What are terms of delivery? Explanation and use

What exactly are terms of delivery? They are the general terms and conditions in which a supplier sets out how they deliver goods or services: the delivery times, when the risk passes, retention of title, and the limits of their liability. They apply to business deliveries between companies and constitute the rules of the game that apply to your quotations and agreements. Legally, they fall under the regulations for general terms and conditions in Article 6:231 et seq. of the Dutch Civil Code.

The short answer

• Terms of delivery regulate how you, as a supplier, deliver to business customers.
• They determine the delivery times and when the risk of the goods passes.
• A retention of title holds the goods yours until they are paid for.
• A limitation of liability limits what you must compensate in the event of damage.
• They only apply once they have been properly declared applicable and provided.

What are terms of delivery and what is their purpose

Terms of delivery are a specific type of general terms and conditions aimed at the delivery of goods and services in a business relationship. While an agreement regulates the core of a deal, such as price and quantity, the terms of delivery contain the recurring agreements that apply to all your deliveries. This way, you do not have to renegotiate delivery times, warranty, and liability with every order.

These terms and conditions are intended for business-to-business situations: deliveries between entrepreneurs. If you supply consumers via a webshop, stricter rules of mandatory consumer law apply, and you require separate terms and conditions. For business customers, you have more freedom to structure the terms and conditions to your advantage.

Delivery times

A central element is the delivery period. By default, you should state that specified delivery times are indicative and not binding deadlines. This is important because, in the case of a binding deadline, your customer is immediately in default as soon as the deadline expires, according to Article 6:83 of the Dutch Civil Code, without a formal notice of default. By keeping deadlines indicative, you prevent even a minor delay from immediately leading to default and liability for damages.

Additionally, you can stipulate what happens in the event of force majeure, such as supply chain disruptions, and that a customer must first grant you a reasonable period to still deliver before they can terminate the agreement.

Transfer of risk and retention of title

The transfer of risk determines from which moment a purchaser bears the risk if the goods are damaged or lost. In the case of a sale, according to Article 7:10 of the Dutch Civil Code, the risk generally transfers at the moment of delivery. You can specify this moment more precisely in your terms of delivery, for example, upon leaving your warehouse or upon transfer to the carrier.

A retention of title clause pursuant to Article 3:92 of the Dutch Civil Code ensures that the delivered goods remain your property until the buyer has paid in full. If the buyer goes bankrupt before paying, you can, in principle, reclaim the goods. This is one of the strongest protections available to you as a supplier, so it should be a standard feature in terms and conditions of delivery.

Limit liability

With a limitation of liability, also known as an exoneration, you limit what you must compensate in the event of damage. Typically, a limit is linked to the invoice value of the relevant delivery and excludes consequential damages, such as lost profits or business interruption at the customer. This way, you keep the risks manageable.

There are limits. An exemption for damage caused by intent or conscious recklessness on the part of yourself or your supervisors will not hold up. An overly broad exclusion may be set aside by the court if it is unreasonably burdensome in the given circumstances. A realistic, defensible limitation is therefore stronger than one that excludes everything.

Declare applicable and hand over

Terms and conditions of delivery apply only if they are applicable to the agreement and the purchaser has had a reasonable opportunity to take notice of them. Therefore, refer to them in your quotations, order confirmations, and on your invoices, and provide them in advance pursuant to Article 6:233(b) and Article 6:234 of the Dutch Civil Code. If you fail to do so, your purchaser may invalidate provisions, leaving you empty-handed when you need them.

A brief illustration: a machine manufacturer delivers an installation with an indicative delivery time and a retention of title clause. The buyer goes bankrupt before payment. Because the terms and conditions were provided in advance, the machine manufacturer can reclaim the installation. Had this not happened, he would have stood as a concurrent creditor in the bankruptcy proceedings.

Honest recommendation

If you supply occasionally and for low amounts to a few regular business clients you know well, you do not need a lawyer to get started. A set of sound basic terms and conditions with an indicative delivery time, a retention of title clause, and a liability limit, correctly declared applicable, will get you a long way.

Do seek assistance as soon as you make structural deliveries, work with larger orders, start delivering internationally, or are dealing with the purchasing terms of a major customer. In such cases, you want your retention of title and exoneration clause to hold up if things go wrong, and for your terms to take precedence over those of your customer.

Want to know more or arrange it immediately? View the terms of delivery on our contracts page, read how to draft terms of delivery and what it costs to have them drawn up.

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