Negotiation and determination of quality terms in import contracts: key elements of quality flexibility and tolerance

In the import contract, the quality clause is one of the main components. It is not only the basis for the delivery of goods between the buyer and the seller, but also related to the effective performance of the contract. In order to ensure the smooth progress of the transaction, the quality-related content of the product must be clarified and refined.

How to express product quality

In import contracts, the expression methods of commodity quality are mainly divided into two categories: sample expression and text description expression.

1. Sample representation

Trading by sample, or “buying and selling by sample”, is where both parties use the quality of the sample as the basis for future delivery. In this case, the sample is an integral part of the contract and the seller must ensure that the quality of future deliveries corresponds exactly to that of the sample. Samples can be divided into the following categories:

• Copy Sample: A copy of the sample retained by the seller to prevent subsequent disputes before sending the sample.
• Sealed sample: A sample jointly signed by the counterparty and sealed by a notary agency, which can be used as a standard in the event of a dispute.

In addition, when using samples provided by the seller for transactions, the buyer needs to pay attention to whether the samples involve intellectual property rights of third parties, and specify corresponding terms in the contract to avoid potential liabilities.

2. Text description representation

This method involves indicating the quality of the product in the form of text, graphics, or photos. In some cases, the quality of goods may vary relatively, so “Fair Average Quality” (FAQ) can be used to characterize it. For some goods that do not have recognized standards, such as frozen fish and frozen shrimp, “Fair Average Quality” can be used to characterize them. Good Merchant Quality (GMQ).

Basic content of quality terms

The quality terms should list the product name, regulations, grades, standards, trademarks or brands and other information in detail. If the transaction is based on samples, the sample number or delivery date must also be noted.

Quality maneuverability and quality tolerance

When formulating quality terms, in order to avoid overly strict requirements affecting the seller’s delivery, the following measures can be taken:

1. Agreed mass maneuver range

The quality maneuverability clause sets the allowable range of quality fluctuations. This can be made clear in the following ways:

• Specified scope: For example, “bleached cloth, width 35 to 36 inches.”
• Specified limits: For example, “The oil yield rate of imported sesame seeds shall not be less than 30%.”
• Specify upper and lower differences: For example, “Silver ingots of minimum 99.95% purity allowing 3% more or less”, within the agreed range, the seller’s delivery will be considered qualified.

2. Agreed quality tolerance

Quality tolerance (Quality Tolerance) refers to the acceptable quality difference of goods within a certain range due to unavoidable errors in the production process. Therefore, both parties can clearly agree on quality tolerances in the contract, for example, “a reasonable tolerance of ±(3%~5%) is allowed for size or weight.”

3. The agreed delivery quality is substantially the same or similar to the sample

When using samples to conclude a transaction, disputes may arise due to inconsistent views of the goods between the two parties. Therefore, it is recommended to include a clause in the contract that “delivery quality is substantially the same or similar to that of the samples” to reduce disputes.

Through the above clear provisions, buyers and sellers can better safeguard their respective rights and interests and promote the smooth progress of transactions.