Adam is the president of the management board of a Polish company that manufactures equipment designed to provide shops and production plants with tool cabinets, mobile cabinets and various types of furniture sets. The company managed by Adam cooperates with distributors and end customers from all over Europe. Despite the dynamically developing activity and the execution of contracts for a significant amount, the company has not yet developed its own General Contractual Conditions or standard templates of concluded contracts. Agreements are prepared for each contract and many times the company relies on templates offered by distributors or end buyers.
As a part of one of the orders, Adam’s company delivered a set of custom-made tool cabinets to Denmark. The contract for the set was provided by a Danish contractor. Adam signed it because he wanted this order for the Company, he did not spend much time on negotiations, he focused mainly on the amount of the agreed remuneration for the set and obtained a price that satisfied him very much.
After several months of use, the delivered set of tool cabinets was damaged due to its faulty construction and material solutions. Adam is aware of the responsibility of the Polish company for damages and confirms the obligation to remove the existing defects on the basis of the warranty granted to the Danish buyer. In the opinion of the Polish company’s engineers, all repair work can be performed on site at the Danish customer. However, the buyer is of a different opinion and, in accordance with the contract, demands the replacement of the entire set with a new one.
Adam is in a hurry looking for a copy of signed agreement. He starts reading. Indeed, the Danish contractor is right. According to the concluded contract, the choice of the warranty right to repair or replace the delivered goods with a new one was granted to the buyer. The company managed by Adam is forced to replace the supplied set of cabinets with a new one and transport it to Denmark at its own cost.
Adam could have avoided this type of situation if, during the negotiations on the content of the contract, he had also remembered to pay attention to the provisions regarding warranty obligations.
The scope of the guarantee granted to the buyer results from the content of the guarantee document. It can be a contract or a separate warranty card. This document may specify in detail not only the scope of the warranty rights granted to the buyer, the warranty period, but also the manner of using the rights granted.
When negotiating the terms of cooperation with a foreign contractor, the subject of which is the delivery of specific goods, it is worth remembering about the provisions regarding guarantees.
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.