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Can I get compensation for a missed delivery?

Posted: 2013-11-29

Full Question

We were told the delivery of the shipment on our order was in 30 days and it was made in 60 days. Are we allowed any compensation, and how can we claim it? Of course, the supplier is unwilling, saying he is not the shipping company. Our contract was clear buy and deliver from the supplier side.

Answer

I'm glad to see you were wise enough to put the delivery dates in the contract. Many buyers forget that. But for the contract to have teeth, it would have been even better to have stated specific penalties for crucial terms, such as shipping date or quality specifications. As mentioned on a recent post on my blog:

"Make sure the penalty is large enough to make the supplier take it seriously but not so large as to scare them away. As long as the penalty is reasonable, liquidated damages provisions are enforceable in a Chinese court and it will save you a lot of trouble. Without pre-agreed terms for compensation, it is very hard to prove how much loss you have suffered. The main value of putting a penalty in your contract is that it will motivate the supplier to comply with the terms so that you actually never have to enforce it."

Based on your question, I am assuming the contract you had didn't state the penalty. But there is still hope for you to receive compensation. Here is a quick overview of your options.

  1. Did you wish to do business with this supplier in the future?
    If yes, I suggest you leverage future orders to get some kind of compensation.
    If no, consider engaging a lawyer or debt collection agency.
  2. If the damages caused by the missed delivery date are less than 4000 USD, it may be hard to get a lawyer or collection agency interested in representing you. But if your loss is substantial, here is a typical scenario:
    1. A Chinese language demand letter is sent from a China-based lawyer to grab the seller's attention and let them know this is serious.
    2. If the seller doesn't offer reasonable compensation, the case can go to court.

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