Ask Entrepreneur

What Is the Limitation on Refund Claims?

I help companies in the U.S. to source goods from other countries. My manufacturer delivered a shipment nine months ago, and the buyer has now sent a claim for $30,000 for bad goods. Is this claim valid after so many months?

Generally, in the United States, you have six years to bring a breach of contract claim. (Long, I know.) However, that timeframe can be shortened if the buyer’s contract terms with the manufacturer stated a different timeframe in which to raise those issues. If the buyer agreed to inform the manufacturer of any defects within, say, three months, then the claim would no longer be valid.

In addition, there is a legal principle known as "laches” (pronounced "LA-cheez"), wherein the buyer cannot recover if the nine-month delay in making the claim is deemed unreasonable. Because so much depends on the way the purchase orders were written and the standards in your industry, you should be sure to speak to litigation counsel who understands this area and can guide you to the most cost-effective way to resolve this dispute.

Share Your Thoughts

Today's Editor's Picks

About ASK ENTREPRENEUR

Ask Entrepreneur is a question-and-answer forum for and by the Entrepreneur.com community. Send in your burning business question, or comment on someone else's now. Have a Question? Ask Now

Topics (over 1000+ answers)

Ask Entrepreneur Q&A Hangouts

Google + Hangout With Shark Tank
Google + Hangout With Jason Falls
Google + Hangout With Angela Jia Kim
Google + Hangout With Grant Cardone

ASK Quick Tips