Order Cancellation

Order Cancellation refers to the act by which the buyer or seller, after the contract is formed and before the goods are delivered, unilaterally or through mutual negotiation terminates the order. It commonly occurs when the buyer requests cancellation due to market changes, funding problems, or specification changes, or when the seller proposes cancellation because of raw material shortages or insufficient production capacity. Usage scenarios include: the letter of credit has not been opened, production has not started, and the goods have not been shipped. Precautions: Cancelling an order may constitute a breach of contract and must be handled in accordance with the contract terms and the United Nations Convention on Contracts for the International Sale of Goods (CISG); if production costs or customized materials have already been incurred, the cancelling party must compensate for the losses; both parties should preferably confirm the cancellation in writing to avoid subsequent disputes. Distinction from other terms: Order Cancellation is different from Return, which occurs after delivery of the goods; it is also different from Revocation, which usually refers to the withdrawal of an offer before the contract is formed. Foreign trade practitioners should clearly define the cancellation conditions, notice period, and cost-sharing arrangements to reduce risks.