Sale contracts with the Incoterm DAP

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In view of several cases managed by our law firm in which the use of the international commercial term DAP (Delivered At Place) has been of special relevance, in this article we will try to shed light on its origin and application.

As a global business organization, the International Chamber of Commerce (ICC) intends to provide the necessary practical tools to activate and simplify world trade through the use of standard terms that allow defining the rights and obligations assumed by of the parties to a sales contract, including those referring to the transportation of the goods from origin to destination. Incoterms or International Commercial Terms affect some relevant aspects of the commercial relation (sales contract) between seller and buyer, but they do not delimit the entire contents of said contract.

European and Spanish courts, to a greater extent the Spanish mercantile courts specialized in transport law, have been aware of the reality of the Incoterms and this is reflected in many resolutions. An example of this is the Judgment of the Court of Justice (EU) C-87/2010 of June 9, 2011, when it states: “In order to check whether the place of delivery is determined ‘according to the contract’, the national jurisdictional body that has knowledge of the matter must take into account all the terms and all the relevant clauses of said contract that clearly designate said place, including the terms and clauses generally recognized and enshrined by international commercial uses, such as Incoterms elaborated by the International Chamber of Commerce.”

DAP is one of the last terms incorporated in the publication “Incoterms 2010” issued by the ICC and, together with the term DAT, it replaces the previous DAF, DEQ, DDU and DES in order to adjust adequately to the current logistic reality. Consequently, as of 1st of January of 2011, date of entry into force of the aforementioned publication, the ICC reduced the Incoterms in use to eleven.

When the parties of a sales contract arrange the inclusion of the term DAP, they essentially agree, among other rights and obligations, that the seller-exporter will comply with its obligations by making available the cargo to the buyer-importer ready for unloading in the used means of transport  at the destination agreed in the contract; the buyer shall therefore be responsible for all expenses associated with the unloading of the merchandise from the means of transport used until destination, as well as for its clearance for importation. Since the seller will assume the organization and materialization of the transport to the place of destination agreed in the contract, he should make sure that this concrete place is duly specified in the sales contract since he runs with the risks of the cargo up to that point. Therefore, buying under DAP conditions will imply a lower risk for the buyer.

The DAP Incoterm is a multimodal term, which means that it can be used regardless of the means of transport used; therefore, its use is justified whether the goods are transported by road, sea, rail or air.

The knowledge and proper use of the terms of international trade is an indispensable part in international sales contracts and increasingly in those of national scope, since their national use has been extended for the benefit of transactions. It is a reality that has been gaining strength since the entry into force of the “Incoterms 2010”.

In short, receiving adequate advice at the time of closing and drafting sale contracts in relation to the Incoterms that best suit the needs of the parties, as well as in relation to the other relevant aspects to be agreed, is essential to protect the position of our clients and achieve the good end of any commercial transaction.

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Article 8.1-a) of the Regulation (EU) 261/2004

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In its judgment dated 12th September 2018, Case C-601/17, the EUCJ held that Regulation EU n. 261/2004, and in particular Article 8.1-a) thereof, must be interpreted as meaning that the price of the ticket to be taken into consideration for the purposes of determining the reimbursement owed by the air carrier to a passenger in the event of cancellation of a flight includes the difference between the amount paid by that passenger and the amount received by the air carrier, which corresponds to a commission collected by a person (or authorised agent) acting as an intermediary between those two parties, unless that commission was set without the knowledge of the air carrier, which it is for the referring court to ascertain.

The Court took into account that the objectives of Regulation EU n. 261/2004 are not only to ensure a high level of protection for passengers but also to strike a balance between the interests of passengers and those of air carriers.

In the light of those objectives, the Court considered that, while a commission collected by an intermediary from a passenger when a ticket was bought must, in principle, be regarded as a component of the price to be reimbursed to that passenger in the event of cancellation of the corresponding flight, its inclusion must nevertheless be subject to certain limits, in view of the interests of the air carriers which it affects.

 

Scope and delimitation of article 3.1.A) of European Regulation No. 261/2004, according to the CJEU

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The Court of Justice of the European Union (CJEU) has recently ruled on the scope and delimitation of Article 3.1.a) of Regulation (EC) No 261/2004 of the European Parliament and of the Council of 11 February 2004, which establishes common rules on compensation and assistance to air passengers in the event of denied boarding and of cancellation or long delays of flights. Read more

Air transport strikes: extraordinary circumstances?

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Summer is nearly here and with it the desired vacations. With that in mind, we, AIYON Abogados, consider that it is the right time to bring up one of the common fears of tourists and travelers: Will I be affected by pilot, air traffic controller or airport staff strike?

Without undermining the concept of strike as a response mechanism for workers to claim and protect their legitimate rights, the fact is that the disruptions resulting from a strike are more than significant: delays, cancellations, and multitudes of angry passengers. Luckily for the latter, in the light of the European Regulation nº 261/2004 and from the interpretations by the various Courts engaged in its development, it will be difficult for the air carriers to allege the existence of an “extraordinary circumstance” in order to avoid the payment of the corresponding compensations in case of a strike, which the affected passengers are entitled to by law.  This will apply only in case we find ourselves facing very specific circumstances such as “unpredictable and illegal strikes.” Read more

Euro Mediterranean Aviation Agreements

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Three months after the entry into force of the Multilateral Agreement between the European Community and Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Iceland, Macedonia, Norway, Serbia and Montenegro, Romania and Kosovo on the creation of a European Common Aviation Area (ECAA), on March 1st 2018, the EuroMediterranean Aviation Agreement between the European Union and its members on the one hand and the Kingdom of Morocco on the other  came into force; this agreement having been designed in Brussels on December 12th 2006. Read more

New regulation on remotely piloted aircrafts

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On December 30th, just one day after being published in the “Boletín Oficial del Estado (BOE)”, the new Royal Decree 1036/2017 dated December 15th (Real Decreto 1036/2017), by which the civil use of remotely piloted aircrafts is regulated, came into force. This Decree puts an end to the temporary regime introduced by Law 18/2014, dated October 15th, on the approval of urgent measures for growth, competitiveness and efficiency.

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Cancelation rights under the Montreal Convention: possible application by analogy of Regulation CE 261/2004

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In a judgment dated 21st September 2017, the Court of Appeals of Barcelona, Section 15, reversing the decision of the first instance court, has considered that damages arising from the cancellation of a flight are covered by article 19 of the Montreal Convention.

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International Air Transportation: Interruptible or Non-interruptible Time Limit?

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For any action for damages arising from international air transportation governed by the Montreal Convention of 1999, the Convention establishes the limitation period of 2 years in its article 35 “reckoned from the date of arrival at the destination, or from the date which the aircraft ought to have arrived, or from the date on which the carriage stopped”. Read more

AIYON Abogados attended the European Air Law Association (EALA) Seminar

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AIYON Abogados attended the European Air Law Association (EALA) 11th Munich Liability Seminar through our colleagues Julia Garcia and Enrique Ortiz.
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Air transportation: boarding denied, flight cancellation and delays

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Passenger rights in air transportation in case of denied boarding, flight cancellation and delays are included in the (EU) Regulation n. 261/2004 dated February 11th 2004. This Regulation regards passenger rights for compensation as well as the airline’s obligations for passengers’ assistance in the abovementioned cases. Nevertheless, the Regulation does not provide any information on how much time passengers have to assert their rights, which leads us to consider whether the claims made by the passengers should abide by the general limitation period of 5 years determined by the Civil Code, or by the limitation period of 2 years provided Read more