at all there are any extra unloading charges they have to be borne by him.