Introduction
A delayed shipment occurs when the supplier fails to deliver the goods within the agreed timeline. Non-delivery occurs when the supplier does not deliver the goods at all, despite accepting the order or receiving payment. Whether the delay amounts to a breach of contract depends on the terms of the commercial agreement and the circumstances of the transaction.
Disputes relating to delayed shipments and non-delivery are mainly governed by the Indian Contract Act, 1872 and the Sale of Goods Act, 1930. Under Section 37 of the Indian Contract Act, 1872, parties to a contract are required to perform or offer to perform their contractual promises unless excused under the law. If a supplier fails to deliver the goods as agreed, it may amount to a breach of contract. Section 73 allows the affected party to claim compensation for losses that naturally arise from the breach, while Section 74 deals with compensation where the contract specifies a penalty or liquidated damages for non-performance. If the agreement includes an arbitration clause, disputes may be resolved under the Arbitration and Conciliation Act, 1996 instead of court proceedings.
Why Is Reviewing The Contract Important?
The commercial agreement is the starting point for resolving any dispute. It sets out the agreed delivery schedule, shipping terms, payment conditions, inspection procedures, force majeure provisions, termination rights, and dispute resolution mechanism. If the supplier fails to comply with these obligations, the contract helps establish whether a breach has occurred. Where the agreement includes clauses on liquidated damages, refunds, or termination, these provisions may provide contractual remedies in addition to those available under Sections 73 and 74 of the Indian Contract Act, 1872.
Can The Buyer Claim Compensation For The Delay?
Yes, where the supplier breaches the agreement, the buyer may have the right to recover compensation. Section 73 of the Indian Contract Act, 1872 allows compensation for losses that naturally arise from the breach or that were within the reasonable contemplation of the parties when the contract was made. If the agreement contains a liquidated damages clause, Section 74 permits the court or tribunal to award reasonable compensation, subject to the terms of the contract. Depending on the circumstances, the buyer may also seek a refund of payments already made or terminate the agreement if the breach is substantial.
Can A Legal Notice Help Resolve The Dispute?
A legal notice is often the first formal step before initiating legal proceedings. It informs the supplier of the breach, refers to the relevant contractual provisions, and calls upon the supplier to deliver the goods, refund the payment, or compensate for the losses within a specified time. While Indian law does not require a legal notice in every commercial dispute, sending one often encourages settlement and creates a written record of the buyer’s claim before arbitration or litigation begins.
What Happens If The Supplier Still Does Not Perform?
If the supplier continues to default, the buyer may initiate arbitration where the agreement contains an arbitration clause. The Arbitration and Conciliation Act, 1996 provides a legal framework for resolving commercial disputes through arbitration, and arbitral awards are enforceable in the same manner as court decrees. Where arbitration is not agreed upon, the buyer may file a civil suit for recovery of damages or other appropriate relief before the competent court under the Code of Civil Procedure, 1908. In appropriate cases, relief under the Specific Relief Act, 1963, including specific performance where legally permissible, may also be available, depending on the facts of the dispute.
