A supplier misses the ship date. You send a sharp email. They apologize, blame a subcontractor, and offer a small discount on the next order. That is not a remedy. Unless the PI states what happens when the date is missed — a daily amount, a cap, a right to cancel — you are negotiating from zero after the goods are already late.
This piece is how to write a late-delivery term that a factory will actually sign, and that you can point to without inventing a number in week six.
1. “On-time” has to be a defined event
“Ship in March” is not a date. Write one event and one clock:
- ex-works ready for pickup on date X, or
- on board the vessel on date X, with the bill of lading date as proof
If you leave it as “delivery,” the factory will count the day they called the truck. Your retailer counts the day the container arrives. Those are different clocks. Match the event to the Incoterm already on the PI.
2. A usable penalty is small, capped, and triggered automatically
Chinese factories will often accept a modest daily deduction — commonly a fraction of one percent of the delayed value per day — with a cap (for example a few percent of that shipment). What they reject is an open-ended “all losses, including lost Amazon ranking.” Put commercial loss in a separate sentence if you must; do not hide it inside the daily rate or the clause will come back unsigned.
Spell out:
- when the meter starts (day after the defined ship event)
- the rate and the cap
- whether you deduct from the balance or invoice a credit
- that force majeure, if you have that clause, pauses the meter only for the documented period
A penalty you cannot calculate from the PI is a penalty you will not collect.
3. Give yourself an exit, not only a discount
Money off a late shipment does not help if the season is over. Add a cancel line: if delay exceeds X days, the buyer may cancel the unfinished quantity and recover the deposit on that quantity. Without it, you own a late order at a slightly lower price.
4. What not to do
- copy a 20% weekly penalty from a forum template — it will not be signed, or it will be signed and ignored
- rely on “we will compensate you fairly”
- start the clock from an email promise that never made it onto the PI
- treat Chinese New Year as a surprise if the dates were knowable when you ordered (put those dates on the order separately)
The bottom line
Late delivery is only a contract event if the PI names the ship event, the daily rate, the cap, and the cancel trigger. An apology and a future discount are goodwill. Goodwill is not a term.
If you need the late-delivery and cancel wording written into the PI in English and Chinese, I can prepare the clause and issue a stamped set under our bilingual translation company seal when you need one. See what this covers.
Penalty and liquidated-damages clauses are interpreted under the contract’s governing law. This article is general sourcing guidance, not legal advice.