Late delivery penalties?
Post 1 of 43
Are there any or is it per contract – what recourse do I have?
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16 Oct 2006 20:20
Post 2 of 43
Replying to [JMS wei]: Recourse depends on several factors, but not limited to: relationship with trade partner, thoroughness of contract, cost of penalty, geographic distance, and possibility for a creative solution.******If you have a continual relationship with a trade partner, then the value of the realtionship out weighs the cost of the penalty. You may want to split the penalty just once, or spread its cost over several periods in a contract.******If no provisions in the contract addresses the handling of penatlies, well, then there is not much one can do. Unless you have the advantage in the exchange.********If the value of the penalty is minor, you may want to absorb the cost as a means of advancing the relationship. Yet, if you do, you should mention that you will not repeat the gesture. ******For large penalties incurred by partners a great distance away, a mere contract may not be enforceable because of the legal cost. Therefore, choose your trading partner carefully.*******Asking for the payment of penalties should be on the agenda, but not before one states the importance of the business relationship. Try finding a person with a relationships with both firms, and ask that person intervene.
11 Nov 2006 21:24
Post 3 of 43
Replying to [JMS wei]:
When the question of late delivery comes, buyer can inform seller in advance that they have to comply with the strict delivery schedules. You also need to explain to seller about the implications of late delivery such as financial loss, loss of your potential customers and you must make them to realise how important is to stick to the delivery schedules.
Ofcourse buyers can not be blamed in case of natural calamities etc.
It is better for buyer to place the order well in advance taking calculated measure of late delivery.
Also Buyer can incorporate a penaulty clause in the contract.
Eg.
Say As per the contract delivery is on or before 15th december.
Delivery - December 15, 2006
Delivery 16th Dec - 20th Dec - Penaulty 2%.
Delivery 21st Dec - 27th Dec - Penaulty 5%.
Delivery 28th Dec - 5th Jan - Penaulty 10%.
Deliveyr 6th Jan -15th Jan - Penaulty 25%.
Delivery after 15th January - Contract Termination or you can put additional conditions.
You can deduct the penaulty amount as per the contract from the Invoice value and pay less to your seller if he fails to comply to the delivery schedules. This formula can be applied for each and every schedule.
This way you can put conditions in your contract for late delivery.
By advancing your purchase program and giving sufficient time to seller to supply can avoid this late delivery problems on your business.
Never reveal your exact deadline to your seller. Always keep a fews days or weeks in your hand to handle any untoward incidents.
Then there wont be late delivery and the question of penaulties.
with regards
pr swamy
To prevent spam, do not enter your contact information - Moderator
When the question of late delivery comes, buyer can inform seller in advance that they have to comply with the strict delivery schedules. You also need to explain to seller about the implications of late delivery such as financial loss, loss of your potential customers and you must make them to realise how important is to stick to the delivery schedules.
Ofcourse buyers can not be blamed in case of natural calamities etc.
It is better for buyer to place the order well in advance taking calculated measure of late delivery.
Also Buyer can incorporate a penaulty clause in the contract.
Eg.
Say As per the contract delivery is on or before 15th december.
Delivery - December 15, 2006
Delivery 16th Dec - 20th Dec - Penaulty 2%.
Delivery 21st Dec - 27th Dec - Penaulty 5%.
Delivery 28th Dec - 5th Jan - Penaulty 10%.
Deliveyr 6th Jan -15th Jan - Penaulty 25%.
Delivery after 15th January - Contract Termination or you can put additional conditions.
You can deduct the penaulty amount as per the contract from the Invoice value and pay less to your seller if he fails to comply to the delivery schedules. This formula can be applied for each and every schedule.
This way you can put conditions in your contract for late delivery.
By advancing your purchase program and giving sufficient time to seller to supply can avoid this late delivery problems on your business.
Never reveal your exact deadline to your seller. Always keep a fews days or weeks in your hand to handle any untoward incidents.
Then there wont be late delivery and the question of penaulties.
with regards
pr swamy
To prevent spam, do not enter your contact information - Moderator
11 Nov 2006 23:18
Post 4 of 43
Replying to [JMS wei]: The difficulty of enforcing these clauses overseas, or any contract clause, especially in developing markets, is a huge issue worldwide. One cannot overemphasize the importance of maintaining a good working relationship with your customer. Failing that, every foreign business must have a good relationship with an agent on the ground; preferably an attorney. That means actual physical contact; not just telephone or emails, though that may be enough depending on the reputation of the agent/attorney involved.
A skillful agent will usually be able to resolve a dispute without involving the authorities, but should of course be able to file a formal complaint and follow up where the need arises.
A skillful agent will usually be able to resolve a dispute without involving the authorities, but should of course be able to file a formal complaint and follow up where the need arises.
15 Nov 2006 07:58
Post 5 of 43
Replying to [JMS wei]:Late deliveries are subject to your agreement with the buyer.However from the seller's point of view take care to
1.have a force majeur clause in the agreement(i.e causes beyond your control like strikes,war,earthquake,flood fire etc)
2.Do not agree to a Liquidated damages of more than 5%
3.Do not agree to Risk purchase clause if in contract./agreement
4.Keep a record of all delays during production and keep the buyer informed.
5.If there is a predespatch inspection fix a time and any delay is to be added to the delivery period.
6.Try and quote FOB delivery so that shipping time is not on your account for late deliveries.
7.Take an insurance against such penalties if possible to cover such expenses.
Regards
Kishen
1.have a force majeur clause in the agreement(i.e causes beyond your control like strikes,war,earthquake,flood fire etc)
2.Do not agree to a Liquidated damages of more than 5%
3.Do not agree to Risk purchase clause if in contract./agreement
4.Keep a record of all delays during production and keep the buyer informed.
5.If there is a predespatch inspection fix a time and any delay is to be added to the delivery period.
6.Try and quote FOB delivery so that shipping time is not on your account for late deliveries.
7.Take an insurance against such penalties if possible to cover such expenses.
Regards
Kishen
16 Nov 2006 03:03
Post 6 of 43
Replying to [JMS wei]:
1. If you have signed a contract with fixed terms for preparing the delivery, and set penalties for delays - YES
2. If you have set fixed term for delivery - minimum-maximum, in a letter, fax or e-mail message, quotation, etc. document - you may enter into negotiation for such
3. If nothing regarding penalties was mentioned in a contract, but its term has expired and goods were not delivered yet, usually there might be some penalty, according to local laws. International terms - most countries accept this stipulation
4. If there was a serious reason for the late delivery (one of the sort of force majeure - flood, fire, war, earthquake, strike, rules, laws, or similar) - then no pretentions dor the delay may be laid to you
5. If the delay was caused by the transporter - then you are not liable for the delay
6. When this specific deal was arranged, did the other party give you a fixed term for delivery, and you agreed with it? - then you are liable for the delay if it is caused by you
7. If the other party set any major changes in the delivery - quantities, items, documentation, etc., then the period for preparing the delivery starts again from the date of last change.
8. If the other party was not examplary as well - late payment or similar - you may use this as an excuse against penalty for delay
9. If the delay was caused due to lack of some items, and the other party agreed to wait for it - it's all their fault.
There' s many more excuses and reasons. Depends on certain cases.
Hoping for being helpful
Nats
1. If you have signed a contract with fixed terms for preparing the delivery, and set penalties for delays - YES
2. If you have set fixed term for delivery - minimum-maximum, in a letter, fax or e-mail message, quotation, etc. document - you may enter into negotiation for such
3. If nothing regarding penalties was mentioned in a contract, but its term has expired and goods were not delivered yet, usually there might be some penalty, according to local laws. International terms - most countries accept this stipulation
4. If there was a serious reason for the late delivery (one of the sort of force majeure - flood, fire, war, earthquake, strike, rules, laws, or similar) - then no pretentions dor the delay may be laid to you
5. If the delay was caused by the transporter - then you are not liable for the delay
6. When this specific deal was arranged, did the other party give you a fixed term for delivery, and you agreed with it? - then you are liable for the delay if it is caused by you
7. If the other party set any major changes in the delivery - quantities, items, documentation, etc., then the period for preparing the delivery starts again from the date of last change.
8. If the other party was not examplary as well - late payment or similar - you may use this as an excuse against penalty for delay
9. If the delay was caused due to lack of some items, and the other party agreed to wait for it - it's all their fault.
There' s many more excuses and reasons. Depends on certain cases.
Hoping for being helpful
Nats
22 Nov 2006 04:22
Post 7 of 43
Replying to [JMS wei]:Late delivery penalty?disqualified member.
25 Nov 2006 00:36
Post 8 of 43
Ammeet, There are no penalties unless an agreed upon date is specifcally mentioned in the contract. Also the actual penalties must also be defined in the contract.
28 Dec 2006 13:13
Post 9 of 43
I think first you must pay more attention when sign a compact,give clear indication of late delivery penalties.Then if the goods late ,consult with the supplier,try for a best way to resolve it.
09 Jan 2007 01:05
Post 10 of 43
Replying to [JMS wei]:Dear JMS wei,
If you are paying by L/C, a clause can be inserted in L/C that if goods are not shipped by specific date, amount payable to supplier be reduced by X %.
Sixer
If you are paying by L/C, a clause can be inserted in L/C that if goods are not shipped by specific date, amount payable to supplier be reduced by X %.
Sixer
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11 Jan 2007 23:08
Post 11 of 43
Replying to [JMS wei]:Late deliveries penalties maybe enforced..before you buy and sell..or sign an agreement / contract / place an order.
These could be on a per day delay basis or per week basis.
adseaco
These could be on a per day delay basis or per week basis.
adseaco
26 Jan 2007 01:12