Questions for Chapter 3

1. Why do companies have quality assurance programs?

Because no manufacturer can produce perfect products all the time.
Moreover, quality is a key issue and customer satisfaction is essential to
successful business. So companies have quality assurance programs to
ensure that customers get what they pay for/ to ensure customer
satisfaction.
2. Why may conflicts arise in negotiating specifications?
Because it is a difficult process. The manufacturer is often tented to be
over- optimistic and to agree to impossible specifications, which is risky
in business. Conflicts can arise even within the exporter’s own team: the
marketing manager is eager to sell brilliant products, but the production
department knows that it cannot make them.
3. What is the benefit of a well-designed set of specifications?
A well-designed set of specifications offers vital protection the both
sides: The importer is protected against inferior products. Moreover, the
seller is protected also-through more subtly. If the products are fully
specified and the consignment meets the specifications, the buyer will be
unable to find any excused for rejection or for exaggerated defects
liability.
4. Which kind of goods needs pre-delivery inspection? Give example.
It depends on the importer's policy. Sophisticated items or capital
equipment can be inspected before shipment.
5. What are the functions of independent inspection?
It reports on the weight, the size, and most important - the value of the
goods. This inspection prevents exporter and buyer agreeing an
unrealistically low invoice price in order to avoid customs duties in the
buyer's country amd shipment of patently defective goods.
6. What does customs inspection reveal?
Customs inspection will reveal discrepancies in weight, size and
description.
7. What is the real inspection for goods?
The real inspection for goods means the buyer will open package to
inspect the goods when it arrives.
8. Name quality checks on goods exported for resale
Quality checks on goods exported for resale:
- Inspection by buyer during manufacture
- Inspection buy buyer or buyer's agent before delivery
- Inspect by inspection service ( e.g, SGS)
- Inspection buy carrier on dispatch
- Open package inspection on arrival at destination
- Seller's liability for defects after sale
9. How long is the defect liability period?
The defect liability period is negotiable, it is likely to be several months
from the date of delivery, or the date of arrival.
10. What are 5 steps in negotiating the Defects Liability Period?
5 steps in negotiating the defects liability period:
- Step 1: Inspection: When are the goods inspected? And when can
the buyer reject them?
- Step 2: Terms: Warranty or guarantee
- Step 3: Definition: What is and what is not a defect?
- Step 4: Timing: How long is the defects liability period? When
does it begin? And what about other timings?
- Step 5: Corrective action: What must the seller do to cure defects?
11. What counts as a patent defect? Give examples.
Obvious or patent defect: Defects that can be easily seen during open
package inspection and usually already rejected. For examples: Deficit in
quantity of products, wrong types of goods, torn or broken items.
12. What counts as a latent defect? Give examples.
 Hidden or latent defect: Defects that cannot be easily seen through
inspection and usually found out until the product. For example, a
smartphone lacks the volume button.
13. What are Implied Warranties?
Under most laws, a buyer can make certain assumptions about goods
even if the exporter gives no express warranty. Lawyers call these
assumptions "implied warranties".
14. What are 3 types of Implied Warranties? Give examples
Implied warranty of conformity with contract: Goods must conform with
their description in the contract. but what is “conformity with contract?
There are law to deal with problem. Most laws have a way of “grading”
non-conformity.
Implied warranty of merchantable quality: Goods might well conform
with the contract but be of seriously inferior quality. An implied warranty
of merchantability is an unwritten and unspoken guarantee to the buyer
that goods purchased conform to ordinary standards of care and that they
are of the same average grade, quality, and value as similar goods sold
under similar circumstances. In other words, merchantable goods are
good fit for the ordinary purposes for which they are to be used.
Implied warranty of fitness for intended purpose: Goods might conform
with the contract and be merchantable but still be useless to the buyer. If
exporter knew the buyer’s intended purpose, and if the buyer trusted the
exporter to supply correct goods, then most laws allow the buyer to reject
unusable items.
15. What is a Product Warranty?
A promise by the exporter to cure defects in his products. There are two
parties: the seller and the buyer
16. What is a Product Guarantee?
A promise of the guarantor to pay the beneficiary, made out at the request
of the principle. There are three parties: the guarantor, the principle and
the beneficiary.
17. What are the similarities and differences between a guarantee and a
warranty?
 Similarities: Both are promise about performance, payment is only
made when there is non-performance of products or of parties
involved.
 Differencies:
- Guarantee: Contract to perform the promise or discharge the
liability; Tripatite: guarantor, principle, and beneficiary; Promise
about somebody else's performance to obtain loan; credit
purchase/sales for good conduct or honesty of person.
- Warranty: State of the subject of contract; Bilateral: the seller and
the buyer; Commitment of seller to make good defects of product
or services in a fixed period; To enhance their value; Show of
quality; Assurance of product performance.
18. What are the 3 types of defects? Give examples.
- Defective Workmanship: A product is incorrectly built. For
example, a smartphone lacks the volume button.
- Defective Materials: Materials used to make products are inferior
or somehow incorrect. For instance, a shirt that should be made of
100% cotton is made from 65% cotton and 35% PE.
- Defective Design: A product does not meet specifications. For
example, a metal fan is covered by a guard, but the openings in the
guard are three-quarters of an inch wide, which is larger than
specified.
19. What are the common exclusions of defects? Give example.

- Fair Wear and Tear: The result of common use. For example, a
refrigerator works less efficiently and uses more electricity after 2
years use.

- Misuse: Mistake in handling by the buyer. For example, the buyer

uses acids to clean parts or the whole sophisticated machines like
computers, phones...In some contracts, misuse can also be
 determined as merely opening these aforementioned complicated
machines.

- Faults not present on delivery: Both buyers and sellers should

understand that only faults provably present in the goods on
delivery can be considered defects.
20. What is the Defect Liability Period?
The period during which the exporter is liable for and must make good
defects that are apparent on delivery or that come to light later.
21. What are the four timing decisions in Defect Liability Period?

- The starting point of the period (defect liability period)

- The time allowed to the buyer to notify the exporter of a defect. (notification
period)

- The time the exporter has to correct the defect (rectification period)
- The period during which the buyer can begin a legal action (legal action
period)
22. What is “Eternal warranty”? How to avoid problems of an Eternal
warranty?
External warranty is an endlessly renewed liability for defects. The
exporter cannot break the chain of warranty and is involved in endless
responsibility for the goods. The problems can be avoided with a cut-off
clause such as: the total warranty period shall in no case exceed 3 years.
23. What are the 5 options for curing defects?

- Repair

- Allow the buyer to repair at exporter's cost

- Replace (part or whole item)

- Reduce the price

 - Return the goods and refund the price
24. Which corrective method is least favourable for the seller? Why?
Returning the goods and refunding the price seems to be the least
favorable for the exporter because this can be considered a cancellation
of the contract. Often defective goods are not worth the cost of return
shipment to the exporter's country. That means the deal is a total loss for
the exporter.
Translating task
1. Discrepancies in quality shall be considered as defects and shall give rise to
claims under the Defect Liability provision of this Contract. However, a
fundamental discrepancy in quality shall give the buyer the right to refuse Delivery
of the Goods in whole or in part and to recover from the Seller all payments made
for the unaccepted portion of the Goods as well as all costs, expenses and customs
duties incurred by the Buyer in association with the shipment, movement through
customs, insurance or storage of the unaccepted portion of the Goods.
Sự khác biệt về chất lượng hàng hóa sẽ được coi là lỗi và cho phép khiếu nại theo
điều khoản trách nhiệm với lỗi của hợp đồng này. Tuy nhiên, nếu khác biệt đáng
kể, người mua có quyền từ chối toàn bộ hay một phần của hàng hóa đã giao và đòi
lại người bán tất cả các khoản thanh toán cho phần hàng hóa không được chấp
nhạn cũng như mọi chi phí, lệ phí và thuế hải quan mà người mua đã phải trả liên
quan đến giao hàng, thông quan, bảo hiểm hoặc chi phí kho bãi cho phần hàng hóa
không được chấp nhận
2. The Seller’s liability for defects is subject to the Buyer having adhered to all
procedures and instructions applicable to the Condition of Use of the item, and
expressly excludes damage to the Goods caused by fair wear and tear or by misuse
occurring after Delivery.
Người Bán chỉ có trách nhiệm đối với hàng hóa có lỗi với điều kiện Người Mua
tuân thủ tất cả các quy trình và hướng dẫn có trong Điều kiện sử dụng của hàng
hóa, đặc biệt, Người Bán sẽ không phải chịu trách nhiệm đối với những hỏng hóc
của hàng hóa do hao mòn khi sử dụng hoặc do việc sử dụng sai hàng hóa.
3. All equipment and accessories under the Seller’s scope of responsibility will
be within 12 months warranty by the Manufacturer from the date of Final
Acceptance Report, but not exceeding 14 months from the date on Bill of Lading.
For consumable items, components and spare parts, Manufacturer’s warranty
conditions apply.
Mọi thiết bị và vật phẩm thuộc phạm vi trách nhiệm của người bán sẽ được nhà sản
xuất bảo hành trong 12 tháng kể từ ngày trên báo cáo nghiệm thu cuối cùng, nhưng
không quá 14 tháng kể từ ngày trên vận đơn. Đối với sản phẩm tiêu thụ, linh kiện
và phụ tùng, điều kiện bảo hành của nhà sản xuất cũng được áp dụng
4. The software provided under this Agreement is furnished “as is” and without
support of any kind whatsoever. The Supplier disclaims all warranties with regard
to any software licensed to the Purchaser under this Agreement, including all
implied warranties of merchantability and fitness for a particular purpose.
Phần mền theo thỏa thuận này được cung cấp nguyên trang mà không có bất kì
hình thức hỗ trợ nào. Người cung cấp từ chối tất cả bảo đảm liên quan đến bất kì
phần mềm nào được cấp phép cho bên mua theo thỏa thuận nào, bao gồm đảm bảo
ngụ ý về khả năng bán được và tính phù hợp với mục đích nhất định
5. The defects liability period shall be prolonged by the length of any period during
which the Goods cannot be used by the BUYER because of a defect. However, if
new Goods are delivered to replace defective Goods, the defects liability period
shall not begin again on the replacement Goods.
Thời gian chịu trách nhiệm với lỗi sẽ được gia hạn bằng khoảng thời gian bên mua
không thể sử dụng hàng hóa do lỗi. Tuy nhiên, nếu hàng hóa mới được giao đến để
thay thế cho hàng bị lỗi, thì thời gian chịu trách nhiệm với lỗi sẽ không tính lại từ
đầu với hàng hóa thay thế