1 Why do companies have quality assurance programs?

To ensure customer satisfaction

2 Why may conflicts arise in negotiating specifications?

Because it is a difficult process. The manufacturer is often tempted to agree to impossible
specifications, which is very 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?

It protects both the buyer and the seller: the buyer is protected against inferior products as it can reject
any products that fail to meet specification; the seller can protect its reputation and avoid costs
It protects both buyer and seller: the buyer is protected against inferior products as it can reject/
refuse any products thai fail to meet specification; the seller can protect its reputation and avoid
costs.

4 What kind of goods needs pre- delivery inspection? Give example.

All kinds of goods need pre-delivery inspection, especially sophisticated items and capital equipment.
All kinds of goods need pre-delivery inspection, especially sophisticated items and capital equipment

5 What are the functions of independent inspection?/Why is there independent inspection?

It reports on the weight, size and most importantly, the value of the goods. It prevents exporter and
importer agreeing an unrealistically low invoice price in order to avoid customs duties in the buyer’s
country. Such inspection also prevents shipment of patently defective goods.
It reports on the weight, size and the value of the goods. It prevents exporter and importer
agreeing a low price to avoid customs duties in the buyer’s country and it also prevents
shipment of patently defective goods
6 What does customs inspection reveal?
discrepancies in weight, size and description
discrepancies in weight, size and description

7 What is the real inspection for goods?

the inspection by the buyer, or “open package inspection”
the inspection by the buyer or open package inspection

8 Name quality checks on goods exported for resale/When can inspection be done?
- Inspection by buyer during manufacture
- Inspection by buyer or buyer’s agent before delivery
- Inspection by inspection service
- Inspection by carrier on dispatch
- Open package inspection on arrival at destination
- Seller’s liability to defects after sale
Inspection by carrier on dispatch
Seller’s liability to defects after sale

9 How long is the defect liability period?

negotiable, this is likely to be several months from date of delivery of the date of arrival.

10 What are 5 steps in negotiating the Defects Liability Period?

 Inspection: When are the goods inspected? And when can the buyer to reject them?
 Terms: Warranty or guarantee?
 Definition: What is, and what is not, a cur?
 Timing: How long is the defects liability period? When does it begin? What about other timings?
 Corrective action: What must the seller do to cure defects?
Inspection-Term-Definition-Timing-Corrective action
11 What counts as a patent defect? Give examples.
Defects that are apparent, e.g., wrong items, broken or missing parts, scratches, etc.
Apparent=patent><latent

12 What counts as a latent defect? Give examples.

Defects that only come to light after buyer’s acceptance, or hidden defects, e.g., structural weakness,
failure to operate at high or low temp. high fuel consumption, etc.
Stuctual weakness, high fuel consumption failure to operate at high or low temp

13 What are Implied Warranties?

Assumptions that the buyer can make about goods, even if the exporter gives no express warranty
Assumption that the buyer can make about the goods, even if the exporter gives no express warranty.

14 What are 3 types of Implied Warranties? Give examples

- Implied warranty of conformity with the contract: in principle, the buyer can reject the goods if
they do not conform with the contract
- Implied warranty of merchantability: the buyer can reject the goods that are not of merchantable
quality
- Implied warranty of fitness for intended purposes: if the exporter knew the intended purpose
and if the buyer relied on the export’s judgement, the buyer can reject the goods that are not
suitable for their intended purposes
Implied warranty of conformity with the contract
Of merchantability
Of fitness for intended purposes

15 What is a Product Warranty?

A promise by the exporter to cure defects in his products. There are 2 parties: the buyer and the seller
16 What is a Guarantee?
A promise by guarantor to pay the beneficiary, based on request of the principal. There are 3 parties:
guarantor, principal, and beneficiary
A promise by guarantor to pay the beneficiary, based on re request of the principal

17 What are the similarities and differences between a guarantee and a product warranty?
- Similarities: both are promise about performance, payment is only made when there is non-
performance of products or of parties involved
- Differences

Guarantee Warranty

contract to perform the promise or discharge

content state of the subject of contract
the liability

parties three parties two parties

commitment of seller to make good defects

essence promise about sb else’s performance
in products or services in fixed period

- To obtain loan - To enhance their value

purposes - Credit purchase/sales - Show of quality
- For good conduct or honesty of person - Assurance of product performance

18 What are the 3 types of latent defects? Give examples.

 Defects may be in workmanship, in materials or in design
- Defective workmanship: a product is incorrectly built.
- Defective materials: materials or parts of a product are inferior or somehow incorrect.
- Defective design: a product does not meet specifications.
19 What are the common exclusions of defects? Give example.
- Fair wear and tear – the result of normal use
- Misuse – seriously incorrect handling by the buyer

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.
The period during which the exporter is liable for and must make good defects that are apparent
on products or that come to light later

21 What types of information are usually contained in a Defects Liability Provision?

- the length of the defects liability period and its starting point
- the period during which the buyer must notify the seller of the defects (notification period)
- the amount of time the exporter has to cure the defects (rectification period)
- (it seldom regulates the legal action period)
The length of the period and its starting point
Notification pẻiod
Retification pẻiod
It seldom regulates the legal action period

22 What is disclaimer of warranty (khước từ)

- means the items are supplied as they are and without support of any kind
Means the items are supplied as they are and without support of any kind

23 What is “Eternal warranty”? How to avoid problems of an Eternal warranty?

- An endlessly renewed liability for defects An endless renewed liability for defects
- The problems can be avoided with a cut-off clause such as: the total warranty period shall in no
case exceed 3 years.
24 What are the 5 options for curing defects? / In what ways can defects be made good?
- Repair
- Allow the buyer to repair at the exporter’s cost
- Replace
- Reduce the price
- Return the goods and refund the price

25 Which corrective method is least favorable 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 or a total loss for the exporter.