A Chinese electronics manufacturer exported a batch of smart home devices to a US company. Initially, the devices performed well, but after a year, several devices failed to function properly due to design defects. The customer, based on the contract terms, demanded repairs or replacements from the Chinese manufacturer and filed a quality claim.
In fact, the exporter faces ongoing claims disputes throughout the entire business chain. From the moment the goods arrive in the destination country, through every stage within the warranty period, and even years after the products have been circulating in the market, claims can arise, sometimes even leading to global recalls.
Key strategies:
1. Product Safety Standards and Certifications
Exporters must ensure that their products meet the safety standards and certification requirements of the destination country. For example, electronics exported to the United States must comply with relevant safety standards set by the Federal Communications Commission (FCC) and the Consumer Product Safety Commission (CPSC).
2. Defining Responsibility
International trade involves multiple stages, and it is crucial to clearly define responsibility at each stage. For example, design defects may lead to safety hazards, manufacturing process issues may cause quality defects, shipping and storage conditions may result in moisture damage, and port handling or transportation stages may lead to product damage.
3. Warranty Period
The warranty period should be determined according to the contract and applicable laws. It is important to note that the warranty period is not the same as the inspection period, and the applicable laws regarding the warranty period may vary.
For instance, under Article 39 of the United Nations Convention on Contracts for the International Sale of Goods (CISG), the buyer must notify the seller of any non-conformity of the goods within a reasonable time after they have discovered or ought to have discovered it. If the buyer fails to notify the seller within two years after the goods have been handed over, they lose the right to rely on the goods’ non-conformity, unless a different period is agreed upon in the contract.
According to Hong Kong’s Sale of Goods Ordinance, Section 37, if the buyer retains the goods for a reasonable time without notifying the seller that they have rejected them, the buyer is deemed to have accepted the goods. The definition of “reasonable time” is a matter of fact.
4. Consumer Claims and Product Recalls
Under the Uniform Commercial Code (UCC) and other state and federal laws in the United States, consumers can file product defect claims within a certain number of years after delivery.
In some countries or regions, laws and regulations require recalls of non-compliant products under certain circumstances. For example, the U.S. Consumer Product Safety Commission (CPSC) can mandate a recall if a product poses a serious safety hazard.