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Place of Delivery, Destination, and Final Destination - Same or Different?

Let us understand what the place of delivery, place of destination and place of final destination of goods mean in Incoterms® with an example.

A buyer and a seller agree on a contract to send goods from place A to place B via port C and port D. They decide that the seller will bear the cost till port D i.e, pre-carriage from place A to port C and main carriage i.e, port C to port D.

They also decide that though the cost till port D will be borne by the seller, he will bear the risk only for the pre carriage, i.e. port C. From port C onwards the risk of the goods will be buyers.

Seller appoints a freight forwarder 1(FF1) and buyer appoints freight forwarder 2(FF2).

So FF1 will arrange pre carriage and main carriage and FF2 will arrange for on carriage from unloading port to final destination.

Here Port C is called the place of delivery or the place of risk transfer from seller to buyer in Incoterms® rules.

Port D is the place of destination or the place of cost transfer from seller to buyer.

Place B is the final place of destination of the goods, usually the buyer’s premises.

So, it is vital to understand that cost transfer and risk transfer are two very different concepts. Though in most Incoterms® rules it is the same place where cost and risk are transferred simultaneously, in some Incoterms® rules these are two different places.

So, identifying the place of delivery and the place of destination as precisely as possible in the contract will ensure no conflict arises at a later stage. For example, it is always prudent to mention the place of delivery as Tower 123, ABC Street, Las Vegas than only mentioning Las Vegas in the Incoterms®.

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