The Fair Trade Commission has clarified that the reference date for payment deadlines to suppliers of large retailers is the 'date of product delivery.' Whether an inspection has taken place is irrelevant. The commission is also cracking down on the practice of passing incidental costs on to suppliers without prior consultation.
On the 13th, the FTC said it had revised seven types of standard transaction contracts for the distribution sector to reflect these changes. The move is intended to correct unfair practices such as delaying payment on the grounds of inspection or shifting costs that were never agreed upon.
Under current law, in direct purchase transactions a retailer must pay within 60 days of the date it receives the goods. However, under the previous contracts, there was room to interpret the date the inspection was completed as the date of receipt. The revised contracts define the date of receipt as the 'date of product delivery.' The inspection clause has been moved after the payment clause. The aim is to prevent retailers from deliberately delaying inspections to put off payment.
Rules on cost shifting have also been tightened. The 'obligation to give advance notice of other costs,' which had previously been limited to certain business types, has been extended across six major direct purchase and consignment transactions, including online shopping malls, department stores, large discount stores and convenience stores. It targets the unilateral billing of suppliers for costs not stated in the contract, such as logistics and advertising fees.
For a retailer to charge additional costs to a supplier, it must disclose the cost-sharing ratio, procedures for changes and other terms when the contract is signed. Notice must be given in writing or through an electronic system that can confirm sending and receipt. Costs that were not notified or discussed in advance cannot be charged under any name.
"We plan to actively promote and encourage the use of these revised standard contracts among policy stakeholders in the relevant industries, including major business associations," the FTC said. It also said it would continue to refine the standard contracts to reflect changes in the retail market, industry demands and institutional improvements.