The boxes with the already paid batch from one partner burned down along with the warehouse of the transport company, another supplier sent a batch of slippers instead of fashionable autumn boots, and meanwhile the store is besieged by angry customers with defective shoes at the ready. Something like this must look like a shoemaker's nightmare. And so that this dream never comes true, you can insure yourself even at the stage of concluding a contract. Vladimir Fokin, Managing Partner of Fokin & Partners Law Firm, talks about how to transfer risks to a supplier.
Not only does the retailer face commercial risks, but so does the wholesaler. However, in retail sales, these risks are much greater, since here the seller faces the most legally protected participant in the trade process, the buyer. Consumer protection law not only provides the buyer with sufficient protection of interests, but also allows an unethical consumer to put the seller at a disadvantage. Everybody knows cases of unreasonable return of used things, and the community of sellers is replete with stories of "troll shoppers" who amuse themselves by regularly handing over generally suitable pairs of shoes to the store under various pretexts. One of the fresh tricks of such dishonest buyers is to come to the store in boots or shoes of the same model that are sold in the store, and during the fitting process, change pairs, leaving in a new thing. However, these are out of the ordinary cases, and most often sellers deal with justified claims of buyers to defective goods. And even if the seller is not to blame for the marriage, it is he who has to be responsible for the manufacturer's oversight and bear the cost of reimbursing funds. Thus, assuming all risks and costs, the seller becomes a kind of buffer between the manufacturer and the buyer.
However, the seller has several opportunities to abandon the role of the so-called “responsibility donor” and share risks with the manufacturer. The first opportunity is to conclude a contract that legally allows you to transfer some of the risks to the supplier. The second option is to reimburse the manufacturer for the costs of the defective product. However, sellers resort to this option quite rarely for several reasons: improperly executed documents for the purchase of goods (lack of a contract, and the presence of only an invoice, waybill or invoice), which forces the participants in the transaction to regulate their relations based on insufficient civil standards the code; low cost of defective goods and at the same time high cost of legal costs, which often makes the complaint disadvantageous to the seller; finally, the elementary unwillingness of the seller to spoil relations with the supplier, which is of great importance to him.
Whatever the reason, reclaiming costs from the manufacturer is a serious step that should not be made without a careful calculation of costs and benefits. This miscalculation often shows that it makes sense to contact the manufacturer for compensation for defective goods only when the entire batch or at least a significant number of shoe pairs has turned out to be flawed. In other cases, this method of transferring risks without a valid contract is the option “more expensive for yourself”. A much more reasonable way to save yourself from wasting money and nerves is to agree with the supplier on the shore: discuss the conditions for returning the goods, and best of all - write a delivery contract. True, this option is unlikely to suit small companies that are not of particular interest to the supplier. Skillful negotiations, of course, sometimes work wonders, but no one has canceled the freedom of contract, and it is hardly possible to force a partner to conclude a contract against his will.
Know where to fall
The main advantage of the contract is that it allows you to agree in advance on everything that would then have to be argued about. Unfortunately, the Civil Code regulates only the most key aspects of entrepreneurship, so it will not be possible to foresee all the risks, relying only on its norms. In any serious transaction, it becomes necessary to conclude a detailed contract.
The type of contract depends not only on the ability to transfer the risks of defective goods to the supplier, but also the ability to return unsold balances. The latter is quite realistic if a commission agreement is concluded between the companies, in which the goods do not become the property of the seller, but are taken by them for sale. In this case, the remaining goods can be returned to the supplier after sales. However, a supply contract may also provide for the risk of residuals. It can be recommended to conclude a framework supply contract for a period of one or two years. The term of the contract may be shorter, but it must necessarily allow checking the goods for quality and covering the period of the planned sale of goods. It turns out that in shoe sales the validity of the supply contract should not be less than six months.
In addition to clauses on the subject of the contract, general terms of delivery and other standard elements, the contract provides for conditions that allow sharing risks with the supplier. For example, it fixes the procedure for acceptance of the goods and their delivery in cases of fixed deficiencies. In general, the supply contract should contain all the items described below.
Subject of the contract: in our case, it is the supply of shoes of a certain article.
Method of order formation: in addition to the total quantity of goods and prices, here should indicate the mechanism for the formation of the order. For example, the buyer draws up an application, which is sent for approval to the supplier, and simultaneously with the approval, the supplier issues an invoice. Or, in other words: the supplier informs the buyer about the available quantity of goods, and the buyer places an order. In this paragraph, it is necessary to stipulate the deadline for each stage of the application and the action plan in case the application cannot be fully or partially confirmed. What will the buyer do if of the 10 types of shoes he needs, the supplier has only 6? Can he refuse the transaction and look for the required product in the assortment of other companies? All this must be agreed in advance with the supplier and spelled out in such detail that any manager understands what he should do only by reading the contract.
The way the parties interact: in this paragraph, the procedure for communication between the parties should be prescribed, indicating the positions of the persons responsible for conducting correspondence and exact contacts. Communication by fax or mail in Russia is now not popular, since everyone has long been communicating by e-mail. The contract should specify not only telephones, but also specific email addresses, so that, if necessary, the customer had the opportunity to prove that correspondence really had a place to be. It makes no sense to indicate the names of managers, as people change, but the specific position of those who correspond will not be in the contract to agree.
Delivery method: pickup, delivery to the warehouse, delivery to the warehouse of a third party or transfer to the carrier, which is especially important for the regions, one of these or another option should be prescribed in the contract. If participants in the transaction use the services of a carrier, their name should be indicated and stipulate how the parties notify each other of the transfer of goods. It is also worth considering the transfer of ownership in the event of accidental loss of goods, for example, its loss in case of fire at the carrier’s warehouse. According to the general rule, the buyer assumes the risks of accidental death at the time of the transfer of the goods to the buyer or carrier. However, other conditions can be agreed in the contract with the supplier, for example, such that, regardless of the delivery method, the ownership right passes from the moment of acceptance of the goods at the buyer's warehouse. This condition is disadvantageous to the seller, so it will have to be approved through negotiation.
The procedure for acceptance of goods by quality: in this paragraph, it is first necessary to stipulate how the goods are received. Sometimes this happens locally, according to documents, or even automatically. In the case of a large consignment, which is accepted according to documents and goods in boxes cannot be counted manually, the contract should specify the risk of shortage. Companies must coordinate their behavior in the contract in a situation where the box is opened before being sent to the trading floor, and at that moment a shortage of the product or its mismatch in the article, color or other parameters is revealed. Usually, such a mechanism is fixed: a representative is called on the part of the supplier, and in the presence of him and at least 3 people, an act with photographs is drawn up by the buyer. Such a scheme of actions is convenient for all parties, since they will not worry because of the possible and unpunished theft by the personnel of one or another side.
Return Policy: if you competently agree with the supplier, then you can return not only goods with a fixed defect, but also unsold balances. The latter, of course, is more convenient to do not under a supply agreement, but under a commission agreement, but if we are talking about a large consignment of goods at good prices and with large turns, the seller can insist on the return of the balance even under the supply agreement. In this case, the buyer's accounting should be careful not to provide the company with extra taxes and not to issue a return as a return sale, and the seller himself needs to contact a lawyer to correctly formulate this condition in the contract. As for the goods, the return of which is carried out due to marriage, the contract must specify its unconditional return in case of quality claims by the buyer and agree on a list of documents accompanying the return (passport data of the buyer, check, something else). This is necessary so that the wholesale supplier can make sure that he is dealing specifically with the quality claim, and not with the return of the balance.
It does not hurt to provide in the contract that case when the supplier does not respond to the buyer’s claim. Typically, the wording is written in the contract with the following meaning: the buyer sends a claim to the supplier, and if the supplier does not respond to the claim within 5 days, the buyer goes to court. However, such an ultimatum is ineffective, because the buyer will have to sue, which is quite expensive. You can make it trickier and write in the contract a condition according to which the absence within 5 days of an objection to a customer’s claim for the quality or quantity of goods means the supplier agrees to the claim. Perhaps the supplier’s lawyers will skip this line, and in the future such a wording may serve the buyer good service.
For each of the listed elements of the contract should be agreed as detailed as possible, providing for any risks. The discussion of risks will not cost the parties a dime, but in the future they will not have to argue and spend thousands of rubles and many hours of their time to resolve their differences.
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