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It depends; if the buyer-seller relation is long and valuable for both; then this issue should be solved based on this win-win. Contractually/legally if there is no delay penalty or liability in the contract; the buyer can't ask for compensation. For the evidence presence it is a matter of trust and nature of business relation.
In a contract, the parties may name a sum to be payable in the event of breach. If such sum is a genuine pre estimate of loss it is termed liquidated damages, and if it bears no reflection on the loss suffered, it is termed a penalty. Courts are reluctant to enforce penalty clauses and in such cases the sum stipulated is normally reduced. It has been perceptively observed by Fansworth that in comparison to the bargaining power which parties enjoy in negotiating their substantive contractual rights and duties, their power to bargain over their remedial rights is surprisingly limited. They are not at liberty to name an extravagant sum having no relation to the breach, for fear of it being construed as a penalty. It is interesting to contrast this with the law relating to consideration. A man may sell his car for a handful of marbles, and the law cares not, as long as he is satisfied. Yet the law would give no peace to a man who claims ten thousand rupees for failure to deliver a handful of marbles, branding such a clause penal.
If it's predicted in the contract as a clause by a penalty per day/week/month of delay, yes the seller is bounded to pay this amount to the buyer fulfilling contract's terms.
In any other case there is no strict and clear obligation from seller's end.
Nevertheless in real life, if there is a long relationship between the seller and the buyer, the seller usually covers this lose, on a good faith basis. In that case, the buyer hasn't to prove something much, since the seller is already aware of the flow of his client.
If there is no long relationship, but the seller wants to keep this client, will accept to cover the loses, based on actual evidence. And this is the most difficult situation, must be treated as a sensitive one.
In the case of no prediction in the contract, there is no long relationship and the seller is a huge one not caring for the resumption of the order, I am really sorry, but don't expect any coverage.
All the above are not accurate if the delay is because of means of transport and an insurance company is involved and the seller claims it's not his fault. In this case you have to go back over the Incoterms and to negotiate with the insurance company and your supplier as well.
(My reply of course, is a summary and not in details for this topic)
I agree with Mr. Theodore Pliarchopoulos's answer ... as long you have a penalty clause in place you do not need to proof any losses.......
Hello Team,
The sale of a good, or an item that is moveable at the time of sale, is a transaction designed to benefit both buyer andseller. However, sales transactions can be complex, and they do not always proceed smoothly. Problems can arise atseveral phases of a sale, and at least one of the parties may suffer a loss. In recognition of these realities and of the basicimportance of orderly commerce to society, legislatures and courts create laws governing sales of goods.
Regards,
Saiyid
If there is actual loss from buyer side due to delay in service by supplier, as per Purchase order terms buyer can make debit note advice to Accounts section for necessary debit from supplier
As stated in previous answers the level and extent of Liquidated Damages should reflect the Buyer's fair and reasonable pre-estimate of the loss that may be incurred. A Court of Law in assessing any dispute arising from the application of Liquidated Damages will take this into consideration. The Seller should be made aware under the contract, of the impact that late delivery will have on the Buyer's own delivery schedule. It is therefore advisable for the Buyer to include a "Time is of the essence" clause in the Contract to make it clear to the Seller that the Buyer is heavily reliant upon the Seller's delivery performance to avoid any adverse impact on the Buyer's own obligations to its customer. Remember that there may been an onus of proof on the Buyer to demonstrate that late delivery has been derogatory to the Buyer's interests. In the first instance however late delivery by the Seller (which should include a reasonable period for the Buyer's acceptance of the goods or services) can be demonstrated by reference to the contract delivery schedule along with the Seller's delivery note and the Buyer's receipt documentation. The Buyer will then be in a position to seek recompense from the Seller under the terms of the contract without recourse to third party evaluation. Persistent late delivery may give cause to resorting to the Termination Clause.
agree with all expert answers above
I agree with the above, but we should differentiate goods and services.
Goods in many cases can be returned and any payment made refunded.
if buying services it is much more difficult to prove losses. That said the buyer is in a strong position to only pay what is reasonable for the services provided if the terms and conditions are drafted well. Key performance indicators should be linked to penalties so it is clear what liquidated damages have been agreed at the start.
