Legal Definitions - CPT

CPT stands for CARRIAGE PAID TO.

CPT is an Incoterm (International Commercial Term) used in international and domestic trade contracts. It signifies that the seller is responsible for arranging and paying for the transportation of goods to a named destination. However, the risk of loss or damage to the goods transfers from the seller to the buyer at an earlier point: when the goods are handed over to the first carrier. This means the seller pays for the freight, but the buyer assumes responsibility for the goods' safety once they begin their journey with the initial transport provider.

• Example 1: International Machinery Shipment

  A German manufacturer sells specialized industrial machinery to a factory in Mexico. The sales contract specifies "CPT Veracruz Port, Mexico." The German manufacturer (seller) arranges and pays for all transportation costs, including inland freight from their factory to the port of departure, ocean freight, and any associated charges, until the machinery arrives at Veracruz Port. However, the risk of damage or loss to the machinery transfers to the Mexican factory (buyer) the moment the machinery is loaded onto the first truck or train leaving the German factory. If the machinery is damaged during the ocean voyage, the buyer is responsible for filing a claim with the shipping company, even though the seller paid for that leg of the journey.

• Example 2: Domestic Bulk Commodity Transport

  A grain producer in Iowa sells a large quantity of corn to a processing plant in Texas. Their agreement states "CPT Dallas Processing Plant, Texas." The Iowa producer (seller) pays for the entire cost of transporting the corn by rail from their silos in Iowa to the processing plant in Dallas. The risk of the corn being spoiled or lost, however, transfers to the Texas processing plant (buyer) as soon as the corn is loaded onto the train cars at the Iowa rail yard. Should the train derail en route and the corn be destroyed, the buyer would bear the financial loss and would need to pursue a claim against the rail carrier, despite the seller having covered the freight charges.

• Example 3: High-Value Art Delivery

  An art gallery in New York sells a valuable sculpture to a private collector in California. The terms of sale are "CPT Collector's Residence, Los Angeles." The New York gallery (seller) arranges and pays for a specialized art transport company to carefully pack and ship the sculpture directly to the collector's home. The risk of any damage occurring to the sculpture, however, transfers to the collector (buyer) the moment the art transport company picks up the sculpture from the New York gallery. If the sculpture is damaged during transit by the specialized carrier, the collector is responsible for initiating an insurance claim with the transport company, even though the gallery paid for the shipping service.