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if you have proof of postage and he didn't pay for insurance then he must realise this is not your fault and must wait until the post office launch an enquiry to recover the item, or arrange compensation.
however, when you post an item, it is considered your responsibility until the person receives it as it is you who have begun a sort of deal with the po, that they deliver your parcel, so it is you that they will deal with about it - they will not speak him. find out his local po and call them - they may have it or have delivered it to the wrong address
always insist on recoreded - its only about 70p and ensures a signature is taken, so there can be no denials
Signed For (aka Recorded Delivery) doesn't enable the package to be tracked. Only Special Delivery will do this. Signed For merely provides a proof of delivery.
I have specifically asked Ebay/Paypal about this in the past; they will not accept a proof of posting as as proof of delivery (not unreasonably, I think), Signed For and Special Delivery they will. Without a proof of delivery, Paypal/Ebay will side with the buyer and will expect you to refund them.
Any claim against the Post Office is between the seller and the PO, nothing to do with the buyer. The seller has to refund the buyer, then sort out the loss with the PO.
Louise, you really should use a signed for delivery service, or you're leaving yourself open to claims, possibly malicous, from buyers. It isn't insurance as such, as Ethel says, as you get that anyway(up to �28), but it protects you from malicous claims by buyers. I always use Signed For when sending off Ebay stuff.