What is Delivered Duty Paid (Incoterm)?

Delivery duty paid is a contract term. It means the seller of a good is responsible for bearing all the costs involved in delivering the good to an agreed upon destination. This ensures the seller would pay for all the expenses including transportation, insurance, imports and exports duties, and other required taxes.

When is Delivered Duty Paid Used?

DDP is a shipping agreement. The seller and the buyer finalize the deal only after agreeing on all the payments and place of delivery. The supplier provides the product, makes all the required documents including sale contract, takes care of the packaging, obtains the export clearance, pays for all the transportation required for sending the product to the agreed destination, fulfills the export, import and customs requirements and obtains the appropriate permission from the authorities in destination country. They also need to arrange the proof of delivery and pay all fees related to the inspection. 

Although the responsibility of unloading the good is on the buyer once it reaches the destination, the supplier needs to inform the buyer once the product is delivered. The supplier is also responsible for any damages or loss during transportation and needs to pay for it. Customs rule varies from one country to another. In some countries, the customs clearance procedure is extremely complex and bureaucratic, and it becomes impossible for the supplier to obtain the clearance in the foreign land. In such cases, it is always advisable that the buyers take the responsibility, as they possess the intimate knowledge of that locality and the requirements for clearing customers. The seller must closely scrutinize the destination countrys customs rule before entering into a DDP agreement. The customs do not consider the fact that a shipment is DDP while examining the customs clearance. The decision of the customs may delay the delivery, or the seller might need to opt for another delivery method causing additional charges.