What is DDU, FOB, CIF, and DAP in incoterms? How can these limit the scope and responsibilities of a Buyer
In international trade, Incoterms are standard trade terms used to define the responsibilities of buyers and sellers in terms of delivery, risk, and cost of goods.
DDU (Delivered Duty Unpaid): Under DDU, the seller is responsible for delivering the goods to the buyer at an agreed place of destination, but the seller is not responsible for clearing the goods for import nor paying any import duties or taxes. This can limit the buyer's scope as they are responsible for customs clearance, import duties, and any additional taxes upon arrival of the goods.
FOB (Free On Board): With FOB, the seller fulfills their responsibility by delivering the goods on board the vessel at the specified port of shipment. The buyer then assumes responsibility for the goods, including transportation costs, insurance, and any additional costs from the port of shipment to the final destination. This can limit the buyer's scope as they are responsible for the goods from the point they are loaded onto the vessel.
CIF (Cost, Insurance, and Freight): Under CIF, the seller is responsible for delivering the goods on board the vessel and arranging and paying for insurance and freight to transport the goods to the designated port of destination. The seller's responsibility ends when the goods are loaded on the vessel. This can limit the buyer's scope as the seller is responsible for the main carriage and insurance, but the risk transfers to the buyer when the goods are loaded onto the vessel.
DAP (Delivered at Place): With DAP, the seller is responsible for delivering the goods to an agreed-upon place in the buyer's country, ready for unloading. The seller bears all risks and costs up to this point, including import duties and taxes. This can limit the buyer's scope as the seller is responsible for delivering the goods to the buyer's location, but the buyer assumes responsibility for unloading and any further transportation costs.
In summary, these Incoterms can limit the scope and responsibilities of a buyer by specifying the extent of their responsibility for transportation, insurance, customs clearance, and payment of duties and taxes, depending on the agreed-upon Incoterm used in the sales contract.
What is DDU in incoterms
DDU stands for Delivered Duty Unpaid. In international trade, DDU (Delivered Duty Unpaid) is an Incoterm that specifies that the seller is responsible for delivering the goods to the buyer at an agreed place of destination. However, the seller is not responsible for clearing the goods for import nor paying any import duties or taxes. This means that while the seller is responsible for delivery, the buyer assumes all additional costs and risks associated with customs clearance, import duties, and any other taxes upon arrival of the goods.
summarise this in 2 lines
DDU (Delivered Duty Unpaid) in Incoterms means the delivers goods to the buyer at the destination, but the buyer is responsible for customs clearance, import duties, and taxes.
What is FOB in incoterms summarise this in 2 lines
FOB (Free On Board) in Incoterms means the seller is responsible for delivering the goods on board the vessel at the specified port of shipment, and the buyer assumes responsibility for transportation costs and risks from that point onward.
What is CIF in incoterms summarise this in 2 lines
CIF (Cost, Insurance, and Freight) in Incoterms means the seller is responsible for delivering the goods on board the vessel and arranging and paying for insurance and freight to the designated port of destination, with the risk transferring to the buyer at that point.
What is DAP in incoterms summarise this in 2 lines
DAP (Delivered at Place) in Incoterms means the seller is responsible for delivering the goods to an agreed-upon place in the buyer's country, bearing all risks and costs up to that point, including import duties and taxes.