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What is a Shipment Contract? A Comprehensive Legal Overview
Definition & Meaning
A shipment contract is a type of agreement in which the seller is responsible for sending goods to the buyer. The seller bears the risk of loss or damage to the items only until they are delivered to the shipping location. If the contract does not specify the terms of delivery, it is automatically considered a shipment contract. In this arrangement, the risk of loss transfers to the buyer at the moment the goods are shipped, which is also regarded as the point of delivery.
Table of content
Legal Use & context
Shipment contracts are commonly used in commercial transactions involving the sale of goods. They are relevant in various legal areas, including contract law and commercial law. Users can manage these contracts with the help of legal templates available from resources like US Legal Forms, which offer documents drafted by qualified attorneys.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A furniture manufacturer sells a set of chairs to a retailer and ships them to the retailer's warehouse. The risk of loss transfers to the retailer once the chairs are handed over to the shipping company.
Example 2: A clothing distributor sends a shipment of apparel to a store. If the shipment is damaged during transit, the distributor is not liable for the loss, as the risk passed to the store when the items were shipped.
Comparison with related terms
Term
Definition
Key Difference
Shipment Contract
Seller sends goods and risk transfers at shipment.
Risk passes to buyer at shipping point.
Destination Contract
Seller delivers goods to a specific destination.
Seller bears risk until goods reach the destination.
Common misunderstandings
What to do if this term applies to you
If you are entering into a shipment contract, ensure that the terms are clearly defined, especially regarding risk transfer. Consider using legal templates from US Legal Forms to create or review your contract. If you encounter complex issues, consulting a legal professional is advisable.
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