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The Importance of Delivery: Royal Mail Fined for Missing Targets

Ofcom, the industry regulator for the Royal Mail has fined them £5.6 million for missing delivery targets. Under the rules dictated by the regulator, Royal Mail is required to deliver 93% of first class mail within one working day and 98.5% of second class mail within three working days. However, during the 2022-23 financial year, a year which faced many Royal Mail strikes, performance results showed that only 73.7% of first class mail was delivered on time.

Royal Mail had the chance to dispute the figures and provide evidence for reasons outside of their control for not hitting the required targets. Following adjustments, which took into account industrial action, extreme weather, and even a Stanstead runway closure, Royal Mail still breached its obligations by failing to meet its targets by a significant and unexplained margin. It was found that this caused considerable harm to customers, and Royal Mail took insufficient steps to try and prevent this failure.

Delivery in Legal Terms

In legal terms, delivery means the transfer of rights in the goods from the seller to the buyer. This may or may not coincide with physical handover of the goods. For example, when you give the buyer a delivery order authorising them to collect the goods from your premises, you could specify that delivery happens when you give them the delivery order, rather than when they physically collect the goods.

Although there may be industry customs governing delivery, it is important that the delivery terms in your commercial contracts are thorough and well drafted, as the express terms of the contract will also govern delivery obligations regarding the specific goods to be delivered.

To ensure that your business does not miss delivery targets or breach the terms of your contracts, it is important that your delivery terms are considered and thoroughly drafted. Key areas to consider are:

  • Place of delivery – It is important to specify in your contracts the place of delivery. This may be either at your place of business, the location of the customer, or another agreed location.
  • Date of delivery – If a specific date is agreed with a customer, then failure to deliver on that date may result in a breach of the contract. Rather, it may be better to agree on an approximate date.
  • Time for delivery being ‘not’ of the essence – If time for delivery is of the essence, then the buyer will have remedies for late delivery. These remedies can include termination of the contract and even damages if they’ve suffered losses as a result of the late delivery. Therefore, if you are the seller, it would be in your interest to state in the contract that time for delivery of the goods isn’t ‘of the essence’.
  • Delivery by instalments – Finally, you may wish to insert terms into the delivery clause of your commercial contracts which dictate that you are able to deliver in instalments.

The Commercial & IP Team at Berry Smith can provide specialist advice on drafting and amending delivery terms in your commercial contracts, as well as general commercial and business advice. Please contact us if you would like more information about the issues raised in this article or any other aspect of Commercial law at 029 2034 5511 or commercial@berrysmith.com.