Delivered at frontier (DAF) is a term used in international trade that indicates that goods are delivered to the buyer at the border of the country where the seller is located. DAF terms are used when the buyer and seller are located in different countries and the buyer is responsible for customs clearance and transportation costs.
Delivered at frontier terms are used to minimize risk for the buyer and seller by specifying that the seller is only responsible for delivering the goods to the border. As such, DAF terms are often used in conjunction with other Incoterms such as FOB (free on board) or CIF (cost, insurance, and freight).
Table of Contents
What is Delivered at Frontier (DAF)
Delivered at Frontier (DAF) is a delivery term used in international trade that indicates that the seller is only responsible for delivering the goods to the border of the buyer’s country.
The buyer is responsible for customs clearance and transportation costs from the border to their final destination. The phrase “delivered at the edge” was first coined by the ICC (International Chamber of Commerce) or incoterms in 1967. But, in the year 2010, it was replaced by delivered at terminal (DAT) and delivered at place (DAP), which were previously known as delivered at destination (DTD) and delivered at position (DP).
Delivered at frontier (DAF) is an international shipping term used to indicate that the seller has fulfilled their obligations under the contract once the goods have been handed over to the carrier at the customs border of the adjoining country. This term is of vital importance because it determines when the buyer assumes responsibility for the goods and, consequently, the costs relating to them. The term DAF must be defined precisely in a shipping contract or shipping agreements in order to avoid any confusion or misunderstanding.
Meaning of Delivered at Frontier
The term Delivered at frontier (DAF) is preferably used in shipping contracts when the buyer and seller are based in different countries. DAF is used to lower risk for both parties by specifying that the seller’s responsibility is only to get the merchandise to the frontier/border of the country where the buyer is located.
DAF terms are often used with other Incoterms such as FOB (free on board) or CIF (cost, insurance, and freight). Free on board means that once the products are loaded on the vessel, the buyer takes over. And cost, insurance, and freight imply that the price includes marine insurance and delivery to a named destination port.
Customs clearance is a complex process that differs from country to country. Delivered at frontier puts this responsibility on the buyer because they are the ones who are importing the goods into their country and should be familiar with the customs regulations.
It is important to note that Delivered at frontier does not include any unloading or loading fees. These charges will be included in the Incoterms 2000 version of Delivered at place (DAP).
When Delivered at Frontier terms are used, it is important to specify the following
- The name and location of the frontier
- The method of transport
- The date or time period when the buyer must take delivery of the goods
- Any other obligations of the buyer, such as paying for shipping costs or storage
- The penalties for failure to take delivery of the goods
- The risks involved in using Delivered at Frontier terms
Working of Delivered at frontier daf
If the buyer has given the seller sufficient notice thereof, the seller may deliver the goods to the border drop-off point at the buyer’s expense and in accordance with the international shipping contracts.
Buyer sufficient notice is required for the seller to deliver at the frontier. This means that the buyer will be held liable for any expenses related to the international shipping contracts and the border drop-off points.
The buyer shall be deemed to have received the goods when they are made available at the border drop-off point.
If, pursuant to an agreement between the parties, the seller delivers the goods to the buyer by means of equivalent electronic messages mentioned, the buyer shall be deemed to have received the goods when the seller has made them available in accordance with the agreement.
The buyer shall be responsible for their own expense packaging. The seller shall not be liable for any damage to the goods that occurs after delivery to the border drop-off point.
If the buyer fails to take delivery of the goods, the seller may, at their own discretion, store the goods at the buyer’s expense and risk. The seller may charge the buyer for the reasonable costs of storage, including any costs incurred in relation to the return of the goods to the seller’s premises.
The International Chamber of Commerce (ICC)
Working of Delivered at frontier daf
The International Chamber of Commerce (ICC) was established in the year 1919 for standardizing shipping languages globally. Delivered at the frontier is an Incoterm published by the ICC. Delivered at frontier border drop-offs, as well as other Incoterms, are used in international trade to help businesses determine which party is responsible for specific tasks and costs associated with the shipment of goods.
The current version of Delivered at the frontier is from the year 2010. The phrase “delivered at the edge” was first coined by the ICC in 1967. Delivered at frontier replaced delivered at the terminal (DAT) and delivered at place (DAP), which were previously known as delivered at destination (DTD) and delivered at position (DP).
Use of Delivered at Frontier
Some of the usages of DAF are
- Delivered at the frontier is usually used in inter-company transactions or when the buyer and seller have an established relationship.
- DAF is used to minimize risk for both parties by specifying that the seller’s responsibility is only to get the merchandise to the frontier/border of the country where the buyer is located.
- Delivered at frontier is often used in conjunction with other Incoterms such as FOB (free on board) or CIF (cost, insurance, and freight).
- Delivered at Frontier can be used for any mode of transport including air, land, and sea.
- Delivered at Frontier is suitable for all types of goods including perishable items.
A- Seller’s Obligations in DAF
1. A1- Provision of goods in conformity with the contract
The seller must provide the buyer with goods that conform to the contract. The contract should specify the type, quantity, and quality of goods to be delivered. It is used to lower risk for both parties by specifying that the seller’s responsibility is only to get the merchandise to the frontier/border of the country where the buyer is located.
2. A2- Licences, authorizations, and formalities
The seller must obtain any licenses or authorizations required to export the goods. The buyer may require the seller to provide proof that these licenses or authorizations have been obtained. The seller must also comply with any formalities required to export the goods. The buyer may require the seller to provide proof that these formalities have been completed.
3. A3- Contracts of carriage and insurance
The seller must enter into contracts of carriage and insurance to cover the transport of the goods to the frontier. The buyer may require the seller to provide proof that these contracts have been entered into. They are only responsible for the cost and risk of getting the merchandise to the point of destination, not for any unloading or loading fees.
4. A4- Delivery
The seller must deliver the goods to the frontier. The buyer may require the seller to provide proof that the goods have been delivered to the frontier. It is the seller’s responsibility to ensure that the goods are properly packaged and labeled.
5. A5- Transfer of risks
The risks of loss or damage to the goods are transferred from the seller to the buyer when the goods are delivered to the frontier. It is important to note that Delivered at Frontier does not include any unloading or loading fees.
6. A6- Division of costs the seller must pay
The costs of transport, insurance, and customs clearance are to be borne by the seller. The buyer may require the seller to provide proof that these costs have been incurred. It is important to note that Delivered at Frontier does not include any unloading or loading fees.
7. A7- Notice to the buyer
The seller must give the buyer notice that the goods are ready for delivery at the frontier. The buyer may require the seller to provide proof that this notice has been given.
8. A8- Proof of delivery, transport document, or equivalent electronic message
The seller must provide the buyer with proof of delivery, a transport document, or an equivalent electronic message. The buyer may require the seller to provide proof that these documents have been provided. They are useful in providing evidence that the merchandise has been delivered as well as serving as a receipt.
9. A9- Checking – packaging – marking
The seller must allow the buyer to check the goods, packaging, and labeling at the frontier. The buyer may require the seller to provide proof that this checking has been carried out. It tells the buyer that they are allowed to check the condition of the merchandise, as well as the packaging and labeling, at the point of destination.
10. A10- Other obligations
The seller must comply with any other obligations specified in the contract. The buyer may require the seller to provide proof that these obligations have been met. These other obligations could include things such as providing a certificate of origin or a commercial invoice.
B- The Buyer’s Obligations in DAF
1. B1- Payment of the price
The buyer must pay the price of the goods. The seller may require the buyer to provide proof that the price has been paid. As per the contract of sale, the buyer is obligated to pay the price of the goods. This obligation is usually fulfilled by paying the seller in cash, although other methods such as bank transfer or letter of credit may be used.
2. B2- Licences, authorizations, and formalities
The buyer must obtain any licenses, authorizations, or formalities required for the importation of the goods. The seller may require the buyer to provide proof that these have been obtained. It is the responsibility of the buyer to obtain any licenses or permits that may be required in order to import the merchandise.
3. B3- Contracts of carriage and insurance
The buyer must conclude contracts of carriage and insurance for the transport of the goods from the frontier. The seller may require the buyer to provide proof that these contracts have been concluded. The buyer is responsible for arranging both the transport and insurance for the shipment once it has reached its destination country.
4. B4- Taking delivery
The buyer must take delivery of the goods at the frontier. The seller may require the buyer to provide proof that the goods have been taken delivery of. Taking delivery of the goods means that the buyer has accepted them and is now responsible for them.
5. B5- Transfer of risks
The risks associated with the goods are transferred from the seller to the buyer at the frontier. The seller may require the buyer to provide proof that the risks have been transferred. This means that any damage that occurs to the merchandise after it has reached the frontier is the responsibility of the buyer.
6. B6- Division of costs
The buyer must pay any taxes, duties, or other charges that are due on the importation of the goods. The seller may require the buyer to provide proof that these have been paid. The buyer is responsible for paying any taxes or duties that are levied on the imported merchandise.
7. B7- Notice to the seller
The buyer must give notice to the seller of any problem with the goods at the frontier. The seller may require the buyer to provide proof that this notice has been given. If there are any problems with the goods, it is the responsibility of the buyer to notify the seller as soon as possible.
8. B8- Proof of delivery, transport document, or equivalent electronic message
The buyer must provide proof of delivery, transport document, or equivalent electronic message to the seller. The seller may require the buyer to provide this proof within a specified period of time. This proof can take the form of a receipt, invoice, or another document that shows that the goods have been delivered to the buyer.
9. B9- Inspection of goods
The buyer must inspect the goods at the frontier. The seller may require the buyer to provide proof that the goods have been inspected. It is the responsibility of the buyer to inspect the merchandise upon arrival to ensure that it is in good condition.
10. B10- Other obligations
The buyer must fulfill any other obligations under the contract of sale. The seller may require the buyer to provide proof that these have been fulfilled. These other obligations could include things like paying for the shipping costs or providing storage for the goods.
Advantages of DAF
- Delivered at Frontier terms are used when the goods need to be delivered to a specific location, such as a port, airport, or border crossing.
- Delivered at Frontier terms place the responsibility for importation formalities and duties on the buyer. This can save the seller time and money.
- Delivered at Frontier terms can be used for all modes of transport.
Disadvantages of DAF
- Delivered at Frontier terms may not be suitable for all types of goods.
- Delivered at Frontier terms may not be suitable for all types of businesses.
- Delivered at Frontier terms may not be suitable for all types of contracts.
Conclusion!
On the concluding note, it is clear that Delivered at Frontier is an Incoterm which is suitable for all modes of transport. Delivered at Frontier terms may not be suitable for all types of goods, businesses, and contracts.
The Delivered at Frontier terms place the responsibility for importation formalities and duties on the buyer which can save the seller time and money.
What are your thoughts? Let us know in the comments below!
Liked this post? Check out the complete series on Business
