Order Cancellation

Order Cancellation refers to the act by which the buyer or seller, after order confirmation and before delivery of goods, unilaterally or through mutual negotiation terminates contractual obligations. It commonly occurs when the buyer cancels due to market changes or financial issues, or when the seller cannot perform due to raw material shortages or insufficient production capacity. Use cases include: customer placed a wrong order, letter of credit expired, force majeure events, etc. Precautions: the canceling party may bear liability for breach of contract, such as paying liquidated damages or compensating for raw material losses; if a letter of credit has been opened, the bank must be notified promptly to cancel it; if goods have already been produced or shipped, cancellation becomes much more difficult and costly. Unlike an 'order change,' cancellation completely terminates the contract, whereas a change modifies quantity, specifications, or delivery time; unlike a 'return,' cancellation occurs before delivery, while a return occurs after receipt of goods. Foreign trade practitioners should clearly stipulate cancellation clauses in the contract, including notice periods, cost sharing, and force majeure exemptions, to reduce risks.