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Mischa is negotiating the sale of wheat to Marco. Marco has insisted that Mischa delivers the wheat to his nominated port of Durban. Marco is happy to arrange for the goods to be unloaded from the ship, but insists that Mischa cover the export and import duties, as well as insurance.
What is the most suitable Incoterm from Marco’s perspective?
A.DAP
B.DDP
C.DPU
D.CPT
The correct answer is B.DDP – Delivered Duty Paid (named destination place): Under a DDP contract, the seller is responsible for the transport of the goods, duty paid but not unloaded from the means of transport, at the named destination. The seller bears all the transport costs to that point, all duty payments and all the risk.
Under DDP, does the seller’s responsibility and risk not end after unloading the goods? I inquired chatgpt and it responded that responsibility ended after unloading the goods.
DAP – delivered at place involves the seller’s responsibility up to the delivery port. But the buyer accepts the risks associated with unloading.
DDP – delivered duty paid involves the seller in all responsibilities up to delivery at the specified location. In this case, it’s the nominated Port of Durban.
DPU – delivered at place unloaded involves the seller accepting responsibility and risk of not only unloading but also all export and import duties
CPT – carriage paid to (place of destination) again involves the seller in accepting responsibility for export taxes
So none of these options exactly fits exactly the Marco / Mischa situation.
The question asks: “What is the most suitable Incoterm from Marco’s perspective?” By process of elimination, options A, C and D seem to be less suitable than option B.
But I don’t like the question 🙁 I believe that the specified location Port of Durban swings it for me. That, and the agreed variation to the incoterm such that Mischa takes on the risk of export and import costs and duties.
Is that OK?
For DAP, Marco has accepted the task of unloading whereas, under DAP, that unloading risk should be Mischa’s.
For DDP, Marco carries the risk up to the delivery of the goods to the specified location (Port of Durban). Again, Marco accepts responsibility for unloading but ‘exchanges’ that risk by insisting that Mischa accepts the import and export costs.
DPU doesn’t fit our case because import and export costs are taken on by Mischa whereas, under DPU, these are costs associated with the seller.
Under CPT, the seller is responsible for export duties whereas Mischa has taken on the responsibility.
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