PA LAW

For a café, bakery, caterer or other South Australian business, a spoiled order can quickly become a dispute about payment. The practical starting point is to collect the records and identify what went wrong before deciding who should bear the loss.

This article develops the fictional example in PA Law’s video into five checks you can use when preparing for a contract review.

Delivered on Monday, spoiled by Tuesday: a fictional example

A baker delivers 200 custom cupcakes to a café on Monday. The café’s fridge fails overnight. By Tuesday, the cupcakes have spoiled and the café says it will not pay. Their written order records the price and delivery date but says nothing about refrigeration or handover.

The failed fridge is an important fact, but several questions remain. Were the cupcakes in the agreed condition when delivered? Were suitable storage instructions given? Was any problem already developing before handover? What did the parties agree about risk and payment?

This example does not establish that either party wins. It shows why a short order form can leave significant questions unanswered.

Delivered goods spoil: 5 essential checks before you decide who pays

1. What was the condition of the goods at delivery?

Start with the handover. Record the delivery time, who received the goods and any visible problem with packaging, quantity or condition. Keep photographs and any temperature records that already exist.

A signed delivery docket is useful evidence of receipt, but it may not resolve whether there was a hidden defect. Equally, discovering spoilage the next morning does not prove that the goods were defective when delivered.

2. What storage instructions were given and followed?

Collect the labels, emails, messages and other instructions supplied with the order. Note when the instructions were provided, who received them and what happened after delivery.

For the cupcake example, useful records could include the time the goods entered the fridge, available temperature logs, when the fault was discovered and a technician’s report. Keep the timeline factual. If a record does not exist, say so rather than estimating it as though it were certain.

3. What did the parties actually agree?

Review the accepted quote, order form, purchase order, supplier terms, invoice and correspondence together. Check what was agreed about the product, quality, delivery, storage, payment and complaints.

Do not assume that every term printed on a later invoice became part of the original agreement. Identify which terms were supplied and accepted, and when. A solicitor can help assess conflicting documents or an arrangement made partly through conversations and messages.

4. When did risk pass, and what caused the loss?

In South Australia, section 20 of the Sale of Goods Act 1895 generally links risk to the transfer of ownership unless the parties agree otherwise. It also addresses loss caused by a party’s delay and preserves relevant duties when one party holds the other’s goods.

This means risk, possession and payment are separate questions. A clause about when risk passes must be read with the rest of the agreement and the law. It does not, by itself, resolve whether the supplier breached a quality obligation before handover.

For this fictional dispute, the review should distinguish a problem already present on arrival from deterioration caused later by storage failure. Both may need investigation if the evidence is incomplete.

5. What evidence supports the complaint and the amount claimed?

Keep the original records of the order, delivery, problem and communications. Identify the affected quantity, invoice amount and any additional loss claimed, with supporting documents.

The buyer and supplier should explain their positions clearly. A payment demand, credit request or refusal to pay should be based on the agreement and evidence. Obtain advice before taking a step that may itself breach the contract.

Do consumer guarantees cover goods bought by a business?

Sometimes. A business purchase may attract Australian Consumer Law guarantees, but the purpose of the purchase matters. The ACCC explains that goods acquired for resupply are excluded. Cupcakes bought by a café to sell to customers therefore raise a different issue from a household purchase.

That exclusion does not mean a supplier has no obligations. Contractual rights and applicable sale-of-goods rules still require assessment. Where consumer guarantees do apply, contract wording cannot simply remove them.

A solicitor should identify the relevant legal framework before advising on rejection, replacement, compensation or payment.

What should you do immediately if delivered goods spoil?

1. Document the problem promptly. Take dated photographs and preserve the available records. Avoid destroying evidence unnecessarily; follow appropriate safety requirements when dealing with perishable goods.
2. Notify the other party in writing. Describe the delivery, affected goods, discovery time and known facts. Ask for relevant records and a response.
3. Read the agreed complaint and payment terms. Identify notice requirements, due dates and any dispute process.
4. Explain the outcome you seek. This could be a discussion about replacement, a credit or payment, depending on the circumstances. A request is not proof of entitlement.
5. Seek advice before escalating. Bring the documents and timeline to a solicitor, especially if a demand or court deadline is approaching.

For an existing disagreement, see PA Law’s civil litigation services. For help with the underlying agreement, see our commercial advice and contract review services.

What should your supply contract say before the next order?

Good drafting makes the practical arrangements clear before problems arise. For a supply agreement involving perishable goods, consider:

• The goods: specifications, quantities, quality expectations and any agreed shelf life.
• Delivery: the location, time window, authorised recipient and arrangements if nobody is available.
• Handover: how receipt and condition are recorded, including any agreed checks.
• Storage: the instructions to be provided and each party’s responsibilities before and after handover.
• Risk and ownership: when each transfers and how those terms work with payment and insurance arrangements.
• Problems and payment: how faults are reported, evidence is shared and disputes are handled.

The wording should suit the actual transaction and applicable law. A blanket statement that the supplier is never responsible after delivery may leave important issues unresolved.

Watch PA Law’s short video

The video introduces the fictional cupcake dispute and the questions a contract review should address.

Frequently asked questions

Does delivery automatically make the buyer responsible for spoilage?

No. Review the contract, transfer of risk, condition at delivery and cause of the spoilage. Physical delivery alone does not answer every question about responsibility.

Can a café refuse to pay if its fridge fails overnight?

A fridge failure does not automatically create a right to withhold payment. The café should review the agreement and evidence before deciding how to respond to the invoice.

What if the order says nothing about refrigeration?

Keep the full correspondence and any instructions given. Silence in the order does not mean no obligations exist; the agreement, circumstances and applicable law still need assessment.

Can a supplier avoid responsibility with a “no refunds” term?

Do not assume that a blanket term defeats every claim. Its effect depends on the agreement and applicable law. Consumer guarantees cannot simply be excluded where they apply.

What should I bring to a contract review?

Bring the order, terms, invoices, messages, delivery records, photographs, storage instructions and a short timeline. Explain any deadline and whether you need help with a dispute or future agreements.

Sources and further reading

• South Australian legislation: Sale of Goods Act 1895, especially sections 17–20.
• ACCC: Consumer rights and guarantees, including business-use exceptions.
• PA Law’s original delivered-goods video guide and transcript.

General information only, not legal advice. The cupcake scenario is fictional. The outcome of a dispute depends on its facts, documents and applicable law. Obtain advice about your circumstances before acting.