What is Delivery Terms?

Delivery terms define the rules for the actual execution of a contract. For goods, they cover the delivery schedule (weekly, monthly, on call), the delivery location (delivered duty paid, ex works), packaging requirements, transport method, and risk transfer. For services, they address availability windows, response times, and the location where the service is performed.

One of the most important elements is the transfer of risk. When does the risk of damage or loss pass from the supplier to the buyer? Under DDP (Delivered Duty Paid) in Incoterms, the supplier carries the risk until the goods arrive at the buyer's door. Under EXW (Ex Works), the buyer assumes the risk as soon as the goods leave the supplier's premises. For a shipment worth EUR 40,000, the difference can be significant.

In the hospitality sector, delivery terms are especially important for perishable goods. A hotel receiving fresh produce worth EUR 2,500 per week needs agreements on delivery times (before 07:00), temperature requirements during transport, and the procedure for rejecting delivered products that do not meet quality standards.

Delay clauses are another core element. What happens when the supplier delivers late? A common approach is a penalty per day or week of delay, expressed as a percentage of the order value, with a maximum of 5 to 10 percent.

Unclear delivery agreements lead to incorrect invoices, disputes, and operational disruptions. CIPS reports that 80 percent of invoices do not match the contractual terms. A large part of that mismatch comes from delivery terms that are not specific enough.

For SMBs in hospitality and wholesale, an incomplete or late delivery directly impacts daily operations. A restaurant that has no stock on Friday afternoon for the weekend loses revenue. Well-drafted delivery terms with clear consequences for non-performance give you a contractual basis to fall back on.