Delivery terms

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Delivery terms
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Delivery terms are the conditions under which a seller agrees to deliver goods to a buyer. They may include details such as the delivery date, transportation method, and any associated costs. Some common delivery terms include FOB (free on board), CIF (cost, insurance, and freight), and DDP (delivered duty paid). The terms should be clearly defined and agreed upon by both the buyer and seller before the sale is made.

Types of delivery terms

There are several types of delivery terms used in international trade and domestic trade, but some of the most common include:

  • FOB (Free on Board): The seller is responsible for delivering the goods to the port of shipment and loading them onto the shipping vessel. The buyer is responsible for all costs and risks associated with transportation from that point on.
  • CIF (Cost, Insurance, and Freight): The seller is responsible for delivering the goods to the port of shipment, loading them onto the shipping vessel, and arranging for marine insurance. The buyer is responsible for all costs and risks associated with transportation from that point on.
  • CPT (Carriage Paid To): The seller is responsible for delivering the goods to the port of shipment and loading them onto the shipping vessel. The seller also pays for the transport costs up to the agreed destination port, but the risk of loss or damage to the goods is transferred to the buyer as soon as the goods are delivered to the carrier.
  • DDP (Delivered Duty Paid): The seller is responsible for delivering the goods to the buyer's designated location and is responsible for all costs and risks associated with transportation, including import duties and taxes.
  • DAP (Delivered At Place): The seller is responsible for delivering the goods to a specific location designated by the buyer, and the buyer is responsible for all costs and risks associated with transportation from that point on.
  • EXW (Ex Works): The seller makes the goods available at their own premises, the buyer is responsible for all costs and risks associated with transportation and import duties.

All of these terms can be adjusted as per the agreement between seller and buyer.

Application of delivery terms

Delivery terms are used to clearly define the responsibilities of the buyer and seller regarding the delivery of goods. When using delivery terms, it is important to consider the following:

  1. Clearly define the delivery terms in the sales contract or purchase order to ensure that both parties understand their responsibilities.
  2. Specify the delivery date and location, as well as any specific instructions for delivery.
  3. Consider the mode of transportation and any associated costs. For example, if the delivery terms are FOB, the buyer will need to arrange and pay for transportation from the port of shipment.
  4. Consider the risks associated with transportation and who will be responsible for them. For example, if the delivery terms are DDP, the seller will be responsible for any damage or loss that occurs during transportation.
  5. Communicate with the other party to ensure that all details of the delivery terms are understood and agreed upon before the sale is made.
  6. Keep records of the delivery, including the date and location of delivery, the mode of transportation, and any issues that arise during delivery.
  7. Make sure that the delivery terms comply with the laws and regulations of the countries involved in the trade.

By using delivery terms correctly, both the seller and buyer can ensure that the goods are delivered in a timely and efficient manner, and that any potential issues are addressed in a clear and organized manner.

References

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