Delivery terms: Overview, definition, and example
What are delivery terms?
Delivery terms are contractual conditions that define how and when goods or services will be delivered from a seller to a buyer. These terms outline important details such as delivery timelines, shipping responsibilities, risk transfer, and costs.
For example, a supplier agreement may specify that products will be delivered within 30 days of purchase and that the seller is responsible for shipping costs.
Why are delivery terms important?
Clear delivery terms prevent misunderstandings and disputes between buyers and sellers. They ensure that both parties understand their obligations regarding shipping, deadlines, costs, and liability for damages.
For businesses, well-defined delivery terms help manage logistics, protect against losses, and provide clarity on who is responsible for delays or damaged goods. In international trade, delivery terms also ensure compliance with Incoterms (International Commercial Terms), which standardize shipping obligations.
Understanding delivery terms through an example
Imagine a company orders 500 units of raw materials from a supplier. Their contract includes the following delivery terms:
- Delivery deadline: Goods must arrive within 21 days.
- Shipping method: Air freight via a specified carrier.
- Risk transfer: The supplier is responsible for the goods until they reach the buyer’s warehouse.
- Costs: The seller covers all shipping expenses.
If the supplier fails to meet the deadline or delivers damaged goods, the buyer can hold them accountable under these terms.
In another scenario, an online retailer selling internationally might include delivery terms stating that customers are responsible for import duties and taxes on shipments. This prevents confusion about who pays additional fees.
An example of a delivery terms clause
Here’s how a delivery terms clause might appear in a contract:
“Seller shall deliver the goods to Buyer at the specified location within [X] days of order confirmation. Risk of loss shall remain with the Seller until delivery is completed. Shipping costs shall be borne by [Seller/Buyer] unless otherwise agreed.”
Conclusion
Delivery terms define the conditions under which goods or services are transported from seller to buyer, ensuring clarity on timelines, costs, and risk transfer. A well-structured delivery terms clause helps businesses avoid disputes, manage logistics efficiently, and protect their interests in commercial transactions.
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.