DDP Incoterm

Commerce

A DDP incoterm is a type of commercial transaction of sale between different countries, characterized in particular by attributing to the seller the responsibility of all costs related to the operation in terms of transport, insurance or customs expenses.

In terms of commerce, the International Chamber of Commerce defines a series of types of agreements or incoterms, among which the DDP stands out. This type of sale between different territories is characterized by attributing to the buyer the responsibility for the costs of carrying out the operation.

The term in acronym (English: delivery duty paid) shows what is described. It is in the hands of the selling agent the undertaking of all expenses necessary to get the merchandise to its destination.

That said, it is assumed that this type of international trade assumes that it is the selling company that has a significantly higher level of risk. This often results in deals reached through DDP leading to higher prices for the buyer.

Basic implications of a DDP-type trade agreement

In the cases in which a sale is made through an incoterm DDP agreement, there will be different key points to take into account:

  • All economic management related to the operation is borne by the seller, from packaging and transport costs to customs and tariff rates, both at the port of origin and upon arrival at the port of destination.
  • These expenses include those of insuring the merchandise through a policy against possible loss and deterioration, also attributed to the offering company.
  • The costs of possible internal transport in the destination country are commonly included in the above, although it is possible, prior agreement between the parties, that it is the buyer agent that carries them with them.
  • Compared to other examples of exclusive incoterms to the maritime environment, a DDP can be applied to sales made by air or land means.

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