China National is a Beijing-based corporation organized under the laws of China with specific foreign trading rights. It facilitates the import and export of goods between Chinese and foreign companies. Apex is a company incorporated in Ontario, California, which engaged in the import and distribution of consumer electronic goods. In 2000, China National entered into a purchase agreement with Apex for the export of DVD players. The purchase agreement was formalized with the conclusion of several substantially identical written contracts for the different types of players. Each contract contained two significant provisions:
- In the event of nonconformity of the goods with the contract, Apex should claim for quality discrepancy within thirty days after arrival of the goods at the port of destination.
- All disputes arising from the contract shall be submitted to certain arbitration tribunal specified in the contract and the award is final and binding on both parties.
Apex imported and sold the products to major retailers such as Best Buy, and K-Mart. Soon after distribution of the imported goods, Apex began receiving reports from its retailers that consumers were dissatisfied with the quality of the DVD players: disk loaders did not open; they did not load after the disk was inserted and did not recognize certain music files; the front panel of the loader fell off, and so on. Some were returned. In spite of these problems, Apex continued to place more orders with China National. It did, however, express its concerns to China National. Apex declined to pay China National, claiming “financial troubles” and citing China National’s refusal to correct the defects. In an effort to obtain payment, China National wrote several letters to Apex threatening legal action. It eventually filed suit in California.
The central issue to be decided by the court was whether Apex rejected the goods or, if it did not, whether it later would be relieved of liability. The court stated that if buyers accept nonconforming goods and do nothing, the law deems them to have accepted those goods. Apex’s actions in continuing to order and sell goods known to be defective constituted an acceptance of those goods. Such conduct of ordering and selling of defective goods was inconsistent with the seller’s ownership and acceptance. It ordered Apex to pay for all unpaid invoices. (141 F. Supp. 2nd 1013. 2001 U.S. Dist.)
Source: Seyoum Belay (2014), Export-import theory, practices, and procedures, Routledge; 3rd edition.
Great V I should certainly pronounce, impressed with your web site. I had no trouble navigating through all the tabs and related info ended up being truly simple to do to access. I recently found what I hoped for before you know it at all. Reasonably unusual. Is likely to appreciate it for those who add forums or anything, web site theme . a tones way for your client to communicate. Nice task..