Where the problems stem from?
During the full-scale war, many traders revise the terms of their contracts. For example, under DAP terms, most traders include provisions for quality checks during unloading. This has become pertinent due to falling market prices and issues at the Ukrainian borders.
Such a practice allows buyers to take samples of the goods themselves, which puts them in a more favourable position. However, sellers in such circumstances often have no control over the sampling process.
This can lead to situations where buyers assess the quality of goods after unloading them at their warehouses. In such cases, the goods may be mixed with other products, complicating the process of quality determination.
After performing an analysis of the quality of the goods, buyers may refuse to accept the goods, demand a discount or refuse to pay. In doing so, they argue that the goods do not meet contractual specifications or EU regulations.
How to solve the problem?
In order to reduce risks for sellers, it is important to change the terms of contracts, especially those on the DAP basis, by including a provision that the quality of the goods must take place at the time of loading. To do this, independent surveyors should be involved in sampling and analysis in accredited laboratories. Such an approach will ensure the final quality certificates are issued.
In order to refute a product quality certificate, one must prove the fraudulent actions at the time of its issuance, which is a complex process. This creates flexibility and confidence for both parties. Sellers can confirm the quality of the goods at the time of loading, and buyers receive proof that the goods meet the terms of the contract.
If the buyer disagrees with the quality of the goods during unloading, sellers may offer to appoint their own surveyor to take independent samples. This is important for sellers, as they will have their own evidence in the event of a dispute over the quality of the goods.
Do buyers have the right to refuse to pay for the delivered goods if they find deviations in their quality indicators?
As a general rule, buyers cannot refuse to pay for the goods if there is a complaint about the quality of the goods. Payment for the goods and the quality assessment are independent terms of the contract.
For example, in many DAP contracts, payment is due upon unloading of the goods without any reference to quality inspection.
If the contract does not make payment dependent on inspection of the quality of the goods, sellers have the right to demand payment in full upon the due date. If buyers refuse to pay for the goods, sellers should consider filing a claim against the buyers for breach of their contractual payment obligations.
In the event of minor deviations from the quality specifications of the goods, buyers have the right to claim compensation for damages due to the supply of noncontractual goods.
However, if the quality of the goods differs materially from the contractual specifications, buyers have the right to reject the goods, in which case no payment obligation arises.
Is it possible to resell goods on a DAP basis?
If the buyers reject the goods or unreasonably refuse to pay, the seller may consider reselling the goods on a DAP basis if the goods have not yet been unloaded at the destination and the buyers have not yet accepted them. In this case, sellers have the option of redirecting the goods and issuing shipping documents to any other final buyer.
If the goods have already been cleared in the European Union, there may be certain technical obstacles to their further resale. Under these circumstances, sellers should respond quickly to the above actions, as there is a risk of losing access to the delivered goods.
Conclusion.
The optimal solution is to enter into contracts stipulating that the quality of the delivered goods be assessed at the time of loading. This ensures that buyers are not obligated to pay for the goods until their quality is verified, creating acceptable conditions for both parties.
If the terms of the contract stipulate that the quality of the goods shall be checked during the unloading of the goods at the destination, the sellers shall appoint their own surveyor who will independently take samples of the quality of the delivered goods.
Once sellers have accepted the contractual requirements for unloading quality testing, they must monitor the buyers' compliance with these requirements. Any breach of this process by the buyers may result in the annulment of the results of such tests.
In view of the above, it is necessary to change the structure of contracts, paying particular attention to the quality of goods. Resolving this issue between the parties helps to reduce risks for both parties at the stage of contracting.
Iryna Moroz, партнерка AGA Partners
Andrii Tantsiura, юрист AGA Partners