International transport, delivery of goods and the passage of risk: 3 mistakes to avoid

In the context of international trade, with partners who speak different languages, who operate in markets that are often very distant, not only with reference to the geographical location but also to the uses, customs and culture, it has gradually become increasingly necessary to share universally known and recognized tools with the aim of agreeing with a high degree of certainty the methods of transport and return of the goods.

Referring to what was previously said on the ICC Inconterms®, regarding the necessary in-depth analysis, it is necessary to further focus on the need to identify within an international sale contract, with absolute certainty, the delivery deadline of the goods and the moment of the passage of risk, avoiding making mistakes that very often end up compromising the success of the operation.

The first of the mistakes not to be made in the context of negotiating an international sale – or distribution contract – consists in not defining with absolute certainty the time of delivery of the goods, as on the contrary it would be necessary to do by indicating, for example, the date or determined/determinable period of time according to the contract within which this obligation would be fulfilled.

In fact, in the absence of specific agreements, in the – highly probable – case in which the contract is governed by the Vienna Convention, the seller will be required to deliver the goods “within a reasonable time from the conclusion of the contract”.

It is clear that the uncertainty of this moment and the consequent discretion of the judge eventually called to establish it, contain in themselves a high risk of achieving unexpected results and most of the time not favorable to the Italian exporter.

In this regard, it is also desirable, and here we come to the second mistake not to be committed, to define in the contract whether or not the deadline set for the delivery of the goods is of essential value and whether the failure to comply can justify the termination of the contract for non-fulfillment, or can constitute the subject of a request for compensation for any damage caused by the failure or late delivery of the goods, in order to avoid long and costly disputes on this point.

The third mistake not to be committed concerns the issue of the passage of the risk: it is in fact essential for the parties, seller and buyer, to be able to count on a complete knowledge of the law to which they will have to refer when they find themselves in the situation of having to identify the place and the moment in which the transfer of charges and risks relating to the delivery of the goods from the country of departure to the country of destination takes place.

For example, with reference to the Vienna Convention, it is good to remember that if the seller undertakes to return the goods to the buyer or transporter in a specific place, the risk passes at that time, while if the sale does not involve transport, or the buyer must collect the goods from the seller, the risk passes with the delivery to the buyer.

In this second case, the buyer who does not take delivery of the goods bears the risk of loss or damage to the goods when they are placed at his disposal.

From this information it is immediately clear that the drafting of a complete and coherent international contract, with reference to these multiple risks, is of fundamental importance to allow the parties to conclude the deal safely.

In any case, to prevent any risk linked to the lack of specific agreements on the points we have highlighted how the use of the Incoterms® of the ICC, on this point, is a very precious tool because through their correct use it is possible to confer, as already mentioned, a precise interpretation of the clauses used in the international sale contract.

Luca Davini
Avvocato in Milano e Torino

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