Warranty Claims

[lamken]

Hi All,
I am seeking advise on a case related to warranty claims.

My Shanghai company contract with a German company who has a UK office. We delivered a series of machine to their UK end user. (The parties involved is slightly more complicated). Due to some defects, a warranty claim was raised by our German customer. While we accept part of the responsibility but the claims has been hugely exorbitant, ~60% of the our total machine selling price (7-digit contract). Part of this is due to fact that we sold machine at Chinese cost but the claims were all based on in UK cost. Our customer included all kinds of engineering expenses, German & UK engineer cost was all added into the claims.

In the contract, it does state that they can claim for "reasonable expenses". My questions is :- is this 60% reasonable? Our 'partner' may claim that that this their actual engineering expenses and it is "reasonable".

I know that the message is short and not as complete but I hope someone can offer a general guidance if we can challenge the claim as unreasonable.

Thanking you in advance.

lam

 

[john1989]

60% of a 7 figure sum is worth some professional advice. I wouldn't be relying on the advice I received on an internet forum.

 

[lamken]

Dear John,
Appreciate your input.
Yes, I totally agree with you that professional is needed. It is just that, I really also need to seek a wider appreciation of the legal understanding of 'reasonableness' within the context of UK legal system.

Furthermore, should our mediation fail, it will then be arbitrated in China. So a Chinese lawyer may have his (different) version of reasonableness.

I guess, what I hope is to know where we stand on the 'reasonableness' of the claims measured from the legal standpoint:-
a) should it be against the actual cost or
b) should it be also measured in reference to it's original contract price?

 

[RayLevy]

Hi,

The term 'reasonableness' depends on the context. There is no fixed standard in law.

The obligation will be on the party claiming the expenses to show why it believes the claim is 'reasonable'. His explanation is the key information. If its a good explanation, then its more likely that he will be able to make out his claim for 'reasonableness', if its a really poor explanation, then not.

If you want a legal opinion on this, I'd need to see the other party's claim, and get some more details from you about the nature of the machinery and the nature of the business, and to see a copy of the contract.

Ray