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What Is Ex works & Delivered Duty Paid (DDP) Incoterm

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“Ex Works” (EXW) and “Delivered Duty Paid” (DDP) are both Incoterms, which are international commercial terms published by the International Chamber of Commerce (ICC). These terms are widely used in international trade to define the responsibilities and obligations of buyers and sellers in the process of transporting goods.
Ex Works (EXW):
In an Ex Works agreement, the seller’s responsibility is minimal. The seller makes the goods available for pick-up at their premises or another named place (factory, warehouse, etc.). The buyer is responsible for all costs and risks associated with transporting the goods from the seller’s location to the final destination. This includes arranging transportation, paying freight charges, handling customs clearance, and assuming the risk of loss or damage during transit.
The main advantage for the seller is that they have little responsibility or cost beyond making the goods available. The buyer, on the other hand, has greater control over the shipping process but also assumes more risk and responsibility.
Delivered Duty Paid (DDP):
Delivered Duty Paid is an Incoterm where the seller takes on the maximum responsibility. In a DDP agreement, the seller is responsible for delivering the goods to the buyer’s location, cleared for import, and paying all costs, including duties and taxes.
The buyer’s responsibility is to receive the goods at the destination and cover any additional costs incurred after the goods have been delivered, such as unloading costs or further transportation within the buyer’s country.
DDP represents the maximum obligation for the seller, and it provides the least amount of risk for the buyer.
In summary, while Ex Works places most of the responsibility on the buyer, Delivered Duty Paid places the maximum responsibility on the seller. The choice between these terms depends on the specific circumstances of the transaction and the preferences of the parties involved. It’s crucial for buyers and sellers to clearly understand their roles and responsibilities when using these Incoterms to avoid misunderstandings and disputes in international trade.
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