Verification of the delivery contract. What to check, features and nuances of filling out the delivery contract.

May, 12 2022

Contents:

The contract of delivery formalizes the purchase of goods for subsequent resale. Each supplier knows the problems with supplies and the subtleties of this activity, so each of them has its own form of contract.

What is a delivery contract?

In accordance with the norms of the Civil Code of the Russian Federation, a delivery agreement is an agreement under which the seller (supplier), belonging to professional market participants and engaged in entrepreneurial activity, is obliged to transfer the ordered goods to the buyer within the stipulated time. The buyer undertakes to make the payment and use the received for commercial purposes.

A distinctive feature of the agreement is that civil legislation refers the contract to one of the types of purchase and sale agreement. Therefore, the document is relevant to the general regulations governing the signing of the agreement, as well as specialized rules governing specifically the conclusion of a supply agreement.

The agreement should be as follows:

  • Paid agreement.
  • Consensual (the agreement is considered valid after the participants agree on all essential conditions).

An unsigned agreement has no legal force and does not entail any consequences for the parties to the transaction.

What to check, features and nuances of filling out the delivery contract

When checking the delivery contract, it is recommended to pay attention to the essential conditions that must be prescribed without fail. If one of them is not present, then the contract is recognized as not concluded.

Article 432 of the Civil Code of the Russian Federation establishes essential conditions:

  • subject of the agreement (the condition of the goods is considered agreed if the name and quantity for delivery are specified in the text);
  • delivery time.

The text prescribes the name, subject, terms of delivery, payment, quantity of goods. Without this information, there is no agreement, and the supplier has no obligations.

Usually, the product is briefly mentioned in the subject of the agreement – what is subject to transfer. Detailed information about the assortment and volume is prescribed in a separate document – the specification, which is signed by both parties.

The agreement may specify the frequency of delivery of the order. Regarding the delivery of the goods ahead of time, the issue is discussed with the recipient and actions are carried out only after his approval (for example, the customer will start using the warehouse for storage by agreement only from August, so the delivery of the goods in July will cause inconvenience for him).

If the party accepts the cargo delivered ahead of schedule, then it goes to the account of the next batch.

A distinctive feature of this document is the fact that it can be signed exclusively during the parties’ economic (entrepreneurial) activities – between sole proprietors and legal entities. Therefore, it is worth paying great attention to the verification of the agreement. Since in the presence of errors or inaccuracies, the execution of the contract may entail negative consequences for the defendants, litigation, as well as significant financial losses.

To verify the agreement, it will not be superfluous to involve a qualified lawyer, who at the initial stage will tell the client about the pitfalls, will reduce the risk of material costs. In general, an advance check before signing the agreement will ensure:

  • Exclusion of the presence of contradictions in the text of the agreement to the norms of civil legislation.
  • Elimination of the risk of recognition of the agreement as unenforceable.
  • Protection of the buyer’s interests.
  • Cancellation of potential risks specific to the supply contract.

Financial conditions

The item on mutual settlements indicates the cost of the goods and the period of transfer of funds. Here you should specify the conditions for delivery, loading or unloading (whether these services are paid separately).

The price is assumed for one unit or completely for the order.

It is necessary to estimate the payment period. Is it suitable for the buyer, since in case of delay, the supplier is legally entitled to charge penalties in the amount of the refinancing rate approved by the Central Bank of the Russian Federation (and a larger amount may be prescribed in the agreement).

Often, the supply contract is signed for a long time and to exclude losses, the supplier makes a condition for changing the price. In this case, it is necessary to fix in advance the provision on notification of changes in the cost.

Unilateral withdrawal from the contract, penalties for violation

The recipient of the goods has the right to withdraw from the agreement in the following cases:

  • Delivery of marriage.
  • The seller violates the delivery time more than 2 times.

It is quite a real situation that the customer can find a more interesting product range, as well as an attractive price. Therefore, it is worth including in the agreement the possibility of unilateral refusal in the order of the usual notification of the supplier without specifying the reason.

The list of violations for which the application of a penalty to the violator is envisaged can be prescribed in the text of the agreement. The amount of the monetary penalty is also included in the contract.

The amount of compensation can be set in a fixed amount or as a percentage of the value of the goods. However, the court may reduce the disproportionately established penalty.

How to minimize risks?

Sometimes there is a situation that when checking the delivery contract, the parties (or one of the parties) found inaccuracies. In this case, the delivery contract should be corrected in such a way as to minimize the risks in further work. First, this applies to four main points.

Item No. 1. The cost of the contract.

Legal practice shows that here disagreements between two counterparties arise most often.

The contract must contain a clear payment procedure. The generally accepted form is the transfer of funds after the delivery of the goods and the signing of the consignment note. This option is especially convenient for the buyer who pays for the delivered goods.

Item No. 2. The method and procedure of acceptance of the goods.

Practice shows that a lot of legal disputes between counterparties arise due to violation of this clause in the contract. Moreover, how the goods will be shipped is important for the two sides of the transaction. To avoid these risks, it is important to clearly state the following points even at the stage of verification of the supply contract:

  • quantity of goods.
  • quality.
  • assortment.
  • complete set.
  • information about the packaging (container).
  • terms of acceptance in the buyer’s warehouse.
  • time to detect flaws.

These points determine how long and what actions will be taken to return the goods to the supplier in case of non-compliance with the terms of the contract.

Item No. 3. The amount and procedure for the application of fines.

Most often, the parties do not pay due attention to such a point, which makes it very difficult to file further claims and increases the costs of the injured party for legal services up to court costs. It should be noted that in the contract it is possible to prescribe two types of sanctions – penalties and a fine directly.

A penalty is a monetary sanction that is charged in a certain amount for each day of violation. It is possible to provide a penalty for each day of delay in the payment of an advance payment or the entire delivery, for violation of the terms of shipment or return of defective goods. As a rule, the amount of the penalty is determined by a certain percentage of the total value of the contract, for example, 0.1% of the contract price. Thus, a serious delay can lead to significant financial losses on the part of the violator.

The penalty is a fixed amount or a percentage of the full value of the contract. The grounds for imposing a fine may be similar, as in the case of a penalty.

If the case for the recovery of the penalty has gone to the courtroom, then according to Article 333 of the Civil Code of the Russian Federation, you have the right to file a motion to reduce its size based on good reasons.

Item No. 4. Terms and procedure for filing a claim.

The obligation of pre-trial settlement of disputes in the arbitration process has been in effect since 2017, but so far, most counterparties do not include the relevant clause in the delivery contract. Of course, there are several regulatory legal acts of the Russian Federation that regulate the claim procedure for dispute resolution. However, entering the relevant items into the contract can save time in case of violations of the terms of delivery.

Thus, only business entities – sole proprietors or organizations – have the right to act as parties to the agreement, and the purchased goods are intended exclusively for use in commercial activities. Each of the parties has prerogatives and obligations to be fulfilled. Before signing the agreement, it is recommended to check the document. It is better to entrust the verification to a professional lawyer who is familiar with all the subtleties of legislation, has experience in legal support of transactions. The procedure will minimize risks, avoid material costs as a result, and protect your interests in case of non-compliance with the terms of the agreement by the other party.

Author of the article
Verification of the delivery contract. What to check, features and nuances of filling out the delivery contract.
Valentina Khlavich
Managing Partner
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