Delivery terms: Overview, definition and example
What are delivery terms?
Delivery terms in a contract define the conditions under which goods or services are delivered from one party to another. These terms specify the timing, location, method, and responsibilities related to the delivery process. Common delivery terms include Incoterms (International Commercial Terms), which outline who is responsible for shipping costs, insurance, and risk during transportation.
Why are delivery terms important?
Delivery terms are important because they clarify expectations between the buyer and seller regarding how, when, and where goods or services will be delivered. They help prevent disputes by making sure both parties understand their responsibilities and the logistics involved. For businesses, clear delivery terms ensure smooth operations and minimize delays or issues related to shipment.
Understanding delivery terms through an example
Imagine a company purchasing equipment from a supplier under an agreement that includes specific delivery terms. The agreement states that the seller will deliver the equipment "FOB (Free on Board) shipping point," meaning the seller is responsible for getting the goods to the shipping point, and the buyer assumes responsibility once the goods are loaded onto the transport.
In another example, a service provider might include delivery terms in a software-as-a-service (SaaS) agreement, specifying that the software will be made available to the customer within 48 hours after signing the agreement. The terms would detail how the software will be delivered, whether via download or cloud access, and who bears the cost of the process.
Example of a delivery terms clause
Here’s how a delivery terms clause might look in a contract:
“The Seller shall deliver the Goods to the Buyer’s warehouse at [Location] within 10 business days of receiving the Order. Delivery costs and risk of loss will pass to the Buyer upon delivery.”
Conclusion
Delivery terms are essential for managing expectations between buyers and sellers. By clearly outlining the responsibilities for shipping, costs, and timelines, delivery terms help ensure that both parties are on the same page and reduce the likelihood of disputes or misunderstandings.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.