Legal Definitions - carriage paid to

Carriage Paid To (CPT) is an international trade term used in contracts for the sale of goods. It defines the responsibilities of the seller and the buyer regarding the delivery of goods, who pays for transportation, and, critically, when the risk of loss or damage to the goods transfers from the seller to the buyer.

Under CPT terms, the seller is responsible for:

• Clearing the goods for export.
• Arranging and paying for the transportation of the goods to a specific, named destination agreed upon with the buyer.
• Delivering the goods to the first carrier chosen by the buyer.

The key characteristic of CPT is that while the seller pays for the carriage of the goods to the named destination, the risk of loss or damage transfers from the seller to the buyer much earlier—specifically, when the goods are handed over to the first carrier at the point of origin. From that moment onward, the buyer bears all risks associated with the goods, even though the seller is paying for their journey. The buyer is also responsible for any costs associated with importing the goods at the destination, such as customs duties and taxes.

Here are some examples to illustrate how CPT works:

• Example 1: Electronics Manufacturing

  A computer manufacturer in South Korea sells a batch of specialized circuit boards to a technology company in Germany under CPT Hamburg terms. The South Korean seller arranges and pays for the air freight of the circuit boards from their factory in Seoul to Hamburg Airport. They also handle all necessary export documentation in South Korea. However, the moment the circuit boards are handed over to the airline (the first carrier) at Incheon International Airport in South Korea, the risk of any damage or loss during transit immediately transfers to the German buyer. If the cargo plane carrying the circuit boards encounters an issue causing damage, the German buyer, not the South Korean seller, would be responsible for the loss, even though the seller paid for the flight to Hamburg. The German buyer would then be responsible for import duties, customs clearance in Hamburg, and arranging transport from Hamburg Airport to their facility.

• Example 2: Textile Raw Materials

  A textile mill in India purchases a large quantity of raw cotton from a supplier in the United States, agreeing to CPT Mumbai. The US supplier arranges and pays for the transport of the cotton bales by truck from their warehouse to a US port, and then by sea freight to the port of Mumbai. The supplier also handles the export clearance in the USA. The critical point for risk transfer occurs when the cotton bales are loaded onto the first truck at the US supplier's warehouse. If, for instance, the truck carrying the cotton to the US port is involved in an accident and the cotton is damaged, the Indian textile mill would bear the financial loss, despite the US supplier having paid for the entire journey to Mumbai. Upon arrival in Mumbai, the Indian buyer would pay for import duties, customs clearance, and local transport to their mill.

• Example 3: Industrial Machinery

  A construction company in Canada orders a custom-built excavator from a manufacturer in Japan, with the contract specifying CPT Vancouver. The Japanese manufacturer is responsible for preparing the excavator for export, loading it onto a ship at a Japanese port, and paying for the ocean freight to Vancouver. They also manage all Japanese export procedures. The risk of loss or damage to the excavator transfers to the Canadian construction company as soon as the excavator is loaded onto the vessel at the Japanese port. If the ship encounters a storm at sea and the excavator is damaged, the Canadian company would be responsible for the repair costs or loss. Once the excavator arrives in Vancouver, the Canadian company is responsible for import duties, customs clearance, and arranging its transport from the port to their construction site.