CPT (Carriage Paid To)

From Supply Chain Management Encyclopedia

Revision as of 00:33, 18 August 2011

Russian: CPT (Carriage Paid To) – CPT Фрахт/перевозка оплачена до (...названное место назначения)

General Provisions

In accordance with rules of Incoterms® 2010, ^[1] the CPT (Carriage Paid To) may be used irrespective of the mode of transport selected and may also be used where more than one mode of transport is employed. The CPT term is often used in sales where the shipment is by air freight, containerized ocean freight, courier shipments of small parcels, and in "ro-ro" (roll-on, roll-off) shipments of motor vehicles.

The seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such place is agreed between the parties). In CPT, the named place of destination is domestic to the buyer. The seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination. The seller fulfills its obligation to deliver when it hands the goods over to the carrier and not when the goods reach the place of destination. It is important to note that the transfer of risk from seller to buyer occurs at a different point than the transfer of costs (See the Table below). The parties are well advised to identify as precisely as possible in the contract both the place of delivery, where the risk passes to the buyer, and the named place of destination to which the seller must contract for the carriage. If several carriers are used for the carriage to the agreed destination and the parties do not agree on a specific point of delivery, the default position is that risk passes when the goods have been delivered to the first carrier at a point entirely of the seller's choosing and over which the buyer has no control. Should the parties wish the risk to pass at a later stage (e.g., at an ocean port or airport), they need to specify this in their contract of sale.

The parties are also well advised to identify as precisely as possible the point within the agreed place of destination, as the costs to that point are for the account of the seller. The seller is advised to procure contracts of carriage that match this choice precisely. If the seller incurs costs under its contract of carriage related to unloading at the named place of destination, the seller is not entitled to recover such costs from the buyer unless otherwise agreed between the parties. The CPT requires the seller to clear the goods for export, where applicable. However, the seller has no obligation to clear the goods for import, pay any import duty or carry out any import customs formalities.

Table 1. Seller's/Buyer's Responsibilities Allocation for Carriage Arrangements, Transaction Costs, and Risk Transfer as Stated by the CPT rule of Incoterms® 2010
Seller (Exporter), Named Place, Seller's Facilities	Export Documents, Formalities, and Duties (if any)	Pre-carriage to Named Place, Not Unloaded	Delivery at Named Place / Port, Unloaded	Ready for Loading at Named Place / Port of Shipment	Loaded on Bord of Ship or Vehicle	Transport by Air, Rail, Road, Water, or Multimodal		On Board Ship or Vessel, Not Unloaded	Discharging (Unloading) at Named Place / Port of Destination	Delivery at Named Place / Terminal	Onward Carriage to Named Place, Not Unloaded	Import Documents, Formalities, and Duties	Buyer (Importer) - Named Place, Unloaded
Seller's/Buyer's Responsibilities Allocation for a Contract for the Carriage of Goods as Stated by the CPT rule of Incoterms® 2010
Seller►►►	Seller►►►	Seller►►►	Seller►►►	Seller►►►	Seller►►►	Seller►►►		Seller►►►	Seller►►►	Seller►►►	Seller►►►	●●Buyer►	●●Buyer►
Seller's/Buyer's Responsibilities Allocation for Transaction Costs as Stated by the CPT rule of Incoterms® 2010
Seller►►►	Seller►►►	Seller►►►	Seller►►►	Seller►►►	Seller►►►	Seller►►►		Seller►►►	Seller►►►	Seller►►►	Seller►►►	●●Buyer►	●●Buyer►
Seller's/Buyer's Transaction (Loss/Damage of Goods) Risk Transfer as Stated by the CPT rule of Incoterms® 2010
Seller►►►	Seller►►►	Seller►►►	Seller►►►	●●Buyer►	●●Buyer►	●●Buyer►		●●Buyer►	●●Buyer►	●●Buyer►	●●Buyer►	●●Buyer►	●●Buyer►
				Seller’s insurable interest [10]

Notes

• [1] According to Incoterms rules, seller and buyer have reciprocal responsibilities only. The "no obligation" term often used in the rules of Incoterms means that one party has not obligation to the other party. In this case (Art. B.3.А - Incoterms® 2010) the buyer has obligation neither to arrange nor to pay the contract on carriage. The "no obligation" term has the same understanding for the both parties in the case of insurance. However, the "no obligation" term being applied to the second party does not mean that the task performance is out of the first party’s interests (Articles B.3.A and B.3.B in Incoterms® 2010). So, for the case of the CPT rule, despite the fact that the buyer has not responsibility to the seller for the contract on carriage, it is clear, that the buyer has an interest to have such a contract on carriage that will deliver the goods to the buyer’s place of destination safely and in the time stipulated.
• [2] Original document, original of document, or, simply, original means in the context of international trade are presented by a signed (executed) and, usually, stamped official document which may be reproduced as facsimiles. An original document can exist as two or more 'copies,' each one of them marked 'original' and having equal legal force. ^[2]. One overview of the current status of electronic public procurement in Europe ^[3] states that the use of original certificates is rare, and electronic certificates are equally uncommon. All correspondents indicate that original certificates are rarely required, and that copies are usually sufficient. It follows that, in an electronic context, unsigned scans would also be permissible. Indeed, in EU, 9 out of 32 countries (28%) explicitly indicate that unsigned scans or unsigned PDF files would also be permissible in most procurements. When electronic certificates are used, unsigned copies or unsigned originals are usually permitted, which substantially reduces cross border interoperability difficulties. The recognition of e-documents in an international business (logistics) is based on the same pillars as e-commerce does. Namely, in the European Union, as is the case for the e-Commerce Directive ^[4], the Model Law ^[5] also embraces the concept of functional equivalence. I.e., traditional paper-based concepts such as "writing"(Article 6), "signature" (Article 7) and "original" (Article 8) are redefined in a way that allows electronic versions of these concepts to have the same legal value, provided that these can serve the same basic purposes and offer the same guarantees as in their traditional form. Therefore, EDI option is acceptable to produce e-documents in international/domestic transactions (sales contracts).

References

1. ↑ Incoterms® 2010: ICC rules for the use of domestic and international trade terms – ICC Publication No 715E
2. ↑ http://www.businessdictionary.com/definition/original.html
3. ↑ Preliminary Study on the electronic provision of certificates and attestations usually required in public procurement procedure / European Commission Internal Market and Services DG, Brussels, 2008 – p.33. | http://ec.europa.eu/internal_market/publicprocurement/docs/eprocurement/ecertificates-study_en.pdf
4. ↑ E-Commerce Directive | http://ec.europa.eu/internal_market/e-commerce/directive_en.htm
5. ↑ UNCITRAL Model Law on Electronic Commerce Guide to Enactment 1996 with additional article 5 as adopted in 1998 | http://www.uncitral.org/pdf/english/texts/electcom/05-89450_Ebook.pdf