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 What is a Shipment Contract?

A shipment contract is a legal agreement relating to the sale of goods (the transfer of a physical object for money) and other business dealings covered by the Uniform Commercial Code (UCC). The shipment contract, which a buyer and a seller enter into, specifies that the buyer is responsible for any loss or damage that occurs during the transportation of goods.

Shipment contracts can provide other forms of information. For instance, they define the seller’s responsibility up to the point of delivery of the goods to a common carrier or port of shipment. At this point, responsibility passes to the carrier or is returned to the buyer.

The Uniform Commercial Code: What is it?

The UCC is a codified system of laws and regulations to create uniformity among the states concerning commercial transactions. Sales, leases, money transfers, documents of title, secured transactions, and investment securities are just a few of the commercial transactions covered by the UCC. Although UCC covers the transfer or sale of personal property, it does not control business dealings involving real estate.

Some sales of goods must be made in writing to be legally enforceable under the UCC. As previously said, shipment contracts cover both the buyer’s and the seller’s risks. The cargo will also comply with all terms and conditions of the sale of products contract, including pricing, payment, quantity, and delivery.

Are Shipment Contracts and Destination Contracts Distinct from One Another?

In a destination contract, a sort of freight contract similar to a shipping contract and regulated by the UCC, the seller commits to assure delivery of the specified goods to the buyer’s destination, and the seller’s liability continues until the products are actually delivered.

The seller is responsible for any loss or damage to the goods while they are being delivered.

The seller’s responsibility normally ends with a shipment contract; in contrast, when the products are loaded onto the carrier or delivered to a designated site for transportation to the buyer. At that moment, either the buyer or the common carrier is legally responsible for the debt.

What Clauses Can You Look for in a Shipment Contract?

The transportation contract under the UCC enables the customer and seller to divide risk in the event that the products are misplaced or harmed before the buyer receives them. The seller guarantees to deliver the items to a common carrier, who will then deliver them to the buyer. The seller’s location and the words “free on board” are often found in the shipment contract.

You most likely have a shipping contract if your contract has language that is comparable to that described above.

The shipment contract may also contain the following language:

  • FOB Plus the Shipment Location or the Seller’s Location: At the conclusion of a “free on board” or “freight on board” (FOB) provision, the location from which the items ship is specified. For instance, the vendor is transporting a shipment of televisions from New York to a Chicago-based customer.
    • The term “FOB New York Facility” in the contract means that the seller must load the items from its New York factory. After doing so, it is released from all contractual obligations to the buyer. On the other hand, the terms “FOB Destination” or “FOB Buyer’s Factory” typically denote a destination contract.
  • FAS (name of the port or ship): This abbreviation stands for “free alongside ship,” followed by the name of the location where the customer receives the goods.
  • CIF or CF: If the terms “cost, insurance, and freight” (CIF) or “cost and freight” are present in the shipment contract, you may also have one (CF).
    • This means that the buyer’s products will be delivered to the destination port at the seller’s expense and obligation for the freight, including insurance. The price of the buyer’s products may increase to match the seller’s CIF. Once the products are loaded onto the ship, the risk returns to the customer.
  • Ex Ship: This signifies that the seller’s price includes all costs up to the port of destination or arrival, at which point liability shifts to the buyer, who must unload the items.
  • No Arrival, No Sale: This UCC clause allows the customer to terminate the agreement or accept the products at a reduced price. This covers situations where the items are misplaced or harmed during delivery to a certain location by the vendor.

Does a Seller Have to Deliver the Products I Order in the Promised Timeframe?

A vendor must send any products ordered by mail, phone, computer, or fax within the time frame stated by the Federal Trade Commission’s Mail or Telephone Order Rule. The seller must send the products within 30 days if no ship date is specified.

What Happens If the Seller Doesn’t Deliver the Items I Ordered Quickly?

The seller is required to give you notification of a specific revised shipping date and give you a choice to cancel your order and get a fast refund if they are unable to deliver the products you requested within the timeframe stated or within 30 days.

You are presumed to have accepted the revised ship date if it is less than 30 days from the original ship date unless you submit notice that you are canceling your order and asking for a refund. If you paid with a check or money order, the refund must be processed within seven days; if your order was charged, it must be processed within one billing cycle.

Unless you give notice that you accept the new revised ship date, your order is presumed to have been canceled if the new shipping date is more than 30 days after the original ship date.

Are There Any Exceptions That I Should Be Aware Of?

Magazine subscriptions, seeds or seedlings, and any photo development are not covered by the Federal Trade Commission’s Mail or Telephone Order Rules. The seller must ship within the time frame promised or, if no delivery date is specified, within 50 days if you seek credit from the seller at the time you placed your order to cover all or a portion of your order.

If the seller misses the first ship date, the seller must provide you with a specified new ship date unless there is a valid cause for the seller to be unable to do so or the seller informs you of the cause of the delayed shipment.

Does My Consumer Protection Matter Require Legal Counsel?

You can assess your case and explore your legal options with the aid of a lawyer. Demand letters can be written on your behalf by a consumer lawyer in your area with competence in consumer protection issues, and if necessary, a lawsuit can be brought against the business.

A local consumer lawyer will be most qualified to comprehend how your state’s unique laws will affect your legal possibilities because state laws regarding consumer protection may vary.

Additionally, a lawyer can assist you in assembling the proof you’ll need to back up your claim and in filing a legal complaint. Finally, an attorney can also represent you in court if you need to sue the company and obtain damages for your specific losses and expenses.

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