Why is quality dispute very challenging for buyer’s lawyers?
By Sun Jin(Marlow), Chinese attorney at Law, Zhejiang Xinmu Law Firm, All rights reserved, republishing this article please indicate author and source of this article.
| In international trade law practice, one of the most-often-seen type of disputes is quality dispute. The foreign importers bought some cargos from China, with very good or good price, however, after the importer received the cargos unloaded from the containers, sometimes they found that the cargo’s quality is really inferior, than the sent samples, or specifications in the sales/purchase agreement. And as usual, both parties may carry on business negotiations, and may finally reach one solution on it. But if the negotiation fails, and the buyer has to transfer the dispute to his lawyer in China, and in most situations, this type of dispute will become a big headache to the buyer’s lawyers.
According to Proof Burden principle of PRC Civil Procedure Law, these who claim must burden the obligation to evidence the defectiveness. So the target of buyer’s evidence system will be the fact, that the cargos from sellers are defective. In fact this contains two relevant facts, first is that the cargos are from the seller, second is that the cargos are defective. And we must evidence these two facts, and also evidence it that these two facts are relevant, which will become quite tricky in some situations. A common doing will be, the buyer picked up some sample from the bought cargos, and have them inspected or assayed by an independent third party, and the third party will issue one report, with conclusion that the cargos are not in conformity with some specifications or standards, hence, in easy word, are defective.
So if I was the lawyer of the seller, I can come to the key point directly, the seller said my sold cargos are defective with one inspection report, the problem is, how can you evidence it, that the inspected or assayed picked samples are from the cargos of mine? This is a real hard question, possibility can surely exist that you picked up the sample from cargos of somebody else which you may bought from another manufacturer or exporter. Sometimes the third party of inspection company will write something in the report like the cargos from which the samples are picked up from cargos of this very supplier(indicates the name of this very supplier in the report), but of course the inspection company can only know this according to the advice and inform of the buyer. So here it’s really hard to distinguish it that the cargos from which the sample are picked up are this very seller’s cargos, because you did not record the whole procedure of opening the container at same time picked up some samples, which is not practical, because the defectiveness could not be found unless some time after the container is opened and the cargo is unloaded, before this, very few guys would know it that the cargos are defective, because they are human.
So this is the first big headache, but not all, while the quality standard will be another problem. We had ever studied some cases, i.e. Court judgements of some quality disputes litigation cases; both parties of seller and buyer did not specify the quality standard at all. Many of them close the deal merely according to samples. The buyer told the seller, I want this product with this photo, do you have it please? The seller said yes we have it, and the couriered some samples to the buyer, the buyer received the sample and confirmed it, said ok you can go ahead with manufacturing of this product, and please manufacture it exactly according to the sample. We may call this type of deal “deal according to sample”, and we here of course had the quality standard, that is the quality will be ascertained by the quality of the sample sent. However, the problem is, we see a similar problem to above first problem. After the package of the sample is opened, then it will be hard to distinguish it to be the sample from this very supplier any more. While on court, it will be the buyer’s Proof Burden to evidence it that the sample is the sample confirmed by both parties, which is impossible at all. The seller need not deny it at all, they can just say, I do not know whether this is the sample that I sent. So most “deal according to sample” are meaningful over business only, but will be meaningless while in litigations. The right way to close a deal according to samples, will be both parties’ sealing some samples together. And specify the specifications adequately detailed in both parties’ communications and agreement. Unfortunate, 90% of transnational merchants did or do not do it.
(To be continued …..)