CPT (Carriage Paid To)
Incoterm whereby the seller contracts and pays for carriage to the named destination, but risk transfers to the buyer upon delivery to the first carrier.
Definition and Principle
CPT (Carriage Paid To) is a multimodal Incoterm in which the seller contracts for carriage and pays the freight to bring the goods to the named place of destination. However, risk transfers to the buyer upon delivery of the goods to the first carrier, not at destination.
Critical Point: Dissociation of Risk and Cost
CPT perfectly illustrates the dissociation between risk transfer and cost transfer characteristic of Group C Incoterms:
- Risk transfer: at the place of delivery to the first carrier (country of dispatch)
- Cost transfer: at the named place of destination
This means that if goods are damaged during main carriage, the buyer bears the loss even though the seller paid for transport.
Seller's Obligations
- Contract for carriage on usual terms, by the usual route
- Clear the goods for export
- Pay freight to the named place of destination
- Provide transport documents to the buyer
Insurance
The seller is not obliged to procure insurance. The buyer who wants coverage must arrange it themselves. If the buyer wants the seller to procure insurance, they should opt for CIP rather than CPT.