Pax Has An Urgent Question

Dear John, I read your book over a year ago and it has changed my life. Thank you. Toward the beginning of the book, in the section "Protecting Yourself," you discuss how importers "have full product liability on the legal fiction the importer is the manufacturer" (p. 38). I have a question about product liability that's especially pressing. Until recently I have been importing goods and wholesaling them at my own risk. I have suffered some troubles as a result of defectives or improperly packaged goods but I was prepared for such setbacks and simply wrote the shipments off as losses as I had nobody to blame but myself. However, I am now in the position to source a large quantity of one product for a client in my country. The supplier is reputable -- I have dealt with them 3-4 times and have found they ship quality goods on time and to spec. My Terms & Conditions of Sale state that I will replace defective goods or refund invoice value for damaged goods. If anything goes awry with the shipment, under these terms, it is probable it will ruin me and my business completely. On the other hand, if things go well, it will be the boost I really need right now. I have asked the overseas manufacturer to guarantee the goods against defects. They have agreed to accept a contract stating such terms. I know there's no legal recourse should the manufacturer decide to renege on the contract, but I thought it would be good to set the expectation prior to placing the order. I am thinking to ask them to ship replacements or refund invoice value of any defectives. If I get a refund from the manufacturer, I'll only be out shipping + duties -- still not good but I can probably take that hit and survive. Does this approach make any sense? I wonder if there's a better way to handle the risk of receiving defective goods and being sued / destroyed by my domestic client. Anyway, I don't have anybody to talk to about this kind of thing because importing is such a solitary trade. So any advice you might have would really help!! Thanks, Pax


Pax,


Rock and a hard place!  You need the benefit of the large sale, but if it goes bad you will be ruined.  So you can buy insurance, in various forms:


1. By going to the 3rd party like SGS, and having them QC the shipment before it leaves as a condition of sale by the supplier... but that might cost too much...


2.  Does your customer need the entire shipment at once?  Say it is $20,000 worth of goods that he plans to sell over five months... will your buyer accept one shipment a month for 5 months, thus totalling $20,000?  If so, no one shipment can break you, and the cost of the extra freight is a form a insurance.


3. Can you afford the $1200 to travel to the source and QC the goods themselves as they are made and packed and shipped?


Let us know if any of these will work...


John

Bookmark this post --- Email this post