How do mutual obligations affect the timing of payment and delivery?

In the context of commercial transactions, the duties of a buyer and seller are mutual and concurrent, meaning they are generally expected to be performed at the same time unless the parties agree otherwise. This principle of mutuality ensures that neither party is required to fulfill their obligation until the other is ready to perform their own.1

The timing of payment and delivery is often structured to maintain this balance:

• Concurrent Performance: Because duties are linked, the law protects the agreed-upon time sequence by allowing a party to withhold their own performance if the other party fails to provide the agreed-upon advance performance.1
• Inspection and Payment: In many international transactions, it is common for the buyer to receive and inspect goods before payment is required.1
• Payment Against Documents: Sellers may restore the time balance by requiring "payment against documents," where the buyer pays upon receiving documents of title, even if the physical goods are still in transit or held by the seller.1
• Financial Security: If a party’s financial situation deteriorates significantly after the contract is signed, the party obligated to perform first may be legally justified in refusing to do so until payment is secured.1