The term “delivery” has an important definition when it comes to Incoterms. This is the point where risk transfers to the buyer from the Seller. This is also the point where liability is transferred to the seller. In all the Incoterms except the “C” terms, the buyer pays for transport from the point of Delivery. For CPT and CIP terms however, the seller is responsible for paying for transport although the delivery is made when cargo is handed over to the carrier. For CFR and CIF rules, the seller is responsible for transport even though delivery is made on board the vessel.
Note: The C Incoterms are:
- CIF – Cost Insurance and Freight
- CIP – Carriage and Insurance Paid To
- CPT – Carriage Paid To
- CFR – Cost and Freight
Since the term “handed over to the carrier” can be vague, it is best to define it properly in the sales contract:
- Container yard?
- Seller’s warehouse?
- Freight hub?
- Some other handover location or docking area?
Do not rely on the default definitions as these may not suit your model. If the specific place of hand over is not clarified the handover to the first carrier is assumed as the place of delivery. In fact, it would be a good practice to define the exact point of delivery even when using EXW or DDP. It is also recommended to mention whether the seller is required to help the buyer load cargo or unload cargo.
Is is important to be sure about the exact point of delivery as that is point where all the risks arising from the damage or loss of the cargo gets shifted from the seller to the buyer.
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