Preserve the goods and original records, identify the agreed specification, check the applicable law and notify the supplier promptly. Then choose a remedy supported by the defect, the contract and the recoverable loss; a full refund is not automatic.
Start with the evidence, not a demand for a full refund
A shipment arrives from China and the goods cannot be sold as expected. The buyer wants its money back; the supplier says the goods passed inspection and blames transport or storage. Before choosing a remedy, turn that disagreement into four questions: what standard was agreed, which units failed, when the defect arose, and what loss it caused.
This guide concerns business-to-business supply disputes involving mainland China. The applicable sales law, agreed terms and dispute forum must be checked first. Some international sales fall within the United Nations Convention on Contracts for the International Sale of Goods (CISG); a reference to Chinese law should not be treated as a reliable substitute for analyzing whether the CISG applies or was excluded. [1][2]
The practical priority is to retain options. Discarding goods, accepting an undocumented credit, or missing a notice deadline can make an otherwise credible quality claim much harder to prove.
Build a defect file that connects the standard to the shipment
A laboratory report is useful only if the product tested can be linked to the relevant shipment and the test answers the contractual question. A certificate showing that one sample failed an unrelated test may prove little about the actual promise made by the seller.
| Issue | Documents to preserve | Question the evidence should answer |
|---|---|---|
| Agreed specification | Purchase order, drawings, approved sample, specifications and revisions | Which version did the supplier accept? |
| Identity and quantity | Packing lists, batch numbers, serial numbers and receiving logs | Which goods and how many units are affected? |
| Nature of the defect | Original photographs, videos, test data and inspection records | What is wrong, and can someone reproduce the finding? |
| Cause and timing | Packaging condition, transport records, storage conditions and installation logs | Could the problem have arisen after delivery? |
| Commercial loss | Rework invoices, replacement purchases, customer claims and stock records | What was reasonably spent or lost because of this breach? |
Keep original files alongside any annotated working copies. Where batches are mixed, separate them before sampling. Explain the sampling method and record who selected, sealed, transported and tested each sample. These steps are a proposed evidence workflow, not a guarantee that a particular report will be accepted.
For goods located outside China, discuss the inspection plan with counsel before destructive testing. A joint inspection can reduce later disputes about selection and handling; an independently commissioned report still needs to be evaluated in the proceedings. Chinese evidence rules distinguish physical evidence, expert material and other documents rather than treating every inspection certificate as conclusive. [3]
Treat notice and limitation as different deadlines
Do not wait for a perfect expert report before checking how and when notice must be given. Preserve proof of sending and receipt, and identify the order, affected goods and problem with enough specificity to make the complaint intelligible.
Under Civil Code Articles 620-623, inspection and defect-notification rules depend on the agreement and circumstances. Article 621 includes a reasonable-time requirement where no inspection period was agreed and a two-year outer rule, subject to warranty-period and seller-knowledge qualifications. That does not give every buyer two years to wait. Article 622 also addresses inspection periods too short to permit a full inspection. [1]
Where the CISG governs, Articles 38-40 establish a separate examination and notice framework. Its reasonable-time and two-year provisions must be read with their exceptions, the contract and the facts. Neither framework should be confused with the deadline for commencing proceedings. [2]
A practical notice can identify the purchase order and lot, explain the observed defect, attach initial evidence, propose an inspection protocol, and reserve the position on remedies while testing continues. A reservation of rights does not cure a missed mandatory deadline or establish that termination is justified.
Choose a remedy that fits the defect
A full refund is not automatic whenever some units are defective. Ask whether repair or replacement is feasible, whether the goods retain commercial value, whether the defect defeats the contractual purpose, and whether the buyer has already used or resold part of the shipment.
For a transaction governed by domestic Chinese sales law, Civil Code Articles 577, 582-584, 591, 610 and 617 are relevant to breach, remedies, losses and mitigation. CISG-governed transactions require their own analysis, including the threshold for avoidance and the applicable damages rules. [1][2]
The commercial options should be costed rather than simply ranked by how aggressive they sound. A replacement batch may preserve a customer relationship but repeat the same production risk. Local rework may be faster but requires agreement on specifications and payment. A price reduction may make sense for goods that can lawfully be used for a lower-value purpose.
Do not sell unsafe products merely to reduce the claim. Product-safety, recall and disposal obligations in the destination market require separate advice. This China-side contractual guide is not a statement that overseas regulatory costs will necessarily be recoverable from the supplier.
Quantify losses without double counting
Prepare a loss schedule with a document against every entry. Separate the unpaid refund or price adjustment from inspection, reasonable storage, rework, replacement procurement and alleged downstream losses. Record any salvage proceeds, credit notes, insurance recoveries and avoided costs.
A claim that simply adds the original purchase price to the full replacement price may overstate the economic loss. Likewise, an overseas customer's demand is not automatically proof that the supplier owes the same sum. Identify whether the amount was actually paid, reasonably incurred, causally connected and legally recoverable.
Preserve decisions about mitigation. Explain why a replacement order was needed, why a particular repair was chosen, and what alternatives were available. The objective is a defensible calculation, not the largest possible opening number.
An illustrative scenario: passing inspection is not the end of the analysis
Illustrative scenario only; not a reported case or a claim about a past client. A European buyer accepts a pre-shipment visual inspection. After installation, a component fails under sustained load. The supplier argues that the inspection waived every quality complaint.
The questions are more specific. Did the agreed inspection cover endurance testing? Was the buyer's intended use communicated? Is the tested component traceable to the shipment? Could installation or storage explain the failure? Was notice sent promptly after discovery? What exactly does the acceptance clause say?
A targeted technical file can be more valuable than dozens of messages calling the product defective. A lawyer and an appropriate technical expert should define those questions before testing consumes the remaining samples.
Escalate with the forum and recovery position in view
Once the evidence and remedy are clearer, review the dispute clause and the supplier's identity. Use the supplier litigation guide for the broader sequence and the no-signed-contract guide where specifications were agreed through messages.
A negotiated inspection or replacement protocol should address timing, sample custody, costs, outstanding payment and what happens if performance fails again. When loss or disposal of relevant evidence is a real concern, discuss evidence-preservation measures with counsel; when assets are at risk, consider the separate property-preservation assessment. These are different applications serving different purposes.
Before substantial legal spend, compare the likely recoverable amount with expert costs, translation, procedure and collectability. A well-supported claim can still be commercially unattractive against a debtor without accessible assets.
What to prepare for a first assessment
Prepare the exact supplier name, contract and final specification, payment evidence, receiving dates, initial complaint and delivery proof, inspection material, current location of the goods, and a preliminary loss schedule. State whether the objective is replacement, repair, price adjustment, refund or an orderly exit.
For a supplier in Shenzhen or South China, the supplier-disputes service page explains the China-side scope. Start an enquiry with party names and a non-confidential summary; detailed technical files can follow after conflicts and document-transfer arrangements are addressed.
Frequently asked questions
Does an inspection report guarantee that I will win?
No. Its value depends on relevance, reliability, sample identity and the disputed issues. The seller may challenge the methodology or argue that the tested condition arose later. Preserve the underlying data rather than relying only on a conclusion page. [3]
Can I return or destroy all the goods immediately?
First address safety, contractual obligations and evidence preservation. If urgent action is necessary, document why, notify the appropriate parties and retain a defensible record or samples where lawful and safe. A return arrangement should specify receipt and the financial consequences.
Is the warranty period the same as the time limit to sue?
No. Inspection, notice, warranty, termination and limitation rules can serve different functions. They need a transaction-specific review, particularly where the CISG may govern.
Official legal sources
Legislative references were checked for this article on 19 October 2026. The English discussion is a summary, not an official translation. Apply the relevant law, contract and procedural requirements to the specific transaction.
- PRC Civil Code. Articles 577, 582-584, 591, 610, 617 and 620-623. Chinese statutory text published by the Ministry of Justice.
- CISG: convention text and applicability. Articles 1, 6, 38-40, 45, 49, 74 and 77. Consult the current treaty status and declarations before relying on applicability. Treaty status and declarations.
- SPC Provisions on Evidence in Civil Litigation. Physical and electronic evidence, expert evidence and assessment of authenticity; 2019 revision effective 1 May 2020.
Fan Yuanyuan
Partner, Guangdong Yushuang Law Firm
PRC Lawyer License No. 14403201810021216
Shenzhen, Guangdong, China
Start with party names and the commercial objective.
Send a non-confidential summary and any known deadline for a conflicts and scope review. Do not send sensitive documents before document-transfer arrangements are confirmed.
General information, not legal advice. Examples are expressly hypothetical and do not describe a client result. Reading this page or sending an enquiry does not create a lawyer-client relationship. Applicable law, forum, deadlines and remedies require a case-specific review.