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Carriage Paid to or CPT: Key Insights into Its Legal Framework
Definition & Meaning
'Carriage Paid To' (CPT) is a term used in international sales contracts. It indicates that the seller is responsible for delivering goods to a specified destination. The seller selects the mode of transportation and covers the costs associated with shipping the goods to that location. Additionally, the seller is responsible for clearing the goods for export. The risk associated with the goods transfers from the seller to the buyer once the goods are handed over to the first carrier.
Table of content
Legal Use & context
CPT is commonly used in international trade agreements. It falls under the category of Incoterms, which are standardized terms that define the responsibilities of buyers and sellers in global transactions. Understanding CPT is crucial for parties involved in international sales, as it outlines the obligations regarding transportation and risk transfer. Users can manage related documentation using legal templates available through platforms like US Legal Forms.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A seller in the United States sells machinery to a buyer in Germany. The seller arranges for the machinery to be shipped to a specific port in Germany and pays all shipping costs. The risk of loss or damage transfers to the buyer once the machinery is handed over to the shipping company.
Example 2: A company in Canada sells textiles to a retailer in Mexico. The Canadian seller chooses a freight service to deliver the textiles to a warehouse in Mexico City, covering all related costs until that point. (hypothetical example)
Comparison with related terms
Term
Definition
Key Difference
Carriage Paid To (CPT)
Seller pays for transportation to a specified destination.
Risk transfers at the first carrier.
Free on Board (FOB)
Seller delivers goods on board a vessel.
Risk transfers when goods are on the vessel.
Cost, Insurance, and Freight (CIF)
Seller pays for transport, insurance, and freight.
Risk transfers when goods are loaded onto the vessel.
Common misunderstandings
What to do if this term applies to you
If you are involved in a transaction where CPT applies, ensure you understand your responsibilities regarding shipping and risk. Review your sales contract carefully to clarify obligations. If needed, consider using US Legal Forms for templates related to international sales contracts. For complex situations, consulting a legal professional may be beneficial.
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Responsibilities: Seller pays for transportation and clears goods for export.
Risk Transfer: At the first carrier.
Use in Contracts: Common in international sales agreements.
Key takeaways
Frequently asked questions
CPT means that the seller pays for the transportation of goods to a specified destination, and the risk transfers to the buyer upon delivery to the first carrier.
The seller is not required to provide insurance under CPT; however, they may choose to do so.
CPT is primarily used for international transactions, but it can be applied to domestic sales as well, depending on the agreement.