Saturday, January 03, 2009

Discussion of Contract Terms Concerning Perishable Products

Discussion of Contract Terms Concerning Perishable Products

On behalf of B's best interests the contract terms have established the liability in the case of late delivery of perishable fruit in a bruised and rotten condition. This remains with A in the agreement which was arrived at through offers and acceptance terms with consideration and binding in written form that the fruit would be delivered within 30 days.

For example, if this agreement was made as a gratuitious promise then it did not consider that late delivery would spoil the product. If A seeks to deliver goods of a perishable nature specific limitation clauses would need to be in effect. The offered product known to be perishable needed to be delivered within the terms of delivery dates to be useful to the buyer.

Payment terms should include "payment with-held until delivery" or DDP delivered duty paid to ensure no risk or cost is transferred to the buyer prior to inspection. It would not be in B's interest to make payments on a perishable product prior to arrival inspection. This would ensure that A did not attempt to deliver products which were already in a bruised or rotten condition prior to shipment.

It would also prove A's good faith in meeting the 30 days delivery date as well the insurance and loss would be absorbed by A in that case. It might be a negligent misrepresentation to sign a contract without DDP.

Otherwise the conditions and warranties of the contract would have to include a firm delivery date which is unlikely that A would sign. Terms of non-performance might include late or damaged delivery. While a frustration/force majeure clause would be possible in the contract it would not encourage purchase of perishable products.

A maximum percentage of perishable goods would be a conciliatory contract provision instead with replacement and/or reshipment of goods of equal value to replace lost produce due to delivery delays. Provisioning of the insurance agreement would then determine either seller or shipper liability in delays and product damages through assessment.

However in the case of perishable items the insurance company would probably not favour repeated damages claims and thus the exporter would shoulder a lion's share of losses due to damages and delays.

Most of this agrees with our text and " A Short Course in International Payments" a book I actually own.

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