Click to Print

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?
Nina Kaufman answered October 11, 2012
URL: http://www.entrepreneur.com/answer/224606

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.

Nina L. Kaufman, Esq. is an award-winning New York City attorney, edutainer and author. Under her Ask The Business Lawyer brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine. She also writes the Making It Legal blog.