Delivered Duty Paid (DDP) is one of the official trade terms defined by the International Chamber of Commerce (ICC) under the Incoterms® rules. It establishes a clear allocation of obligations, costs, and risk between seller and buyer in an international sales contract.
This article explains DDP strictly from a legal and contractual perspective, focusing on responsibility boundaries and the point of risk transfer. Practical cost structures, operational execution, and term comparisons are addressed separately in their respective dedicated articles.
What Does Delivered Duty Paid (DDP) Mean in Incoterms®?
Under the Incoterms® rules published by the International Chamber of Commerce (ICC), Delivered Duty Paid (DDP) designates a term in which the seller assumes the broadest set of delivery obligations toward the buyer. Legally, the seller is responsible for arranging transportation, completing export and import formalities, and delivering the goods to the named place of destination. DDP may be used for any mode of transport and is classified as a destination rule within the Incoterms® structure.
Within the Incoterms® framework, DDP is not a description of logistics services but a standardized legal formula used in international sales contracts. Its function is to define which party bears responsibility for the movement of goods across borders and at what point those responsibilities end. By selecting DDP, the parties agree that the seller remains accountable for the goods until they are placed at the disposal of the buyer at the agreed destination.
Although DDP includes obligations related to customs clearance and payment of applicable import charges, the breakdown of specific cost elements and financial implications is addressed separately on the dedicated DDP cost article.
Legal Allocation of Obligations Under DDP
Delivered Duty Paid (DDP) defines a comprehensive distribution of contractual responsibilities between seller and buyer under the Incoterms® framework. The rule clarifies which party must arrange transportation, handle customs formalities, and ensure delivery at the agreed destination. Its primary function is to eliminate ambiguity by specifying legal accountability rather than commercial convenience. The allocation of obligations under DDP is structured so that the seller retains responsibility for the goods through export procedures, international carriage, and import clearance until delivery at the named place.
Seller’s Obligations
Under DDP, the seller must arrange and bear responsibility for export clearance, main carriage, and import clearance in the country of destination. The seller is required to comply with applicable customs regulations and ensure that the goods are delivered to the named place ready for unloading, unless otherwise agreed. All risks associated with the transportation process remain with the seller until delivery occurs at the agreed destination. These obligations arise from the contractual incorporation of Incoterms® into the sales agreement.
Buyer’s Obligations
The buyer’s primary obligation under DDP is to accept delivery of the goods at the named place and pay the price as agreed in the sales contract. The buyer may be required to assist by providing necessary information or documentation if such cooperation is needed to complete import formalities. However, the core legal structure of DDP places the operational and regulatory responsibility on the seller until delivery is achieved.
Legal Allocation of Obligations Under DDP
Delivered Duty Paid (DDP) defines a comprehensive distribution of contractual responsibilities between seller and buyer under the Incoterms® framework. The rule clarifies which party must arrange transportation, handle customs formalities, and ensure delivery at the agreed destination. Its primary function is to eliminate ambiguity by specifying legal accountability rather than commercial convenience. The allocation of obligations under DDP is structured so that the seller retains responsibility for the goods through export procedures, international carriage, and import clearance until delivery at the named place.
Seller’s Obligations
Under DDP, the seller must arrange and bear responsibility for export clearance, main carriage, and import clearance in the country of destination. The seller is required to comply with applicable customs regulations and ensure that the goods are delivered to the named place ready for unloading, unless otherwise agreed. All risks associated with the transportation process remain with the seller until delivery occurs at the agreed destination. These obligations arise from the contractual incorporation of Incoterms® into the sales agreement and must be interpreted in conjunction with the specific terms of the underlying contract of sale.
In addition, the seller must provide the buyer with the documents necessary to enable the buyer to take delivery of the goods. These documents typically confirm shipment, transport arrangements, and successful completion of required formalities, without altering the allocation of responsibility established by the rule itself.
Buyer’s Obligations
The buyer’s primary obligation under DDP is to accept delivery of the goods at the named place and pay the price as agreed in the sales contract. The buyer may be required to assist by providing necessary information or documentation if such cooperation is needed to complete import formalities. However, the core legal structure of DDP places the operational and regulatory responsibility on the seller until delivery is achieved.
Once the goods are placed at the buyer’s disposal at the agreed destination, responsibility shifts in accordance with the risk transfer mechanism defined by the rule. From that moment forward, the buyer assumes the legal consequences associated with possession and further handling of the goods.
Risk Transfer Under DDP
A central function of Incoterms® rules is to determine the exact point at which risk transfers from seller to buyer. Under Delivered Duty Paid (DDP), the transfer of risk occurs when the goods are placed at the disposal of the buyer at the named place of destination. This means the seller bears the risk of loss or damage to the goods throughout export clearance, international transport, and import clearance, up to the agreed delivery point.
It is important to distinguish between risk and cost. Although DDP assigns extensive cost responsibility to the seller, the legal concept of risk focuses specifically on who bears the consequences if the goods are lost or damaged at a given stage of the transaction. Under DDP, that responsibility remains with the seller until delivery has legally occurred at the specified destination.
The named place plays a decisive role in determining the moment of transfer. If the contract identifies a precise address or facility, risk passes when the goods are made available there in accordance with the rule. Ambiguity in defining the destination may create uncertainty regarding the timing of risk transfer, which underscores the importance of clearly drafting the contractual delivery location.
DDP Within the Incoterms® Framework
Delivered Duty Paid (DDP) must be understood within the broader structure of the Incoterms® rules issued by the International Chamber of Commerce (ICC). Incoterms® are standardized trade terms designed to clarify the division of responsibilities, risks, and certain costs between contracting parties in international sales transactions. They do not govern the entire contract of sale but operate as an agreed allocation mechanism when expressly incorporated into that contract.
Within this framework, DDP is categorized as a destination rule, meaning that delivery is completed in the country of import at the named place agreed by the parties. Unlike rules that conclude delivery at the point of shipment, DDP extends the seller’s obligations through to arrival at the specified destination. Its structure reflects a high level of seller commitment under the Incoterms® system, but its legal effect depends entirely on correct contractual incorporation.
Incoterms® rules are periodically updated, with Incoterms® 2020 being the current version at the time of writing. When referencing DDP in a contract, the applicable version of Incoterms® must be clearly stated, as different editions may contain revisions or clarifications that influence interpretation.
Using DDP in International Sales Contracts
Delivered Duty Paid (DDP) only produces legal effect when it is properly incorporated into an international sales contract. Incoterms® rules do not apply automatically; the parties must expressly reference the chosen rule and specify the applicable version. Clear contractual drafting ensures that the allocation of obligations and risk established by DDP is enforceable and not open to conflicting interpretation under domestic law.
Correct Contract Format
The standard contractual expression for this rule follows a precise structure: “DDP [Named Place of Destination] – Incoterms® 2020.” The named place must be clearly identified, as it determines the location of delivery and the point of risk transfer. Stating the version of Incoterms® is equally important, since each edition reflects updates or clarifications issued by the ICC. Without reference to a specific version, interpretation disputes may arise regarding the parties’ intended allocation of responsibilities.
Why the Named Place Matters
The effectiveness of DDP depends heavily on the precision of the named place. A broadly defined destination, such as a city without further specification, may create uncertainty about where delivery legally occurs. By contrast, identifying a precise address, warehouse, or facility reduces ambiguity and aligns contractual language with the operational reality of delivery. Careful designation of the destination strengthens legal certainty and ensures that the transfer of risk and completion of obligations are clearly understood by both parties.
Understanding DDP in Context
This article explains Delivered Duty Paid (DDP) strictly within the legal structure of the Incoterms® rules. Incoterms® are designed to allocate contractual responsibilities and define the point of risk transfer in international sales agreements. They do not regulate commercial pricing decisions, logistical arrangements, or operational execution methods.
In practice, businesses often evaluate how DDP functions beyond its legal definition, including how responsibilities are carried out in cross-border transactions and how delivery is implemented under real trade conditions. Those operational considerations involve a different analytical perspective from the contractual interpretation provided here.
For a broader perspective on how DDP works in real trade execution beyond its legal definition, see our guide on how DDP works in real trade execution.
