Regulations on risk transfer in goods purchase and sale contracts

Article overview

Transfer of risks in goods purchase and sale contracts is an important factor that helps participating parties clearly define their responsibilities and rights. Specifying regulations on when and how risks are transferred not only protects the commercial interests of both seller and buyer, but also minimizes disputes and uncertainty in transactions. The following article will analyze risk transfer cases and related legal solutions.

Transfer of risks in goods purchase and sale contracts
Transfer of risks in goods purchase and sale contracts

Form of goods purchase and sale contract

A contract for the sale of goods is a legal agreement between the seller and the buyer. According to Article 24 of the Law on Commercial 2005, contracts must be expressed verbally or in writing. International goods sales contracts must be made in writing or in another form with equivalent legal validity.

  • Written contract
  • Contracts by electronic means
  • Contract by specific behavior.

For some types of goods purchase and sale contracts that are required by law to be made in writing, traders must comply with that regulation.

Case of risk transfer in goods purchase and sale contract

In case there is a definite delivery location

According to Article 57 of the Law on Commercial 2005, risk is transferred to the buyer when the goods are delivered at the agreed location. The transfer of risk takes place immediately at the time the buyer or authorized person receives the goods. This provision applies even if the seller holds documents of ownership of the goods.

  • Time of transfer of risk: When the goods are delivered to the agreed location
  • Delivery conditions: The buyer or authorized person has received the goods, and the delivery location must be clearly identified in the contract.

Scope of risk transferred:

  • Loss of goods
  • Damaged goods
  • Quality loss/

Actual example: Company A (seller) delivers goods to Company B (buyer) at Company B’s warehouse at 123 XYZ Street. The risk is transferred to Company B as soon as the goods are delivered to this address and the representative of Company B signs to receive the goods.

 In case there is a delivery location
In case there is a delivery location

In case there is no specified delivery location

Pursuant to Article 58 of the Law on Commercial 2005, risk transfers to the buyer when the goods are delivered to the first carrier. This provision applies in cases where the contract has a transportation clause but does not specify a specific delivery location.

  • Time of transfer of risk: When the goods are delivered to the first carrier.
  • Conditions apply: The contract has provisions on transportation of goods, but does not specify the specific delivery location.

Actual example: Company X in Hanoi sells goods to Company Y in Ho Chi Minh City, using the shipping service of unit Z. Risk is transferred to Company Y when Company location Z and has a delivery record.

In case of delivering goods to the consignee for delivery

Article 59 of the Law on Commercial 2005 stipulates two moments of risk transfer:

Case 1: When the buyer receives ownership documents

  • Time: Date recorded on transfer documents
  • Requirements: Documents must be valid and complete.

Case 2: When the consignee confirms possession

  • Form of confirmation: Document
  • Confirmation content: Ownership rights of the buyer
  • Effective time: Date of confirmation.
 Deliver the goods to the consignee for delivery
Deliver the goods to the consignee for delivery

In case of buying and selling goods in transit:

For goods in transit, risk is transferred from the moment the contract is signed. This regulation aims to clearly define the responsibilities of the parties in this special case.

Legal basis: Article 60 of the Law on Commercial 2005.

Dispute resolution method transfers risk

  • Direct negotiation between parties: This is the process by which trading parties voluntarily meet to discuss and find solutions to problems that arise without the intervention of a third party. This approach helps create mutual understanding and can lead to flexible and quick agreements.
  • Commercial mediation: This is a method by which a neutral third party, called a mediator, assists the parties in finding a solution to the dispute. Mediation helps parties freely exchange opinions, thereby reaching an acceptable agreement without having to go through litigation.
  • Commercial Arbitration: In the event of unsuccessful conciliation, the parties may decide to refer the dispute to arbitration. Here, one or more arbitrators will review the case and issue a binding decision to the parties. This method is often faster and less formal than court proceedings.
  • File a lawsuit in court: If the above methods do not achieve results, the parties can sue in a competent court. The court will review the case based on evidence and current law to make a final decision. This is the most formal method and can take more time and cost.

Consulting and support services on risk transfer in goods purchase and sale contracts at Long Phan

Long Phan provides in-depth consulting services on:

  • Review goods purchase and sale contracts.
  • Analyze the rights and obligations of the parties at the time of risk transfer in the goods sale contract.
  • Consulting on when to transfer risks in specific goods purchase and sale contracts.
  • Support customers in analyzing the feasibility of each solution method.
  • Representing customers to resolve disputes in the transfer of risks in goods purchase and sale contracts.

To ensure your rights in commercial transactions, customers need professional advice on risk transfer regulations in goods purchase and sale contracts. Long Phan is committed to supporting you with a team of experienced experts in the field of commerce. Contact Long Phan immediately via the hotline: 0906735386 for detailed advice.