Adam manages a Polish company that manufactures storage systems and industrial furniture. A significant part of the company’s activity is focused on the realization of individual projects. The company carries out orders in the country and abroad and provides its customers with guarantees for the delivered storage systems. The content of the guarantee indicates that during its validity period, the Company covers all costs related to the necessary transport of defective parts of, their replacement and the performance of necessary repair work. The company does not differentiate in any way domestic and foreign deliveries in terms of the scope of the guarantee granted and the guarantee obligations imposed on it.
As a part of one of the projects carried out by the company, it delivered a multi-level storage system to the Netherlands. The subject of the contract also included the assembly of the delivered set in the warehouse. The assembly works lasted many weeks and several employees of the Polish company worked on them. When the assembly was completed, the customer started using the delivered system. After a few months, it turned out that due to production errors, it was necessary to replace some of the delivered structural elements and repair a few others. The Polish company recognizes its responsibility for this case and proceeds to perform warranty activities. In the first place, employees are sent to the Netherlands to check the condition and which parts need to be replaced.
However, Adam wonders what would happen if the storage system was delivered much further than to the Netherlands, for example to Australia. He decides to discuss with the management boeard the content of the company’s documentation concerning guarantees given to products delivered abroad.
1. Specify whether the warranty covers the replacement or repair of damaged components
The content of the warranty document determines the scope of warranty rights. It is on its basis that we determine whether they include repair or replacement and what is the scope of possible replacement or repair.
2. Determining who decides whether a given item is to be replaced or repaired
One of the important issues that should be regulated in the content of the warranty is to specify who is the decision-making entity as to whether a damaged element or part is subject to replacement or repair. Will it be the buyer or the seller?
3. Determining whether an inspection and assessing the scope of the defect is possible on-site.
Frequently, it is necessary to inspect the subject of the contract and establish the extent of the defect in order to determine the actions that the seller is obligated to perform under the granted warranty. In the case of foreign deliveries, particularly those made to a location significantly distant from the seller’s premises, it is advisable to include a provision in the warranty stating that the inspection can be carried out on-site, at the location where the subject of the contract is situated. Additionally, it may be worth considering giving the seller the option to enlist the assistance of a local expert to avoid having to involve their own personnel.
4. Determining whether the repair of the fault is possible locally or whether it is necessary to transport the subject of the contract to the manufacturer or service
Once it is known what has happened and what is the scope of the possible defect, it needs to be determined whether its removal is possible in the place where the subject of the contract is located, or whether it is necessary to transport it to the manufacturer or a place indicated by him. The way of proceeding the indicated cases should be regulated in the content of the guarantee granted, so as to avoid possible doubts related to it.
5. Indication of who bears the necessary transport costs
If, as a result of the inspection, it is decided that the warranty repair requires the transport of damaged parts or the entire subject of the contract, it is worth specifying who is obliged to bear the necessary transport costs and on what terms the transport is to take place. Who is responsible for the organization of transport, loading, unloading, packaging and securing the subject of the contract for the duration of transport and its insurance.
Although the indicated issues should be clearly regulated in each contract on the basis of which the guarantee is granted, in the case of foreign deliveries they are particularly important.
Joanna Lubecka
attorney
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Case study. Check what Adam forgot when negotiating a contract with a foreign contractor
Although the indicated issues should be clearly regulated in each contract on the basis of which the guarantee is granted, in the case of foreign deliveries they are particularly important.
Below you will find some useful information on how to negotiate contracts concluded with a foreign business partner.
The purpose of the NDA is to secure the confidential nature of information that is provided to the other party in connection with the commencement of negotiations, determining the terms of possible cooperation between the parties, the concluded contract, cooperation or employment.
The standard practice is to start reading each document from the beginning. In the case of B2B contracts concluded with a foreign contractor, it is worth reversing this order.