A shipment arrives from an overseas supplier, but the goods fail inspection, do not match your specifications, or cannot safely be sold. Your next steps can affect whether you recover payment, obtain replacements, or absorb the loss. For California businesses, remedies for defective goods from a foreign supplier depend on the contract, the governing law, and where recovery is practical. This article explains how to preserve your position and evaluate those options.
Which law applies to defective goods from a foreign supplier?
Start with the signed agreement, purchase orders, order confirmations, specifications, and incorporated terms. Look for governing-law provisions, inspection deadlines, warranty terms, remedy limitations, and requirements for arbitration or court proceedings. Conflicting terms in buyer and supplier documents may require legal analysis.
International sales can fall under the United Nations Convention on Contracts for the International Sale of Goods, commonly called the CISG. Under Article 1, it generally applies to sales between parties whose places of business are in different contracting countries. The United States is a contracting country, but not every supplier’s country is.
Parties can exclude the CISG under Article 6. Simply selecting “California law” does not necessarily exclude it. If the CISG does not apply, California’s Commercial Code may govern, depending on the agreement and applicable choice-of-law rules. Under Article 2(a), purchases for personal, family, or household use are excluded from the CISG unless the seller, before or at the conclusion of the contract, neither knew nor ought to have known that the goods were bought for such use.
An attorney reviewing international business agreements and disputes can identify the governing rules before you commit to a remedy.
Inspect, document, and notify the supplier promptly
Do not assume that photographs alone establish a claim. Preserve evidence showing what the supplier promised, what arrived, and how the defects affect use or resale.
- Keep the contract, approved samples, technical specifications, invoices, and payment records.
- Photograph packaging, labels, serial numbers, and defects before repairs or disposal.
- Record delivery dates, inspection dates, quantities affected, and testing methods.
- Consider an independent inspection, especially where the supplier disputes the cause.
- Separate affected goods and preserve representative samples when safe and practical.
Under CISG Articles 38 and 39, buyers generally must examine the goods within as short a period as is practicable in the circumstances and notify the seller, specifying the nature of the nonconformity, within a reasonable time after discovering it or after they ought to have discovered it. Article 39 also generally imposes an outside two-year notice limit from actual delivery, unless inconsistent with a contractual warranty period. That is a notice rule, not a universal deadline for filing suit.
Under California Commercial Code section 2607(3)(A), when a tender has been accepted, the buyer must notify the seller of any breach within a reasonable time after the buyer discovers or should have discovered it, or be barred from any remedy. Send specific written notice promptly, follow contractual notice procedures, and retain proof of delivery.
Compare rejection, replacement, refund, and damages
Your remedy depends on the governing law, the seriousness of the defect, whether you accepted the goods, and the supplier’s right to cure. A refund is not automatic merely because some goods are defective.
- Rejection: Under California Commercial Code section 2601, a buyer generally may reject goods that fail to conform, subject to exceptions and the parties’ agreement. Installment contracts and cure rights can change the analysis.
- Revocation after acceptance: Section 2608 permits revocation in specified circumstances where a nonconformity substantially impairs the goods’ value to the buyer. Timing, notice, and the reason for initial acceptance matter.
- Repair or replacement: CISG Article 46 permits a buyer to require substitute goods when the lack of conformity constitutes a fundamental breach and to require repair unless repair would be unreasonable in the circumstances. Either request must be made with the notice required by Article 39 or within a reasonable time afterward.
- Ending the sale: CISG Article 49 permits avoidance in specified circumstances, including a fundamental breach. This is a higher threshold than simply showing imperfect goods.
- Financial recovery: Available relief may include a price reduction or damages, depending on the governing rules and contract.
For accepted goods, California Commercial Code sections 2714 and 2715 address damages, including qualifying incidental and consequential losses. Under CISG Article 74, damages are subject to foreseeability limits, and Article 77 requires reasonable mitigation. Document inspection costs, reasonable substitute purchases, and supported business losses. Contractual exclusions or liability caps may restrict recovery.
Check whether cross-border recovery is practical
A strong claim and a collectible recovery are different questions. Confirm the supplier’s exact legal name, business location, and available assets. A trading company may not be the manufacturer, and an invoice’s brand name may not identify the contracting party.
Review any forum-selection or arbitration clause before filing. International service of process, translations, tribunal fees, and enforcement abroad can affect cost and timing. Do not assume a California judgment will be readily enforceable in the supplier’s country.
For smaller disputes, a documented demand, negotiated replacement, partial refund, or settlement may be more economical. If a marketplace, payment provider, or trade-credit insurer is involved, check its procedures and deadlines immediately. Those processes do not necessarily replace contractual notice requirements or extend legal deadlines.
Reduce exposure on the next overseas order
Future contracts should connect product standards to measurable inspection and remedy procedures. Useful provisions include:
- Clear specifications, approved samples, and independent pre-shipment testing.
- Inspection periods that account for shipping and testing time.
- Responsibility for return freight, replacement costs, and defective inventory.
- Payment stages tied to inspection or other verifiable milestones.
- An express CISG decision and a practical dispute-resolution forum.
Delivery terms can allocate transport costs and risk, but they do not by themselves resolve whether goods conform to the contract.
Talk to a California business attorney
If a foreign supplier sent defective goods, Itkin Law can review your agreement, notice obligations, and recovery options in a free consultation. Schedule a free consultation or call (424) 603-8888.
This article is attorney advertising and provides general information only. It is not legal advice and does not create an attorney–client relationship. The law changes, and this article reflects the law as of its publication date. Every situation is different — contact us to discuss how the law applies to your exact circumstances. See our full disclaimer.
