A DEAL WITH MANY MISTAKES. PART 3
27/06/2011
Analysing this case we can see that both the supplier and the buyer made serious mistakes that led to a conflict between the companies and money lost for the importer. What were these mistakes?
- Company B had experience in purchasing tyres from their existing supplier. Due to this fact, it neither asked for a pre-shipment inspection of the product nor sent their representatives to check the product.
- We could not exclude the situation that the seller had loaded inferior tyres on purpose to receive a higher profit from the deal. In the worst scenario, he could blame the subcontractor in all the troubles and by this try to avoid the responsibility. As no pre-shipment inspection was done, such thought can be only assumption.
- Company A had no experience in working with the new supplier but transferred the prepayment without even checking the exporter.
- Both companies did not make any contract where all terms and conditions of the deal were stipulated. The money was transferred based only on the proforma invoice with a very general product description. Without a written contract, any litigation or arbitration will be a difficult process.
- Company A did not order a pre-shipment inspection of the cargo when making the very first purchase from an unknown supplier.
- Company A did not order the inspection upon arrival and took the container from the port to their warehouse.
- When the first problem with the tyres was discovered, the importer should have stopped the unloading and invited an independent surveyor to inspect the cargo, take photos and prepare the report. Such a report could have proved the quality of the product and could have been used in court.
- Company A stated to sell the good quality tyres without receiving a formal reply from the supplier.
- Company A started to repair the damaged tyres without having acceptance from the seller and without having any form of compensation.
- Company A did not invite the seller to come to their premises and inspect the goods themselves. Even if the seller refused to come, the importer could have shown his good will and ability to prove his words.
- As the buyer had no proofs of his position he understood that the chances to win the case were very small and preferred to write the loss off. If he had the proofs and the contract in his hands, he could have very good chances to receive the compensation from the seller.
We always say to our clients that such situations are easier and cheaper to avoid rather than trying to recover the losses later. If the buyer turned to us for a short consultation, the losses could have been avoided and the delivery could be fault-free.
