DDU Destination as per Incoterms 2000
Hi Friends,
in which way can be worded a transport document request in a L/C for goods sent by a Port of Loading via a Port of Discharge to a Final Destination sold DDU Final destination as per Incoterms 2000? Please state all the possible combinations, by surface, by sea and by air.
Thanks and ciao
Hi!
As for the docs then it can be:
+ B/L by sea
+ Multimodal transport doc - at least 2 different modes
+ Truck consignment note (CMR) - by surface
+ Airway bill - by air
BUT...
DDU term is term which concerns with fact of DELIVERY and not DESPATCH of the goods.
So the main problem is how to prove that the goods delivered to the final destination.
How to prove this?
Who will be authorized to evidence?
In what way?
Has faced with the same problem on one of our local forum and discussion is still not finished.
It is known that DDU condition requires the seller to deliver the goods not unloaded to the named place in importing country and bearing the costs and risk involved in carrying the goods to the named place of destination. Also the seller must advise the dispatch of goods in sufficient time so that the buyer can make arrangements to take delivery of the goods. He supplies as documentation a commercial invoice with relevant transport document or delivery order to buyer. (I.e the minimum documentation required by DDU)
On the other hand, the importer, in view of the contract concluded under this condition, is obligated to take delivery of the goods.
So coming bank to Armagedo's question I consider that when a presentation of this sort is made under a L/C , it should be accompanied by an additional declaration of the seller certifying he delivered the goods on, let's say ,15 January 2008 under named transport docs (CMR, AWB) to the named destination or alternatively, for B/L or combined B/L, a declaration of the carrier that goods arrived at destination and in good conditions. Both documents prove delivery of the goods under DDU conditions. It is of no concern of the banks whether declaration is really true or is false, this is outside a scope of the credit and banks are well protected by UCP. I would not agree to a document countersigned by the applicant certifying receipt of the gooods in view of the independence principle of the credit and in the line with ISBP which states that credit must not be issued requiring docs countersigned by applicant.
Why this additional document can protect both bank and applicant interest? Simply because it proves delivery of goods i.e. seller fullfilled his obligation. Presentation of only Invoice and transport doc does not in fact prove delivery of goods under DDU but merely shipment of goods. Think about this scenario: A commercial invoice and a CMR dated 12.12.2007 is presented to the nominated bank on 13.12.2007 unde a DDU condition covering shipment from Ukraina to Spain. CMR also mentions as a delivery condition DDU city in Spain.
Do you consider that is a DDU condition giving the fact that it is clearly ascertained that goods could not arrive at destination within 1 day (i.e the seller has fullfiled his obligation under DDU - goods have been delivered) .
I am waiting for other solutions.
regards
Cristian
In my eyes the risks to be borne by beneficiaries until the goods have arrived at its destination has nothing to do with a letter of credit.
I had some import DDP-credits (almost the same INCOTERM, just the import duties are on top) and asked for a combined transport B/L as per art. 19 bearing the remark " freight and all THC prepaid" and an official customs receipt, stating that the relative import duties amounting to ... were paid, leaving the transport risk on the applicant.
You can't exclude all risks under a credit. A credit should be handable and acceptable by beneficiaries. If the applicant has a good transport insurance, he might not be too concerned about the transport risk. My DDP-clients had such a good cover and would have received back the money from the insurance. In their case, DDP was not really intended but something like "CFR port of discharge, import charges and further transport charges to ... final destination ... prepaid". But "DDP final destination" is much shorter.
Pan, there aren't too many possibilities for such a transport. In 99.9 percent you will have a land transport after the sea transport, a combined tranport B/L as per art. 19 is the most common doc. for it.
-Each long journey starts with a small step-
Best regards
Frammi
In my eyes the risks to be borne by beneficiaries until the goods have arrived at its destination has nothing to do with a letter of credit.
I had some import DDP-credits (almost the same INCOTERM, just the import duties are on top) and asked for a combined transport B/L as per art. 19 bearing the remark " freight and all THC prepaid".
You can't exclude all risks under a credit. A credit should be handable and acceptable to the beneficiary. If the applicant has a good transport insurance he might not be too concerned about the transport risk. My DDP-clients had such a good cover and would have received back the money from their insurance. In their case, DDP was not really intended but something like "CFR port of discharge, import charges and further transport charges to ... final destination ... prepaid". But "DDP final destination" is much shorter.
Pan, there aren't too many possibilities for such a transport. In 99.9 percent you will have a land transport after the sea transport, a combined tranport B/L as per art. 19 is the most common doc. for it.
-Each long journey starts with a small step-
Best regards
Frammi
Dear Frammi,
Good to see your opinion and should be taken into account. However, in choosing which documents should be required there is quite a difference between DDU condition and DDP in the latter case, can be clearly ascertained when the benef fulfilled his obligation, proved, as you said by: 'an official customs receipt'. (i.e arrived at the destination point).
There is not the case of DDU where this proof cannot be seen. Also DDU like DDP does not require presentation of an insurance document simply because the buyer (applicant) strictly in the light of DDU Incoterms2000 is not concerned about the carriage until the final destination (point where risks pass to the buyer) . This is the most common perception that once the benef shipped the goods and presented docs it can be assumed he fulfilled his obligation. I would not agree to that. On the other hand it is obvious that the risk of goods vs letter of credit cannot be compared in the manner you have presented. Presumably seller is willing to promote his products and it is difficult to believe that seller would load a container with stones and present documents as having loaded timber, while the carrier protect itself by the clause: 'shipper's load and count - carrier not responsible'.
Summing up the above it should be a clear proof that benef really delivered goods at the stated point according to conditions chosen of INCOTERMS.
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