China Justice Observer

中司观察

EnglishArabicChinese (Simplified)DutchFrenchGermanHindiItalianJapaneseKoreanPortugueseRussianSpanishSwedishHebrewIndonesianVietnameseThaiTurkishMalay

If Previous Order Has Quality Problems, Can I Reject the Goods Under the New Order from a Chinese Supplier?-CTD 101 Series

Thu, 29 Jun 2023
Categories: China Legal Trends
Editor: C. J. Observer

No, You can’t, but you can handle this in other ways.

This post was first published in CJO GLOBAL, which is committed to providing consulting services in China-related cross-border trade risk management and debt collection. We will explain how debt collection works in China below.

One of our clients from Italy purchases a batch of auto maintenance tools from China, and needs to prepay 20% of the contract price to the Chinese supplier and pay the remaining 80% by D/P 30 Days.

Before that, the Italian buyer had purchased several batches of goods from this Chinese supplier. However, the Italian buyer’s distributors kept telling the Italian buyer that the product quality of the previous batches did not meet reasonable standards.

As a result, the Italian buyer no longer wants to fulfill the latest order, although the goods under this order are already on the cargo ship from China to Italy.

The Italian buyer consulted us whether it could cancel the order, stop receiving the goods and recover the advance payment.

Regrettably, we can only to tell the Italian buyer that “No, you can’t”.

Because, at least for the time being, the product quality of the latest order cannot be proved to be unqualified. The buyer cannot hold the Chinese supplier responsible for the new order on grounds of quality problems under previous orders.

However, we also understand that if the problems under previous orders cannot be solved, and the Italian buyer now continues to accept the goods under the new order, then the Italian buyer may incur additional losses.

But if the Italian buyer refuses to take delivery of the goods, then the goods will be stored in the port upon arrival, which will also cause huge losses to the Chinese supplier.

So, how can this problem be properly solved?

Finally, we persuaded the Chinese supplier to apply with the bank for a quality guarantee. In the event of any product quality problems, the bank will indemnify the Italian buyer against anylosses.

The Italian buyer, after receiving the guarantee, took delivery of the goods from the port and made payment for it. After that, the two sides negotiated a price discount plan regarding the product quality problem.

 

 

* * *

Do you need support in cross-border trade and debt collection?

CJO Global's team can provide you with China-related cross-border trade risk management and debt collection services, including: 
(1) Trade Dispute Resolution
(2) Debt Collection
(3) Judgments and Awards Collection
(4) Bankruptcy & Restructuring
(5) Company Verification and Due Diligence
(6) Trade Contract Drafting and Review

If you need our services, or if you wish to share your story, you can contact our Client Manager Susan Li (susan.li@yuanddu.com).

If you want to know more about CJO Global, please click here.

If you want to know more about CJO Global services, please click here.

If you wish to read more CJO Global posts, please click here.

 

 

Photo by Adam Jang on Unsplash

Contributors: CJO Staff Contributors Team

Save as PDF

You might also like

China Revises State Secrets Protection Law

China’s national legislature, the National People’s Congress, revised the State Secrets Protection Law to enhance information classification, secrecy in technological innovation, and precise protection of state secrets, effective May 1, 2024.

China Enhances Legal Aid Law Implementation

In November 2023, China’s Supreme People’s Court and other top judicial bodies jointly issued measures to implement the Legal Aid Law, clarifying responsibilities and ensuring parties' rights to legal aid.