What is on-site delivery (DAP)?
Delivered on site (DAP) is an international trade term used to describe an agreement in which a seller agrees to pay all costs and suffer any potential loss of moving goods sold at a specific location. An on-site delivery agreement is applicable to any form or combination of forms of transportation and generally lists the point at which the purchaser assumes financial responsibility, for example, “Delivered at Place, Port of Oakland”.
In on-site delivery agreements, the buyer is responsible for payment of import duties and applicable taxes, including customs clearance and local taxes, once the shipment has arrived at the specified destination.
Operation of on-site delivery (DAP)
Delivered on site simply means that the seller assumes all risks and costs of delivering the goods to an agreed location. This means that the seller is responsible for everything, including packaging, documentation, export approval, loading fees and final delivery. The buyer, in turn, assumes the risks and responsibilities upon unloading the goods and clearing them for import.
Even with the clear guidelines for DAP agreements, there are still situations that lead to litigation, such as when the carrier of the goods incurs demurrage – a charge for failing to unload on time – because it has not received the appropriate authorization from one of the parties. In these cases, the fault generally lies with the party that failed to provide timely documentation, but it can be difficult to determine this, as documentation requirements are defined by the national and local authorities controlling ports and vary from country to country. Indeed, international commercial law can be complex even with the advantage of defined contractual clauses.
Delivered on site is an international trade term which was introduced in the 8th publication of the International Chamber of Commerce (ICC) of its Incoterms – international trade terms – in 2020. DAP replaced the term Delivery Duty Unpaid (DDU) and, well that DDU can still be used colloquially, DAP is now the official term used in international trade.
The ICC itself has been in existence since 1919 and has published eight updates to its international trading conditions since 1936.
The main driver of the ICC and Incoterms is the need for a clear understanding of counterparties’ responsibilities in international contracts, especially when it comes to who ships what and where. The ICC publishes concrete definitions, contracts can refer to Incoterms and the signatory parties have a common understanding of responsibilities. Incoterms are updated to simplify usage and remove obsolete terms. One of these simplifications was on-site delivery, as the definition applies regardless of the mode of transportation.
Key points to remember
- Delivered on site (DAP) is an international trade term used to describe an agreement in which a seller agrees to pay all costs and suffer any potential loss of moving goods sold at a specific location.
- Delivered on site simply means that the seller assumes all risks and costs of delivering the goods to an agreed location.
- Delivered on site is an international trade term which was introduced in the 8th publication of its Incoterms by the International Chamber of Commerce (ICC).