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What is DDP? Delivered Duty Paid Incoterms 2020 definition & explanation

What is DDP incoterms 2020

What is DDP? – DDP incoterms 2020 (Delivered Duty Paid) is the latest version of DDP ICC’s Incoterms. Delivered Duty Paid is belong to group Group D (Arrival) assumes that the seller is obliged to deliver the goods to a specific place or the port of destination. This group includes such Incoterms as DAP, DPU, and DDP.

What is DDP – Delivered Duty Paid?

Delivered Duty Paid means that the seller delivers the goods to the buyer:

  • When the goods are placed at the disposal of the buyer, cleared for import, on the arriving means of transport, ready for unloading, at the named place of destination or at the agreed point within that place, if any such point is agreed.

The seller bears all risk involved in bringing the goods to the named place of destination or to the agreed point within that place. In this Incoterms rule, therefore, delivery and arrival at destination are the same.

This rule may be used irrespective of the mode of transport selected and may also be used where more than one mode of transport is employed.

Incoterms 2020 DDP, with delivery happening at destination and with the seller being responsible for the payment of import duty and applicable taxes is the Incoterms rule imposing on the seller the maximum level of obligation of all eleven Incoterms rules.

The parties are well advised to specify the destination place or point as clearly as possible and this for several reasons.

First, risk of loss of or damage to the goods transfers to the buyer at that point of delivery/destination – and it is best for the seller and the buyer to be clear about the point at which that critical transfer happens.

Secondly, the costs before that place or point of delivery/destination are for the account of the seller, including the costs of import clearance, and the costs after that place or point, other than the costs of import, are for the account of the buyer.

Thirdly, the seller must contract or arrange for the carriage of the goods to the agreed place or point od delivery/destination. If it fails to do so, the seller is in breach of its obligations under the Incoterms rule DDP and will be liable to the buyer for any ensuing loss. Thus, for example, the seller would be responsible for any additional costs levied by the carrier to the buyer for any additional on-carriage.

If PDD seller incurs costs under its contract of carriage related to unloading at the place of delivery/destination, the seller is not entitled to recover such costs separately from the buyer unless otherwise agreed between the parties.

DDP requires the seller to clear the goods for export, where applicable, as well as for import and to pay any import duty or to carry out any customs formalities. Thus if the seller is unable to obtain import clearance and would rather leave that side of things in the buyer’s hands in the country of import clearance being left to the buyer. There may be tax implications and this tax may not be recoverable from the buyer.

DDP – Delivered Duty Paid’s Cost and obligation

Blue: Cost/ Yellow: Risk/ Orange: Insurance

INCOTERMS 2020 DDP

Using Incoterms 2020 DDP, the seller takes costs

  • All costs of control activities (quality control, measurement, weighing of goods);
  • Costs for all formalities related to customs clearance, export, import, and transit. If he 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;
  • 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);
  • Cost of delivery;
  • Charges paid by the buyer in connection with the assistance in the provision of documents relating to the transport.

Main obligations of the seller

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).

  • He must properly pack and label the goods so that they can be transported (unless the parties have agreed otherwise in advance).
  • The seller must provide the buyer with all the information/documents required to enable the buyer to take delivery of the goods.

The buyer takes costs

  • Costs of the products according to the contract of sale;
  • Charges relating to goods after the delivery;
  • Unloading costs (unless these costs have been taken into account by the seller under the contract of carriage);
  • 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.

Obligations of the buyer

  • He is obliged to collect the goods.
  • The buyer is obliged to assists the seller (at his request) in obtaining all documentation related to import, export and transit.
  • If both parties agreed that the buyer is obliged to determine the time and place of delivery, he must also notify the seller in advance.

But:

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.

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