B2B terms of sale and delivery

Does your business sell products or services to other businesses? Then terms of sale and delivery are not just good business practice but a decisive legal protection for your company. Clear terms prevent payment disputes, unclear warranty obligations and disproportionately large damages claims.

This guide explains what B2B terms of sale and delivery should contain, which standard terms apply in Danish business, and how you ensure that your terms actually apply.

What are terms of sale and delivery?

Terms of sale and delivery (also called terms of trade or standard terms) are a set of standardised contract terms that apply to sales and deliveries from your business to your customers.

In a B2B context (business-to-business), the protective rules of consumer law do not apply. This means the parties are relatively free to agree their own terms, including limitations of liability, shorter complaint deadlines and stricter payment terms.

Terms of sale and delivery typically govern:

• Formation of the agreement: when has a binding agreement been made?
• Delivery: when and where is the goods delivered?
• Price and payment: what does it cost, and when must payment be made?
• Retention of title: when does ownership pass to the buyer?
• Liability and limitations: what is the seller liable for?
• Complaints and defects: when must the buyer complain?
• Force majeure: what happens with external events?

When do your terms apply?

It is not enough to have good terms of sale and delivery. They must be actively incorporated into the contractual relationship to apply.

"Battle of forms"

In Danish contract law, the phenomenon is often seen where each party tries to get its own standard terms to apply. The party that "wins" the battle of the terms is typically the one that last makes its terms clearly applicable without the other party protesting.

Practical consequence: If your customer sends a purchase order with its own terms, and you simply deliver without making your own terms applicable, it can be argued that the customer's terms apply.

How to ensure your terms apply

1. Refer to the terms in all quotes and order confirmations, for example "This agreement is subject to our terms of sale and delivery of [date], available at [url]"
2. Link to the terms on your website and in your email signature
3. Require written acceptance for larger agreements
4. Draw express attention to the terms before the agreement is binding

The most important clauses in B2B terms of trade

1. Quote and order confirmation

The terms should define when a binding agreement arises. Typically:

• A quote from the seller is binding for a set period (for example 30 days)
• An agreement is only binding when the seller has issued a written order confirmation
• The customer's order is an offer that the seller can accept or reject

This clause protects the seller from being bound by a quote for a long time or by an order that cannot be fulfilled.

2. Delivery and passing of risk

Delivery clauses determine when the risk of the accidental loss of the goods passes from the seller to the buyer, and who pays for freight.

In Danish and international trade, Incoterms designations are often used:

• EXW (Ex Works): The risk passes to the buyer when the goods are made available at the seller's premises. The buyer pays all freight.
• DAP (Delivered at Place): The seller bears the risk up to the agreed place of delivery. The seller pays the freight.
• DDP (Delivered Duty Paid): The seller bears all costs and risks including duty and taxes up to delivery.

The NL terms and industry standards: In many sectors, especially machinery and technical equipment, the Nordic delivery terms (most recently NL 17, previously NL 92) are used as a standard. These terms should be expressly agreed, as they do not apply automatically.

3. Price and payment terms

The terms should state:

• The price basis: are prices including or excluding VAT, freight and duty?
• Price adjustment: can prices change on changes in raw material prices, exchange rates or wage costs?
• Payment deadline: typically 14, 30 or 45 days net
• Interest on late payment: under the Interest Act, the default interest is the Danish central bank's lending rate (the reference rate) plus 8 percentage points, unless otherwise agreed
• Reminder fee: up to DKK 100 per reminder and a fixed compensation amount of DKK 310 per overdue invoice in business relationships, under the Interest Act
• Advance payment: for new customers or large orders, it is normal to require part of the amount in advance

4. Retention of title

Retention of title means the seller keeps ownership of the goods until the full purchase price is paid.

Retention of title is especially important because it allows the seller to take the goods back if the buyer goes bankrupt or fails to pay.

Requirements for a valid retention of title:

• It must be agreed no later than at delivery, typically in the order confirmation or on the invoice
• It must appear clearly from the agreement
• It applies only to identifiable items, that is goods that have not been consumed or further processed

Note that retention of title is not the same as an assignment of receivables for security, which is a different legal instrument entirely.

5. Defects and complaints

In B2B relationships, there is broad freedom of contract on complaint deadlines. Your terms can shorten the deadlines considerably compared with the starting point in the Sale of Goods Act, subject to the general limits of contract law and to limitations not applying in cases of fraud or gross negligence.

Typical complaint terms:

• Visible defects: the buyer must complain within, for example, 5-10 business days of delivery
• Hidden defects: a complaint at the latest, for example, 6-12 months from delivery
• Duty to examine: the buyer must examine the goods immediately on receipt (section 51 of the Sale of Goods Act)

By comparison, the Sale of Goods Act has an absolute complaint deadline of 2 years. In B2B you can lawfully agree a shorter deadline.

6. Limitation of liability

A limitation-of-liability clause is one of the most valuable elements of your terms of trade. It limits what your business can at most be liable for.

Typical limitations:

• Monetary limitation: liability is limited to the invoice amount for the delivery in question
• Exclusion of indirect loss: operating loss, loss of profit and other consequential loss are not compensated
• Product liability: the statutory product liability for personal injury under the Product Liability Act cannot be derogated from to the injured party's detriment by agreement

Validity: Limitations of liability are generally valid in B2B relationships, but only to the extent they are not unreasonable under section 36 of the Contracts Act. Limitations also do not apply in cases of intent or gross negligence.

7. Force majeure

A force majeure clause releases a party from liability when performance of the agreement is prevented by extraordinary and unforeseeable circumstances beyond the party's control.

Examples of typical force majeure events:

• War, terrorism and natural disasters
• Strikes and lockouts
• Authority intervention and trade bans
• Pandemics and serious outbreaks of disease
• Critical component shortages due to global supply chain problems

Requirements: The clause should state that the affected party immediately notifies the other party, and that the deadline for performance is extended correspondingly. In the case of prolonged force majeure, both parties should have the right to cancel the agreement.

8. Choice of law and venue

Always state which law applies and at which court disputes are decided:

• Choice of law: Danish law
• Venue: preferably state the seller's home court, which gives you as the seller a home advantage in disputes

For international agreements: expressly state that the UN Convention on Contracts for the International Sale of Goods (CISG) is opted out of, if you want Danish law alone to apply.

Sector-adapted standard terms

Many industries have developed their own standard terms:

Industry	Standard terms
Construction	AB 18, ABR 18, ABT 18
Machinery and technical equipment	The NL terms (most recently NL 17)
IT and software	The state standard contracts (the K contracts)
Advisory services	Industry-specific terms

These standard terms are balanced and known to both parties in the industry. Consider using them as a starting point, even if you adapt them to your business.

Incorporation on the website

Do you sell online? Your webshop's terms of sale and delivery for business customers should be separated from the consumer terms, as the rules are fundamentally different.

Elements for B2B e-commerce:

• A clearly stated CVR number and company information
• A clear reference to the terms before the order is placed
• The option to print or save the terms

The most common mistakes in B2B terms of trade

1. The terms are not part of the agreement. They are available on the website, but they are not referred to in quotes and order confirmations
2. Too broad limitations of liability that are so drastic they can be considered unreasonable and set aside
3. Missing retention of title, so the seller loses priority to the goods on the buyer's bankruptcy
4. No force majeure clause, so the seller is liable for delay even in extraordinary circumstances
5. Unclear payment terms without stating the due date, interest and reminder procedure
6. Outdated content, where the terms are not updated in step with changes in the law

Updating and maintaining the terms

The terms of trade are not a document you create once and forget. They should be updated on:

• Changes in the law
• New product categories or types of service that require separate terms
• Changes in your supply chain with consequences for delivery times and liability
• Experience from actual disputes that reveal gaps in the terms

Version control: Always state the date and version on the terms, and archive older versions. In a dispute, it is decisive to be able to document which terms applied at the time of the agreement.

International trade agreements (Incoterms 2020)

Incoterms 2020 is the latest revision of the International Chamber of Commerce's standard clauses for international trade. The most important changes from Incoterms 2010:

• DPU (Delivered at Place Unloaded) replaced DAT and expands the delivery options
• Increased focus on insurance cover under CIF and CIP

If your business uses Incoterms in the terms of trade, you should make sure you refer to the correct edition: "Incoterms 2020".

Conclusion

Good B2B terms of sale and delivery protect your business from payment disputes, unclear liability and unreasonable claims. Make sure the terms are actually made part of the agreement, that retention of title and limitation of liability are worded correctly, and that the terms are kept up to date. For larger or international agreements, it can pay to have them reviewed by a lawyer.

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The content of this article is for guidance only and does not constitute legal advice. Consult a lawyer for advice on your specific situation.