A Spotlight On: Changing US contract delivery terms from DDP to DAP

BY:

Gail Leeson
23 May 2025

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Overseas customers often require an export supplier to deliver under the DDP (Delivered Duty Paid) Incoterms® rule, arguably the most difficult term to use for an export delivery, as all import formalities and charges are the responsibility of the delivering party. 

Many UK suppliers who had previously delivered from the UK before the EU Exit found themselves working with unfamiliar delivery terms as they navigated new territory, supplying into the EU as a UK exporter.   


Import VAT has become a new challenge, as it is non-recoverable for a UK supplier delivering DDP into the EU without having EU VAT fiscal arrangements in place to support import VAT reporting and payment. 


Delivering DDP into the US has its challenges, especially with the new US import tariffs being as volatile and unpredictable as they are.   


With contract delivery dates to be met and goods ready for export, UK exporters with DDP delivery terms are seeking ways to manage variable DDP costs, as these costs can be unclear at the time the goods leave the UK. 


Some UK suppliers have amended the Incoterm® rule from DDP in their export paperwork, leaving it for the US customer to sort out on import.  This is not a recommended practice if the underlying commercial contract has not also been amended. 


If the US importer isn’t paying close attention to how their import is being managed by their agent, it may be a while before their increased costs are noted.  A little like the UK exporter lighting the blue touchpaper and standing well back. 


Some UK exporters may prefer a more measured approach to the change in the Incoterms® rule from DDP, as this change could significantly impact their US customers.   


Changing an Incoterm® from DDP, where the onus for import formalities and charges is on the UK exporter, to a DAP term, will shift the obligation for import formalities and costs onto the US customer making the import. 


Force Majeure 

If the export contract has a ‘force majeure’ contract clause, the salient point will be to check the definition of that clause within the contract terms. 


Traditionally, force majeure clauses are defined as acts of God, adverse weather conditions (which affect delivery), and wars. 


These conditions have evolved over time and now often include other specific events, such as acts of terrorism, changes in government policies, or a government's approach to border or export controls.   


Steps to Consider 

Checking the contract terms and conditions. 


Purchase Order acceptance conditions may allow for a change in Incoterm® rule or refer to an overarching contract with a force majeure clause. 


If a force majeure clause is present, the definition of the force majeure clause will be within the contract term.  After that, it is a case of determining whether force majeure can be used to trigger a renegotiation of the delivery Incoterm® away from DDP, to a Delivery at Place term that is favourable to the UK exporter. 


Note:  The Executive Orders published by the White House rely largely on regulations that refer to U.S. national Security.  This fact may strengthen the argument regarding whether a clause conditional on a change in US trade policy applies. 


Negotiating a New Sales Contract 

When negotiating a sales contract that involves deliveries to the US, it is essential to include trade control measures in your contract checklist. 


A key factor to address will include the origin of goods. 


U.S. tariff measures are heavily determined by the country of origin, making accurate origin data critical for customs compliance and cost control. 


Import declarations require verified origin information, and errors can result in delays, penalties, or unexpected duty costs. 


To mitigate these risks, ensure that the export paperwork includes precise and validated origin details, particularly for goods affected by the evolving US trade measures. 


In short, don’t leave the goods' origin as an afterthought.  Build this into your contract requirements from the start to protect your supply chain and ensure smooth customs clearance.

 

Contract terms should be consistent with any related purchase order terms. 



The devil will be in the details. 


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