It may happen in business that certain terms and conditions of the contract are infringed or not strictly observed by the Supplier or by the Customer. In that case the dissatisfied party writes a letter of complaint to the other party. Sometimes if the matter is serious a complaint may take the form of a formal claim which may be referred to arbitration for consideration and settlement. Both parties, however, tend to come to terms about disputes by negotiation1 since arbitration may be costly and entirely undesirable. A penalty clause is provided in the Contract indicating the penalty rates and the manner of claiming them.
Most frequently the Buyer's complaints arise from the delivery of wrong, damaged or low-quality goods. Short-shipment/ delivery of the goods is a common cause of the Buyer's complaint.
The Customer can make a claim on the Contractor if the latter does not observe2 the construction and erection schedule or fails to meet the contractual dates for having the project (or part of it) ready for commercial operation.
H the project does not reach the rated performance during the set period it may also lead to the Customer's claiming for the retention amount.
The Supplier can claim on the Customer because of late entry visas for the Supplier's specialists, lack of permits for them, etc.
The Customer's initial data may be incomplete or even misleading. He may fail to provide in the agreed time the construction site or materials required for work and the Contractor will claim money for down time at fixed rates.
Penalties are often stipulated for late payments which is often the case3 in business with developing countries. Minor infringements can also cause complaints.
The Resident Representative 20 May, 20...
We are writing to inform you that the last consignment supplied under Contract No. ... came with a two months' delay which is a serious infringement of the Contract.
Attached to the shipping documents on the equipment was your letter4 testifying that deliveries under this Contract are complete.
However on checking the goods received5 we found that one item was short-delivered and three arrived damaged which caused us considerable inconvenience. We are sustaining heavy losses since at present we are unable to use the lot.
In view of the bad need for the goods we urge you to arrange for speedy replacement of the missing and damaged items.
In the meantime we should like to bring to your notice that we feel entitled to claim agreed and liquidated damages because of your delay in delivery. These should be paid at stipulated rates.
We hope that you will consider our claim and admit it as justified. We also believe that the matter will be settled amicably to mutual satisfaction and you will meet the claim as requested.
COMPLAINTS ABOUT DAMAGED OR DEFECTIVE EQUIPMENT
Buyer: I must offer my apologies, Mr I. It turns out item 1 got lost at the port through our oversight. We've arranged to send it to the clients.
Seller: Oh, that's good news. And what about the damaged items? Did you look into the matter?
B. We did. The acceptance report that was signed in the presence of your agent and the captain shows that three cases were damaged. We believe it's your responsibility.
S. We've investigated the position as well, Mr D. The matter is that the bill of lading is a clean one.
B. Is it? Sorry, we've overlooked that.
S. That proves that the damage must have occurred in transit.6 You shouldmake aclaim on theinsurance company.
B. Well, we've got to make a thorough check-up with the carrier.
S. That would be reasonable. Is everything else O.K.?
B. Not quite, Mr I. During the tests one of your instruments showedmanufacturing defects. Would you like to look at the report?
S. I've seen the report. They are fairly slight, aren't they?
B. They are, and we are ready to retain the instruments. We'll try and eliminate the defects if you compensate us for the expenses.
S. Under the contract we should pay agreed and liquidated damages for the delay. So we'd rather do it ourselves, it'll speed things all around, no compensation.
B. All right. But you won't get paid for the consignment until everything's straight.
S. That's not fair. It's only three cases and some minor defects. You should pay for the lot, minus the damaged and faulty items. And our engineers will help you with documentation. There was a complaint about it before, remember?
B. O.K. We're friends, aren't we? We'll find a way to make everyone happy.
S. I'm sure we shall.
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