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Unfair Contract Terms 1977

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  • Unfair Contract Terms 1977

    Can anyone advise if a contract is unfair, when the terms and conditions are not sent to you before the order is placed and you are only aware of the terms and conditions once the invoice arrives which is after the order had already been given!

    My thoughts are that it is an unfair term and goods not being of merchantable quality - but not being a solicitor I am unsure that if we sued we would not get our money back..

    The situation here is that goods were ordered for a customer from a Chinese agent here in the UK who had the goods bought in from China. the samples that were shown to our customer who liked the goods and then placed the order, but when the goods arrived they were not of merchantable quality. They were made in a different site to the one that the samples were shown and all the goods had to be returned. It was agreed that the goods would be sent back which happened, but so far we have not received the return of monies that were paid in good faith under the Bill of Exchange.

    Thanks

  • #2
    Re: Unfair Contract Terms 1977

    Who ordered the goods and who paid whom for them?

    If you need to see the terms and conditions, you must ask for them before parting with payment.

    This does not appear to be a matter of the contract being unfair, just that the goods you received were not of the same quality and fitness for purpose as the samples demonstrated. You have sent them back and are now awaiting a refund, which goes to the question at the head of this reply.

    Comment


    • #3
      Re: Unfair Contract Terms 1977

      Originally posted by Cetelco View Post
      Who ordered the goods and who paid whom for them?

      If you need to see the terms and conditions, you must ask for them before parting with payment.

      This does not appear to be a matter of the contract being unfair, just that the goods you received were not of the same quality and fitness for purpose as the samples demonstrated. You have sent them back and are now awaiting a refund, which goes to the question at the head of this reply.
      The firm I work for are the agents for the customer and we had to pay by Bill of exchange to the Chinese agent before the goods could be delivered to our customer.

      So the situation was until we received the invoice, we were none the wiser about the terms and conditions attacing to the order as the terms and conditions are printed on the back of the invoice. Surely they should make you aware of the T&C's before the order is placed! The invoice also stated that the money had to be paid by Bill of exchange before the goods could be delivered.

      The T&C's are so rigid that it is unlikely that if we sued we would get the money back. As you say the goods were definately not the same quality of the samples ordered from.

      I am going to suggest that he seeks legal advice to recover the monies as at the moment the only looser is my boss for the total of the whole shipment ( 2 containers).

      xx

      Comment


      • #4
        Re: Unfair Contract Terms 1977

        Originally posted by TUTTSI View Post
        The firm I work for are the agents for the customer and we had to pay by Bill of exchange to the Chinese agent before the goods could be delivered to our customer.

        So the situation was until we received the invoice, we were none the wiser about the terms and conditions attacing to the order as the terms and conditions are printed on the back of the invoice. Surely they should make you aware of the T&C's before the order is placed! The invoice also stated that the money had to be paid by Bill of exchange before the goods could be delivered.

        The T&C's are so rigid that it is unlikely that if we sued we would get the money back. As you say the goods were definately not the same quality of the samples ordered from.

        I am going to suggest that he seeks legal advice to recover the monies as at the moment the only looser is my boss for the total of the whole shipment ( 2 containers).

        xx
        It is quite ordinary to pay in full when importing goods from China and this always involves a significant financial risk.

        I need to know more about how your boss actually paid, because "bill of exchange" could mean any number of methods usually referred to collectively as "Documentary Collections" which are "Documents Against Acceptance" or "Documents Against Payment" also known as "DA" or "DP" payment terms.

        Documentary Collection procedures are not complicated, but can work in various ways and do depend on the terms of sale and one of those could be whether or not the bill of exchange was a negotiable instrument or not.

        After shipping the goods, the supplier submits to the bank the shipping documents, including the bill of lading conveying title to the goods, as well as other documents related to the shipment and a draft (also called a bill of exchange) demanding payment from a buyer. Depending on the agreed terms of sale, this may be a sight draft, demanding payment on presentation, or a time draft, demanding payment at some stated future time after presentation or after the bill of lading date.

        Documents against Acceptance (DA) is where a buyer is required to "accept" a seller’s time draft, thus acknowledging obligation to pay at the specific future date. The time of payment occurs at maturity of an accepted time draft, 30, 60 or 90 days after date of acceptance or date of bill of lading. Documents against Payment (DP) is where a buyer is required to pay a seller’s sight draft in order to obtain shipping documents. Payment is made on presentation of the sight draft by a bank to the buyer, usually one or two weeks after shipment. Under DP terms, the seller, through a bank acting as an agent, is able to retain control of the goods until the buyer pays.

        Documentary Collections, in general, offer the buyer more protection and put more of the risk on the seller.

        Finally. regarding the terms and conditions, I simply do not accept that your boss could not have seen them before he received the invoice. It is not up to the supplier to automatically share with the buyer the terms of the transaction and if the buyer does not know what the terms are, why place the order?. Clearly your boss was happy to arrange the payment so why did he do it if he had not seen the terms and conditions?

        Comment


        • #5
          Re: Unfair Contract Terms 1977

          I am not there again till next Friday so will find out more info then. I do not believe that he paid through any shipping agents as he paid direct to the other agent from memory as I have not seen any shipping documents.

          I am aware however that it is usual to do business this way with China or indeed any other country, paying before the goods can be released for delivery.

          I think the reason he never asked to see any terms as he is an old business / friend /aquaintance and has done other deals before with him. Naturally nothing ever went wrong in the past and was all OK.

          In the past others when I have worked with other companies and they bought in consignments all the ones I know have been caught with Chinese goods not coming up to satisfaction and not the same quality as samples being shown and these were all unsaleable. I begged him not to go down this route but because he knew the other agent very well he was happy to continue.

          It just goes to show you cannot trust anyone in business, especially friends. It is a small one man business that I work once a week and if he takes a knock like this could cripple him and put him out of business then I will not have a job!

          What about the unsaleable goods! do you think he could make a claim here!

          xx

          Comment


          • #6
            Re: Unfair Contract Terms 1977

            It may be possible to get a refund but your boss will need to secure Chinese counsel and sue in China, anything else will not work. Any judgment he may get here will have no value in China and even if it did, there are very strict limits placed on refunds.

            If you want a Chinese manufacturer to make a product made to a particular standard, you have to be unbelievably explicit about exactly how you want your product to be manufactured. Chinese companies usually claim that the quality of product they provide was warranted by the amount you paid for it. According to the Chinese company, if you had wanted better quality, you would have had to pay more for it. Unfortunately, this is often a seen as a valid defence and there is a very good chance a Chinese court will agree.

            If your boss has done deals with this supplier before, then it may be that this can be resolved without the need to litigate. If it cannot, then my advice, in the absence of a written contract of supply (and that means written in Chinese) is for him to walk away.

            Comment


            • #7
              Re: Unfair Contract Terms 1977

              He did not have the contract with the Chinese, his order was through the english agent here in the UK, so it is the agent who has the contract with the Chinese, not my boss.

              Comment


              • #8
                Re: Unfair Contract Terms 1977

                Now he's an English agent? In posts 1 & 3 he was a Chinese Agent. Throw me a bone here Tuttsi!

                Comment


                • #9
                  Re: Unfair Contract Terms 1977

                  Sorry, if I was not clear, I had too much wine at lunch, the agent is English and from the UK. I wondered why your answers were confusing!

                  xx

                  Comment


                  • #10
                    Re: Unfair Contract Terms 1977

                    In that case, if your boss wants to do it, he needs to request a full refund for breach of contract and if he does not get paid, he should issue a claim through the courts.

                    He can sue under the Sale of Goods Act 1979, as while the Act generally applies to protect individual consumers, it can also apply to the sale of goods between businesses. However, businesses do not have the same protection as individual consumers. A consumer contract excluding liability for defective goods would be automatically invalid, for example but as a business purchaser it is up to you to check in advance what terms and conditions you are agreeing to. If, as appears to be the case here, your boss was not aware of the terms and conditions, he may not have much of a claim because excluding liability for defective or poor-quality goods is permitted in the contract if if it is reasonable.

                    The test of reasonableness is not precisely defined, but courts will usually take into account the information available to both parties when the contract was drawn up, whether the contract was negotiated or in standard form and whether the purchaser had the bargaining power to negotiate better terms.

                    All of this is contained within the Unfair Contract Terms Act 1977 but what it does not contain is any rule requiring any advance notification of terms and conditions. Businesses are assumed to be free to enter into whatever contracts they agree between themselves which means the onus is on the parties to make sure they are happy with the contracts they agree with other businesses.

                    Comment


                    • #11
                      Re: Unfair Contract Terms 1977

                      Thanks Cetelco for your help!

                      I will certainly next week when I am back in the office advise him about what you have said, then it is up to him.

                      Being that they are old business friends..... he has been hoping that he will refund without the need to litigate. My own personal opion is that he should issue the court claim as I believe this is never going to resolve it self by just waiting.

                      He is never going to order this product again as it was a special order for one of our customers and in turn for one of their customers. He is also lucky that our customer did not make more demands financially as they lost a potentially a valuable customer over this.

                      So everyone was in a no win situation, but money has changed hands and no saleable goods have been received.

                      What a nightmare!

                      xx

                      Comment

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