Delivery clauses in contracts

The delivery clauses clarify the buyer and seller’s rights and obligations regarding the delivery and handing over of the goods.

The delivery terms often relate to the transport of goods at distance selling.

Delivery clauses are of great importance in assessing

• the parties’ responsibilities in delivering goods
• cost sharing
• risk shifting

What are the delivery clauses?

Delivery clauses may be applicable, for example, to

•     delivery time
•     the way of delivering
•     fees for delivery
•     possible insurance of the goods during the transportation.

Law versus delivery clauses in contracts

The Sale of Goods Act contains detailed provisions on the transfer of liability from a seller to a buyer in transactions between private individuals or entrepreneurs.

However, the provisions of the Sale of Goods Act do not apply if the agreement, the practice adopted by the parties or the commercial practice otherwise shows.

On the other hand, the Sale of Goods Act is subject to mandatory provisions of the Consumer Protection Act, which cannot be disregarded to the detriment of the consumer.

Delivery clauses are decisive in risk

As a general rule under both the Sale of Goods and Consumer Protection Act, the seller carries the risk for damages caused during the transportation. In other words, the risk will be transferred from the seller to the buyer at the time of handing the goods over to the buyer.

Risk means the sharing of responsibilities and the moment when the responsibilities for merchandise damage will be transferred to the other party.

The moment of handing over the goods, is the moment at which the merchandise will be given to the possession of the buyer under a specific term of a contract.

Thus the risk for the goods determines the party who is liable for damages if the goods, for example, goes missing or breaks during the carriage. If the goods are at the risk of the buyer, he must pay the price even if the goods deteriorate or are destroyed, lost or diminished, provided that the loss or damage is not due to an act or omission ofthe seller.

Penalties for breach of delivery clause

If a term in the delivery clause has not been fulfilled, it is a breach of contract.

In principle, the party who breaches the contract is obliged to compensate for damages unless he proves that he has been acting carefully.
On the other hand, the counterparty has the right to claim the performance of the contract, in other words in kind, despite the disruption.

Who pays the cost of return?

The main rule about costs of returning the goods in trades between consumers and entrepreneurs is, that the buyer is entitled to cancel the trade if he can return the goods substantially unchanged and without deduction.

However, the buyer may, exceptionally, return the goods even if their value is lowered under certain statutory conditions or unless the parties have agreed otherwise.

The Consumer Protection Act is based on the fact that the consumer is responsible for the return of the goods himself, unless the trader explicitly takes responsibility for returning the goods.

On the other hand, if the goods are sold to be delivered to the consumer and the goods cannot be returned by post, the seller is obliged to collect the goods at his expense from the consumer’s home.

Article is written by lawyer Daniéla Jarva.