Shipping: Overview, definition, and example
What is shipping?
Shipping is the process of transporting goods from one location to another, whether by land, sea, or air. In business contracts, “shipping” refers to how, when, and where goods will be delivered. It includes key details such as who is responsible for costs, risks, and delivery timelines.
Why is shipping important?
Shipping plays a crucial role in business transactions, especially for companies that sell physical products. Clear shipping terms help prevent disputes by setting expectations on delivery times, costs, and liability if something goes wrong.
For example, if a package is lost or delayed, the contract should specify whether the seller or the buyer is responsible. Without well-defined shipping terms, businesses risk confusion, extra costs, and potential legal conflicts.
Understanding shipping through an example
Imagine you run an online store selling handmade furniture. A customer orders a table, and your contract states that shipping is handled by a third-party carrier. If the table arrives damaged, who is responsible?
If your contract includes a shipping clause stating that the seller is responsible for damages until delivery, you must replace or refund the item. However, if it states that responsibility transfers to the buyer once the order is handed to the carrier, the buyer must handle any claims with the shipping company.
Example of a shipping clause
Here’s an example of what a shipping clause may look like in a contract:
“The Seller shall arrange for shipment of the Goods to the Buyer’s specified address using a carrier of the Seller’s choice, unless otherwise agreed in writing. Risk of loss shall transfer to the Buyer upon the carrier taking possession of the Goods. The Seller is not responsible for delays or damages occurring in transit unless otherwise stated in this Agreement.”
Conclusion
Having clear shipping terms in your contracts ensures everyone knows their responsibilities. It helps businesses manage costs, reduce risks, and prevent disputes over lost or damaged goods.
Before finalizing any transaction, make sure your shipping terms are clear—who handles the costs, when ownership transfers, and what happens if something goes wrong. A solid shipping clause can save your business from unexpected headaches and keep your operations running smoothly.
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.