International transportation, delivery of goods and passing of risk: 3 mistakes to avoid

Luca Davini
Lawyer in Milan and Turin


In the context of international trade, with interlocutors speaking different languages, operating in markets that are often quite distant, not only with reference to geographic location but also to customs, habits 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 on the modality of transport and delivery of goods.

It is therefore necessary to draw further attention to the need to identify within an international sales contract, with absolute certainty, the deadline for delivery of the goods, resorting to the correct use of the ICC Incoterms® rules, and the moment of the passage of risk, avoiding mistakes that very often end up prejudicing the successful completion of the transaction.

The first of the mistakes that should not be made in the context of negotiating an international sale – or distribution – contract is not to define with absolute certainty the time of delivery of the goods, as on the contrary should be done by indicating, for example, the date or the period of time determined or determinable according to the contract within which to fulfill this obligation.

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

It is clear that the indeterminacy of this moment and the consequent discretion of the Judge possibly called to establish it, contain in themselves a high risk of achieving unforeseen and most often unwelcome results for the Italian exporter.

In this regard, it is also desirable, and here we come to the second error 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 or not, the failure to comply with it, may justify the termination of the contract for non-performance or constitute the subject of a claim for compensation for any damage caused by the non-delivery or late delivery of the goods, so as to avoid the emergence of lengthy and costly litigation on this point.

The third mistake not to be made relates to the subject of the passing of risk: it is in fact essential for the parties to the contract, seller and buyer, to be able to rely 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 time when the passing of burdens and risks relating to the delivery of the goods from the country of departure to the country of destination takes place.

For example, again with reference to the Vienna Convention, it should be recalled that if the seller undertakes to remit the goods to the buyer or the carrier at a specified place, the risk passes at that time, whereas if the sale does not involve transportation, i.e., the buyer is to collect the goods from the seller, the risk passes with delivery to the buyer.

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

It is immediately apparent from this information that the drafting of a complete and consistent international contract, with reference to these multiple risks, is of paramount importance to enable the deal to be concluded safely.

In any case, in order to prevent any risk related to lack of specific stipulations on the points we have highlighted, recourse to the Incoterms® of the ICC, on this point, holds an invaluable working tool since through their correct use of the it is possible to give, as already mentioned, a precise interpretation to the clauses used in the international sales contract.

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Marcello

Dear Aurelia, the information you have provided are not sufficient for an answer which is subject to a professional engagement. In any case, we should study the provisions of the contract and identify governing law of the contract.If it does not provide anything on governing law then conflict law shall apply (in the most part of the countries likely the governing law will be the law of the country where the agent is domiciled). best regards Marcello Mantelli

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Aurelia

I signed a contract with a fashion agency but there were no termination clauses in the contract and decided to withdraw it before one week after signature so sent them an email but after 14 days they sent me an email and asserted that because i didnt withdraw in legal deadlines i have to perform the contract and pay whole money.Noboday told me about any deadlines and nothing was in the contract!! Why did they claim such a thing?

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