Port Terminology: Understanding Delivered at Place (DAP), Its Function, and Responsibilities

Delivering Goods on the Buyer's Terms: DAP Explained

Port Terminology: Understanding Delivered at Place (DAP), Its Function, and Responsibilities

In the world of international trade, sellers and buyers must navigate a complex landscape of contracts and responsibilities. One such term that demystifies this process is Delivered-at-Place (DAP).

What Is Delivered-at-Place (DAP)?

Introduced by the International Chamber of Commerce (ICC) in their eighth publication of Incoterms (international commercial terms) in 2010, DAP is a term that signifies the seller takes on all the risks and costs of delivering goods to an agreed-upon location. Essentially, it's a guarantee that the seller will deliver goods safely to the buyer's specified destination.

Key Details

• A DAP agreement responsibilities: The seller delivers goods to the specified destination and hands them over to the carrier for onward transport, while the buyer assumes the risk and responsibility once the shipment arrives at the destination.
• Import duties and taxes: The buyer is responsible for paying import duties, taxes, and local charges upon the shipment's arrival.
• Flexible in transportation: DAP rules apply to any mode or combination of modes of transportation.
• Replaced DDU: DAP replaced the term Delivery Duty Unpaid (DDU) in 2010, although DDU may still be used colloquially.

How DAP Works in Action

When a DAP agreement is reached, a series of responsibilities and costs are divided between the buyer and seller.

Seller's Responsibilities

• Packaging and Documentation: The seller prepares the necessary documentation and ensures the goods are properly packaged for export.
• Transport Costs: The seller covers the costs of transportation, including loading charges, and insurance costs during transit.
• Delivery: The seller delivers the goods to the agreed-upon location, ready for unloading by the buyer or carrier.
• Export Licensing: The seller obtains required export licenses and handles any customs issues on their end.

Buyer's Responsibilities

• Payment: The buyer must pay the agreed-upon price to the seller and advise the seller of the destination.
• Import Duties and Taxes: Once the shipment arrives, the buyer is responsible for paying any import duties, taxes, and other levies.
• Unloading: The buyer arranges for the unloading of the cargo at the destination, usually a port or warehouse.
• Transport to Final Destination: After unloading, the buyer is responsible for transporting the goods to their final destination.

The Importance of Incoterms

In 1919, the ICC was founded to facilitate domestic and international trade. Since then, they have introduced Incoterms, a set of rules that define the responsibilities of buyers and sellers in financial contracts. These terms provide clarity in contracts and ensure that both parties understand their roles and obligations.

Despite clear guidelines, disputes may still arise due to differing customs requirements and paperwork burdens. Ensuring timely and accurate documentation, particularly for international shipments, can prevent demurrage charges and other complications.

Top Takeaways

• DAP is an international trade term introduced in the ICC's 2010 eighth publication of Incoterms.
• Under DAP, the seller bears the risks and costs of delivering goods to an agreed-upon location, while the buyer's responsibility begins upon arrival at the destination.
• Seller's responsibilities under DAP include obtaining any licenses needed to export goods, as well as covering costs and losses during transit.
• Buyer's responsibilities under DAP include clearing goods for import, paying customs duties, handling unloading, and arranging for final transportation.
• Incoterms help clarify the roles and responsibilities of buyers and sellers in financial contracts, particularly when they are in different countries.

[1] International Chamber of Commerce, Incoterms® 2020: https://www.iccwbo.org/publication/incoterms-2020-rules/[2] Investopedia, Delivered Duty Paid vs Delivered Duty Unpaid: https://www.investopedia.com/terms/d/ddp.asp[3] U.S. International Trade Commission, Incoterms®: Rules for the Sale of Goods: https://www.usitc.gov/publications/332/what_are_incoterms_rules.htm[4] Export.gov, DAP / Delivered at Place: https://www.export.gov/marketing-and-sales-supported-by-the-u-s-government/incoterms/termin explanations/e1cf7431-7ceb-49add-8514-41e305e3a036/[5] Export.gov, Use of Incoterms: https://www.export.gov/export-assistance/exporting-goods/incoterms/types-of-incoterms/ddp-delivered-duty-paid/cu116cc7-1c2a-4f8e-a4f3-460e781b8285/

1. In the realm of international finance, the delivery of tokens in Decentralized Finance (DeFi) could be simplified using a DAP-like term, ensuring the sender bears all risks and costs of delivering digital assets to the agreed-upon location.
2. Mining businesses, when adopting DAP, can ensure that upon the delivery of cryptocurrencies, the risks and costs of transit are covered by the sender, offering a guarantee of secure transaction completion.
3. In the business of technology, introducing DAP in token sales can provide transparency and clarity, with the sender responsible for documentation, cost of transportation, delivery, and export licensing, while the buyer takes care of import duties, unloading, and further transportation.
4. The International Chamber of Commerce (ICC) could consider expanding Incoterms to include definitions for the digital asset realm, helping businesses navigate the complexities of token sales and DeFi transactions.

Read also: