The business of transportation is a dynamically developing area of the economy. Every year more and more new players come to it, some of which have a poor idea of working in this industry. To fix this, we bring to your attention an article that describes the terms of delivery of DDP.
Given the trend towards a rapid increase in traffic, such information will certainly not be superfluous.
Deciphering the basic concept
In foreign literature , DDP delivery conditions are indicated by the term Delivered Duty Paid (... named place of destination), which translates as “delivery with payment of the duty”, and then indicate the destination where you want to bring the goods.
What does it mean?
Simply put, the term means the following: the seller agrees to make available to the buyer the goods that have passed all customs formalities (clearance), delivering it to the destination agreed by the parties. Of course, in this case, the seller bears all the risks associated with the transportation of goods, pays all necessary customs duties.
Thus, in this case, the seller bears all responsibility for the safe arrival of the goods from the warehouse to the final buyer. Important! If a supplier for one reason or another cannot pay a license to import products, the term “DDP terms of delivery” is no longer applicable.
Some exceptions
The parties may agree that part of the costs (VAT, for example) may be paid by the party purchasing this product. But in this case, all the smallest details of the transaction should be reflected in the contract. The seller must be especially careful in this regard: if these conditions are not spelled out in the documents, any court will side with the buyer, so that the terms of the DDP delivery are beneficial to the receiving party.
If the buyer assumes the risks of transporting the goods, then the term DDU should be used. Of course, all this should also be reflected in the contract of sale. This designation is used regardless of the type of transport, but in international practice it is customary to designate delivery by sea as DES or DEQ.
Of course, we have repeatedly reiterated the seller’s full responsibility, but this topic should be disclosed in more detail, as in some cases exceptions are possible.
Customs clearance
Unlike other delivery methods, in this case, the seller himself (!) At his own risk draws up all permits for importing products, passes goods through the customs of another state or his country (domestic transportation), while paying all fees and duties from your pocket.
Carriage and Insurance Contracts
In addition, it is the supplier who, at his own expense, concludes a contract for the supply of products. But! Unless otherwise specified in the contract, he can independently choose the destination that best meets his requirements. As for the insurance contract, there are no obligations under it.
About the distribution of expenses
Among other things, DDP terms of delivery - Incoterms-2010 - oblige the seller to bear all costs associated with loading / unloading goods, as well as reimburse those costs that arise during the delivery of goods to the customer. Forced expenses associated with crossing the internal or state borders (as well as the borders of other states in the future) also fall under this definition.
Important! According to new requirements, DDP delivery conditions (Incoterms-2010 - these rules are called so) provide for sending a notification to the buyer about the fact of the beginning of the transportation of goods, as well as obliging the latter to send all the information that may be needed to carry out any activities related to acceptance of goods.
Proof of Delivery
Please note that the seller’s area of responsibility also includes the provision (at their own expense) of a delivery order and / or an ordinary document issued during transportation. These include a negotiable bill of lading, sea waybill, invoices confirming the fact of sending goods by sea, air or other means of transport. If such is provided for in the supply contract, the use of electronic documents certified by an electronic signature, encrypted using standard cryptography means, is allowed.
About inspection and packaging requirements
As for the verification of the goods before dispatch, the delivery on DDP terms in this regard is no different from that for other methods of shipping. Simply put, the seller must, at his own expense and on his own, check the availability of goods, its weight and other important characteristics that are important for the normal shipment and subsequent acceptance of the goods. In addition, the supplier, at his own expense, provides the necessary packaging for the product, unless the trade rules permit the export of this cargo in bulk.
Of course, the container must have all the necessary markings adopted for this type of product throughout the world or in the country through which it is transported.
This is what DDP terms of delivery are for the seller. And now we’ll talk about what kind of obligations are imposed on the direct recipient of the goods (buyer).
The main responsibilities of the buyer
First, you should make a reservation in advance that this role can be played not only by a legal entity, but also by an individual. In any case, the main responsibility of the buyer is the timely payment for the delivered goods.
In addition, the delivery of goods on DDP terms requires him to fully assist the seller in obtaining any necessary information for the timely and unhindered receipt of all necessary customs documents. If the delivery is carried out in accordance with all generally accepted rules and conditions agreed upon in advance and specified in the contract of sale, then the customer is obliged (!) To accept and pay for the goods in full accordance with previous agreements.
If for some reason the buyer cannot accept the goods at the point of unloading, which was previously agreed upon in the contract, he is obliged to inform the seller as soon as possible. If this obligation is not fulfilled, penalties may be applied to it.
Force Majeure
Some exceptions can only be force majeure. This term refers to force majeure that prevents the parties from fulfilling their agreements stipulated in the contract (war, natural disasters and natural disasters).
But this does not save the buyer from the need to pay for the goods delivered to him or to accept the already paid freight. In addition, in order for the conditions to be truly recognized as force majeure, he should contact the nearest branch of the Chamber of Commerce of the Russian Federation for a maximum of three days and record his appeal there on deferring the fulfillment of obligations to the seller.
If force majeure will be valid for more than three months, the contract may be terminated by agreement of the parties. But this again does not mean that the buyer or seller may not deliver the goods already paid or not pay the delivered consignment.
In the event that a conflict arises on such grounds that cannot be resolved by an amicable agreement between the parties, the Arbitration Court must reconcile them.
Risk transfer
As you might guess, the main responsibility for this item lies with the seller. But the customer himself has certain obligations.
If the cargo was delivered on time and in accordance with other terms of the contract, in this case the buyer is fully responsible for its further safety from the moment the goods were transferred to him or his legal representative. In the event that damage or shortage occurred in the event of the customer’s actions, the latter is obliged to fully pay the penalty at the expense of his personal funds.
If the buyer did not inform the seller about the impossibility of accepting the goods, he must fully pay all losses resulting from his actions. But! The main condition for compliance with this clause of the contract is the full compliance of the goods with the declared characteristics. In particular, the delivery terms of DDP "Incoterms-2012" are based on this.
Simply put, the shipment must be identified in the proper way. Or it is otherwise defined as the product that was the
subject of the contract between the two conflicting parties.
In addition, it is the recipient who must bear all the costs associated with the inspection of the goods at the time of receipt. This is especially true in cases where such a requirement is legislatively fixed in those countries where the seller exported the goods. This requirement was introduced even in the terms of delivery of the Incoterms-2000 DDP and since then its provisions have not changed.
Important notes
Despite all of the above, legislative incidents are often encountered. So, many entrepreneurs in our country have faced a situation where a seller who is a legal or natural person of another state, according to the rules of our trade, cannot pay trade duties and other fees on his behalf (article 320 of the Labor Code of the Russian Federation), despite the fact that they require it DDP delivery terms. This means that this state of affairs should be taken into account even at the time of conclusion of the contract, stating the need for payment of trade duties by the buyer. This will allow to avoid misunderstandings and legal burdens in the future.
Finally
The method of trade deliveries described above is especially relevant in recent years. The global industrial and economic crisis leads to the fact that sellers are forced by all means to fight for the attention of buyers. If you do not violate trade laws, then often the only way to attract potential customers is to supply DDP, as it allows you to show maximum customer loyalty.