What are DPU conditions?

I. WHAT ARE DPU CONDITIONS?

 

DPU (abbreviated by the phrase: Delivered at Place Unloaded) is a term in international trade that specifies the obligations, costs, and corresponding risks related to the delivery of goods from seller to buyer according to Incoterms standards published by the International Chamber of Commerce (ICC).

 

Under DPU terms, the seller delivers when the goods are placed at the buyer's disposal, and unloaded from the means of transport at the named place of destination. The seller bears all risks involved in bringing the goods to the named place and unloading them from the means of transport. DPU is the only term that requires the seller to unload the goods at the place of destination.

 

The DPU term is used for all modes of transport and can be used when multiple means of transport are involved.[1]

 

If the parties intend the seller not to bear the risks and costs of unloading, the DPU rule should not be used and DAP should be used instead[2].

 

This rule dates back to 1953 under the name EXQ (Ex Quay) and was renamed DEQ (Delivered Ex Quay) in Incoterms® 1990. The rule requires the seller to unload the goods from the ship onto the wharf. Clearly, this only refers to goods loaded directly onto the ship, such as breakbulk cargo. In Incoterms® 2010, this rule was replaced by a broader rule, DAT – Delivered at Terminal, to cover all modes of transportation.

 

In DAT, "Terminal" is understood to be any place, whether covered or not, such as a port, warehouse, container yard, or road, rail, or air terminal. However, this clear clarification is not mentioned in the rule itself but is only referred to in the Guidance Note. Clearly, the intention was to allow delivery at various forms of terminals so that the buyer receives the goods after customs clearance is completed.

 

In the final discussions of the Incoterms® 2020 rules, the expansion of DAT was introduced. The purpose is to include delivery to destinations outside the terminal and where the seller arranges for unloading.

 

This could happen in cases where specialized machinery is transported to a location where the seller is also responsible for assembly and installation. Thus, almost at the last minute, DPU was born.

 

When the drafting committee amended DAT to DPU, it gained increasing support.[3]

 

 

DPU [named place of destination] Incoterm® 2020

 

(Location needs to be specific to avoid disputes)

 

For example, the delivery location designated by the buyer to unload goods at Tien Sa port, Da Nang is at 01 Yet Kieu, Tho Quang, Son Tra, Da Nang. The DPU of this foreign trade contract will be shown as follows: DPU 01 Yet Kieu, Tho Quang, Son Tra, Da Nang, Vietnam Incoterms 2020.

 

II. USER MANUAL

 

1. Regarding transportation methods:

 

This term shall be used for all modes of transport and may be used where more than one mode of transport is involved.

 

2. Transfer of goods and risks (DPU – Delivered at Place Unloaded):

 

Delivery has been unloaded at the destination means that the seller delivers the goods when they are placed under the control of the buyer, having been unloaded from the transport vehicle at the specified destination. The seller bears all risks related to bringing the goods to the specified place and unloading them from the transport vehicle.

 

DPU is the only term that requires the seller to unload the goods at the destination. The seller should ensure that they have the capability to organize the unloading at the destination, or if not, consider using the DAP term. The parties should specify the destination as clearly as possible. Firstly, the risk of loss or damage to the goods transfers to the buyer at the delivery point, so it is best for both parties to specify the delivery point clearly. Secondly, the seller incurs all costs to bring the goods to the delivery point and unload them, meaning this is the transfer point for costs from the seller to the buyer. Finally, this location is where the seller must sign a transport contract to deliver the goods there. If any issues arise with the goods before reaching the delivery point, the seller bears all losses. For example, the seller will have to bear all additional fees that the carrier charges during transportation. The seller is advised to sign a transport contract to that specific location.

 

3. Unloading costs at designated destination:

 

The seller pays all costs related to  unloading the goods at the point of delivery.

 

4. Customs Obligations for Export/Import:

 

The DPU condition requires the seller to clear the goods for export, if necessary. However, the seller is not obligated to clear the goods for import, pay import duties, or bear the costs of import customs procedures. In the event that the buyer fails to clear the goods for import, the goods will be held at the port or in the yard in the importing country.

 

So, who bears the risk of loss and damage that may occur when the goods are detained? The answer is that the buyer bears the risk, and continues to bear it until the goods are transferred to a location within the inland of the importing country. From this point, the seller resumes bearing the risk and costs associated with the loss or damage of the goods until delivery. This is clearly stipulated in section B3(a). If both parties believe that the exporter can handle customs clearance and import procedures to avoid the situation described above, they may consider using the DDP condition.

 

III. OBLIGATIONS OF BUYER AND SELLER UNDER DPU CONDITIONS

 

A. OBLIGATIONS OF THE SELLER:

 

A1. General obligations of the seller

 

The seller must supply the goods and the commercial invoice in accordance with the contract of sale and provide all appropriate evidence that the contract may require.

 

Any documents provided by the seller may be in traditional paper form or in electronic form if agreed by the parties or prescribed by custom.

 

A2. Delivery

 

The seller fulfills the obligation to deliver when the goods are placed under the control of the buyer, having been unloaded from the transport vehicle at the designated destination (if any), at the specified place on the agreed-upon date or within the stipulated period.

 

In the case of DAP and DDP, the seller is only required to deliver when the goods have reached the destination and are ready for unloading. In contrast, for DPU, the seller must deliver the goods after they have been unloaded from the transport vehicle at the destination.

 

Placing the goods “at the disposal of the buyer”:

 

The EXW rule and the D-group rules specify that the seller must deliver the goods by placing them "at the disposal of the buyer." This means that the seller must do everything necessary so that the buyer, without having to do anything else, can still receive the goods at the delivery location. In this scenario, the buyer can decide to use the goods for any purpose, such as transporting them to another location, reselling them to others, or storing them locally.[4]

 

A3. Risk transfer

 

The seller bears all risks of loss or damage to the goods until they have been delivered in accordance with A2, except in cases of loss or damage referred to in B3.

 

A4. Loading

 

The seller must bear the costs of contracting or arrange for the carriage of the goods to the specified destination or agreed-upon location, if any, at the named destination. If the specific location is not agreed upon or determined by custom, the seller may choose a location at the specified destination that best suits their purpose.

 

The seller must comply with any security requirements related to transportation to the destination.

 

Although Incoterms® 2010 in the D-group rules specified that the seller “contracts” transportation, the seller could still arrange transportation using their own means. This is made clearer in Incoterms® 2020[5], where the term “contracts” is replaced with “contracts or arrange” transportation. Therefore, under the D-group rules, the seller can use their own means of transportation without necessarily having to hire the third-party carrier's transport. This provision is advantageous for D-group sellers who have their own means of transportation for shipment.

 

While in Group F, the seller only needs to meet security requirements related to transportation until delivery at the departure point, in Groups C and D, the seller must meet all security requirements related to transportation that the seller intends to use to transport the goods to the specified destination or agreed-upon port.[6]

 

A5. Insurance

 

The seller has no obligation to the buyer to conclude an insurance contract.

 

Because sellers in group D must bear risks during transportation to deliver goods to the destination, sellers need to purchase insurance to protect their interests. Purchasing such insurance is voluntary and not required by the seller, so it is not the seller's obligation to the buyer.[7]

 

A6. Delivery/ transport document

 

The seller must bear the cost of providing any document required for the buyer to receive the goods.

 

If the seller in Group C has to provide transport documents for the “buyer to have the right to complain to the carrier about the goods”, including the right to receive the goods from the carrier, then the seller in Group D only has to provide transport documents as required for the “buyer to receive the goods”. The requirements for transport documents in Group D should be specified in the contract by the buyer.

 

The general principle is that if the goods do not conform to the transport documents, the buyer in Group C has the right to complain to the carrier, while the buyer in Group D has the right to complain to the seller.

 

Additionally, in Incoterms® 2020, the titles of Article A6 and B6 have combined two titles from Article A8 “Delivery document” and B8 “Evidence of delivery” in Incoterms® 2010 into a unified title, which is “Delivery/ transport document”

 

In Groups C and D, the seller must bear the cost of providing the buyer with transport documents so that the buyer can receive the goods from the carrier at the specified destination. As the seller's obligation is to provide transport documents, the title “Delivery document” in Article A8 of Incoterms® 2010 is not suitable, replaced by the title “Delivery/ transport document” in Article A6 of Incoterms® 2020.

 

A7. Export/import customs clearance

 

a) Regarding export and transit customs clearance

 

If necessary, the seller must do and pay all costs related to the procedures

 

Export and transit customs (if there is transit in a third country) are regulated in the country of export and transit, as

 

• Transit export license;

 

• Security check for goods when exported/in transit;

 

• Check before sending goods; and

 

• Any other official license

 

b) Support in carrying out import procedures

 

If necessary, the seller must assist the buyer, upon the buyer's request, in the risks and costs borne by the buyer to obtain the necessary information for customs procedures when importing, including security information and inspection of goods, as specified in the importing country.

 

The seller in DPU is responsible for and bears the costs of export and transit procedures through any country (other than the importing country) as required. If the buyer requests, the seller must also assist the buyer in obtaining documents and information related to import customs procedures, with the risks and costs borne by the buyer.[8]

 

A8. Check – Packaging, packaging – Marking

 

The seller needs to pay the costs of inspection (such as quality inspection, weighing, measuring, counting) necessary for delivery as prescribed in section A2.

 

The seller must package the goods at their own expense unless industry practice specifically requires that the goods be sent unpackaged.

 

The seller must package and mark the goods in accordance with the mode of transport unless both parties have specifically agreed on packaging and marking when the contract is signed.

 

A9. Division of costs the Seller must pay:

 

a) All costs related to the goods and the transportation of the goods until they are unloaded from the transport vehicle for delivery to the buyer under section A2, except those paid by the buyer under section B9;

 

b) Costs of providing evidence to the buyer under section A6 that the goods have been delivered;

 

c) If necessary, customs clearance, payment of export duties, and any other fees related to the export and transit of goods as specified in section A7(a); and

 

d) Reimburse the buyer for all costs and fees related to assisting the seller in obtaining documents and necessary information under sections B5 and B7(a).

 

Although section A9(a) in the DAP and DPU rules both stipulate the same, due to the difference in section A2 (Delivery) in these rules, the costs that the DPU seller must bear are different from DAP, with the only exception being the unloading costs at the place of delivery.[9]

 

A10. Notice to buyers

 

The seller must notify the buyer of any information necessary to enable the buyer to take delivery of the goods.

 

B. BUYER'S OBLIGATIONS

 

B1. General obligations of the buyer

 

The buyer must pay for the goods as stipulated in the sales contract.

 

Any documents provided by the buyer may be in traditional paper form or in electronic form if agreed by the parties or prescribed by custom.

 

B2. Receive

 

The buyer must accept the goods when they have been delivered according to section A2.

 

B3. Transfer of Risk

 

The buyer must bear all risks related to the loss or damage of the goods from the moment the goods are delivered as per section A2.

 

If the buyer is unable to fulfill their obligation related to import customs clearance as per section B7, the buyer will bear all risks and costs related to the loss or damage of the goods, provided that the goods have been clearly identified as the goods of the contract.

 

If the buyer fails to notify the seller in a timely manner as per section B10, the buyer will bear all risks of loss or damage to the goods from the specified date or the last day of the stipulated period for delivery, provided that the goods have been clearly identified as the goods of the contract.

 

B4. Carriage

 

The buyer has no obligation to the seller to make a contract of carriage.

 

According to groups C and D, the obligation for the contract of carriage belongs to the seller, so the buyer has no obligation to the seller to enter into a contract of carriage. If the buyer wishes the goods to proceed from the named place of destination to another final destination, the buyer may need to enter into a contract of carriage. However, the buyer signs this contract of carriage for his own benefit, so it is not the buyer's obligation to the seller.[10]

 

B5. Insurance

 

The buyer is not obligated to the seller regarding signing an insurance contract. However, if the seller requests and bears the risk and costs, the buyer needs to provide necessary information for the seller to purchase insurance.

 

The seller in Group D must bear the risk during the journey to deliver the goods to the place of destination. Therefore, the seller needs to procure insurance to protect themselves against the goods during transportation to the delivery location. Hence, the seller may need information about the destination to purchase suitable insurance. Clause B5 in Group D, therefore, stipulates that the buyer must provide the seller, when requested and bearing the risk as well as expenses, with the information needed to purchase appropriate insurance.[11]

 

B6. Delivery/transport document

 

The buyer must accept the transport documents provided in accordance with A6.

 

B7. Export/import customs clearance

 

a) Export Clearance and Transit Support

 

If necessary, the buyer must assist the seller when the seller requests it, as the seller bears the risk and costs, in obtaining documents and information related to export clearance/transit, including security or inspection information stipulated by the exporting/transit country.

 

b) Import Clearance

 

If necessary, the buyer must handle and bear the costs related to customs clearance as stipulated in the importing country, such as:

 

• Import license;

 

• Security checks for importation;

 

• Inspection of goods;

 

• And any legal requirements.

 

B8. Check – Packaging, packaging – Marking

 

The buyer has no obligations to the seller.

 

B9. Cost division

 

The buyer must:

 

a) Pay all incurred costs related to the goods from the moment the goods are delivered according to clause A2;

 

b) Reimburse all costs and fees that the seller has incurred when assisting the buyer according to clause A7(b);

 

c) If stipulated, pay all taxes, fees, and other charges, as well as customs clearance fees for importation as per clause B7(b); and

 

d) Reimburse any incurred fees that the seller paid if the buyer cannot fulfill their obligations according to clause B7 or fails to notify the seller as per clause B10, provided that the goods have been identified as contractual goods.

 

B10. Notification to the seller

 

If agreed, the buyer, within the agreed-upon time frame and/or at the designated delivery location, has the right to determine, must appropriately notify the seller.

 

If the buyer in group C and group D has the right to determine the time or place of receiving the goods at the designated destination, the buyer must notify the seller appropriately for the seller to instruct the carrier to deliver the goods at the correct time and place at the destination.[12]

 

When using the DPU (Delivery at Place Unloaded) term in a commercial contract, special attention should be given to the following points:

 

Delivery Location: Ensure clarity and accuracy regarding the designated location where the seller must unload the goods. This helps avoid disputes during the contract execution.

 

Transportation Management: The seller needs to ensure that the goods are transported to the specified location on time and in perfect condition. The seller needs careful transportation management to prevent delays, losses, or damages.

 

Transportation Costs: Clearly stipulate the payment of transportation costs to avoid disputes over fees during the contract execution.

 

Insurance: Buyers and sellers should agree on cargo insurance during transportation to protect the interests of both parties in case of loss or damage.

 

Risk Transfer Timing: Buyers and sellers should clearly agree on the timing of risk transfer during the transportation process to avoid disputes and difficulties in resolution when incidents occur.

 

These pieces of information help provide a better understanding of the DPU Incoterms® 2020 conditions. Each condition clearly delineates the responsibilities of both the seller and the buyer in commercial activities. If there are any questions or need guidance on importing and exporting goods, contact FDVN for the most accurate support and advice.

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