When the goods arrive wrong: rejection, claims and recourse

The question that decides everything: who sold you the goods

The remedies you have for a bad consignment are mostly settled the day you place the order, and they turn on one fact: who the seller is. Not who found the factory, not who arranged the freight, but whose name is on the contract of sale and the invoice for the goods.

Buy directly from a Chinese factory without a written choice of law and the contract is governed by the law of the country where the seller is based. That is the default rule for sales of goods under the Rome I Regulation, which the UK kept after leaving the EU, and it means a dispute with a factory in Guangdong is a dispute under Chinese law. You can still win an English judgment in some circumstances, but you then have to enforce it where the factory's assets are.

That second step is the hard one. The UK joined the 2019 Hague Judgments Convention on 1 July 2025, which makes UK judgments easier to enforce in the other countries that have signed it. China has not. There is no treaty between the UK and China for enforcing each other's civil judgments. Chinese courts can recognise a foreign judgment on the basis of reciprocity, and the Shanghai Maritime Court did exactly that for an English commercial judgment for the first time on 17 March 2022. But it is a second set of proceedings, in China, in Chinese, and for a small importer chasing a few thousand pounds it is rarely worth starting.

Buy from a UK company that sells you the goods, and all of that changes. The contract is an English-law sale between two UK businesses, the implied terms of the Sale of Goods Act apply to it, and if it comes to a claim you bring it in the county court against a company with a registered address. This is the practical meaning of a UK counterparty. It is not a promise that nothing will go wrong. It is a statement about where you stand when something does. Note the distinction that matters: an agent who arranges a purchase in your name is not the seller, and the factory still is. See who is the importer of record and sourcing agent vs wholesaler vs platform for how the roles split.

What UK law says about goods that are wrong

Between businesses the relevant law is the Sale of Goods Act 1979, not the Consumer Rights Act 2015, which covers sales by a trader to a consumer. Where the seller sells in the course of a business, section 14 implies a term that the goods are of satisfactory quality: the standard a reasonable person would regard as satisfactory, taking account of the description and the price. The Act lists what that covers, including appearance and finish, freedom from minor defects, safety and durability, and fitness for the purposes goods of that kind are commonly supplied for.

There are limits a buyer should know before relying on it. The term does not cover a defect that was specifically pointed out before the contract, or one your own examination ought to have revealed, or one a reasonable examination of the sample would have shown. That last point is why the sample you approve matters so much: it becomes part of what "right" means.

Two further rules apply only because you are a business. Under section 15A, if the breach is so slight that rejecting the goods would be unreasonable, you cannot reject them; you are limited to claiming damages. And under section 6 of the Unfair Contract Terms Act 1977, a seller may exclude or limit these implied terms against a business buyer, provided the exclusion passes a test of reasonableness. Read the seller's terms for exactly this before you order, not after the goods arrive.

The Act's "reasonable person" test is the fallback when nothing better exists. A written specification with tolerances and an agreed defect standard is much stronger, because it turns an argument about what is reasonable into a check against numbers both sides signed. That is the whole case for writing a product spec before you ask for a price.

The day the goods arrive

Section 35 says you are treated as having accepted goods if you tell the seller you accept them, if you do something inconsistent with the seller still owning them, or if you keep them beyond a reasonable time without saying you reject them. You are not treated as having accepted them until you have had a reasonable opportunity to examine them. The Act gives no number of days, and nobody can honestly give you one; what counts is whether you acted as soon as a careful buyer would.

So act quickly and leave a record. Photograph the pallets and cartons before anything is unpacked, and note any visible damage on the delivery receipt rather than signing it clean. Count the cartons against the packing list. Open a spread of cartons, not only the top layer, and check them against the specification and the approved sample. Keep the suspect goods together and do not sell, use or alter them beyond what is needed to establish the fault, because both the law and HMRC treat use and resale as signs you have kept them.

Then put it in writing to the seller the same week: what is wrong, with photographs, how many units, and that you reject them or reserve your rights while you investigate. Asking the seller to repair the goods does not on its own count as accepting them, so you can open that conversation without losing the right to reject. And you do not have to reject everything: under section 35A you can accept the goods that are right and reject the rest.

Damaged in transit is a different claim

Crushed cartons, water damage and broken units are usually a transport problem rather than a manufacturing one, and the claim goes somewhere else. Who carries it depends on where risk passed under the incoterm on your contract. Under FOB, risk passes to you once the goods are loaded at the Chinese port, so damage at sea is yours to insure; under DAP or DDP the seller carries it to the named destination.

If you bought CIF or CIP the seller had to insure the goods, but the default cover differs. Under CIF the seller only has to buy the minimum, Institute Cargo Clauses (C), which covers a narrow list of major casualties rather than handling damage; under CIP the default since Incoterms 2020 is the broader (A) cover. If you are relying on the seller's policy, ask to see it before shipment. The Incoterms chart shows who insures under each term.

Getting the duty back on goods you reject

If you reject goods and send them back or destroy them, you can claim repayment or remission of the import duty and import VAT paid on them. HMRC's conditions are specific. At the time they were declared the goods must have been defective, damaged or not in accordance with the contract. You must not have used them beyond the minimum needed to establish the fault, and must not have sold them after finding it. They must be re-exported or destroyed.

Two time limits catch people. The claim must be made within one year of the date the charges became due, which for most imports is when they were declared. And the application must go in at least 48 hours before the goods are packed for re-export or destruction, so do not let the goods leave before HMRC knows. You will need the import invoice and proof of the defect, which in practice means your written correspondence with the supplier.

Keeping faulty goods at a discount does not work the same way. HMRC's guidance on defective goods allows a duty repayment where the goods are repaired and the seller reimburses you under a warranty, with a record of the defect, the repair and the reimbursement. A simple price reduction agreed after the event does not, on its own, change the customs value you declared. If you are VAT registered and reclaim import VAT through postponed VAT accounting, the VAT is already neutral, so it is the duty that is at stake.

How you paid decides how much leverage you have

UK Government guidance on payment terms puts it plainly: payment in advance is the safest option for the seller and the riskiest for the buyer. An international bank transfer, once paid out, cannot be pulled back because the goods turned out to be wrong. In a direct purchase from a factory, your real leverage is whatever you have not yet paid. That is why the balance should only be released against an inspection you have seen, as set out in how to pay Chinese suppliers.

A letter of credit is often assumed to protect the buyer against bad goods. It does not, on its own. Under the ICC rules that govern credits, banks deal with documents and not with goods: the bank pays when the documents presented match the credit, whatever is in the container. A credit only protects quality if one of the documents it calls for is evidence of quality, such as an inspection certificate from an inspector you name. Without that, a perfect set of documents releases the money for a bad shipment.

This is also why quality inspection before shipment is worth more than any remedy after it. A defect found in the factory is a conversation about rework while you still hold the balance. The same defect found in the UK is a claim.

Recourse against a Chinese factory, realistically

When the seller is the factory, most disputes end in a negotiated settlement rather than a court. The options on the table are usually rework or replacement at the factory's cost, a credit against the next order, or a partial refund. A credit against the next order is often the one a factory will agree to fastest, because it costs them no cash today, but it only has value if you intend to order again. Get whatever is agreed in writing, with quantities and dates.

If you bought through a platform, its dispute process is governed by the platform's own rules, not by UK law, and the evidence it asks for is much the same as a court would want: the agreed specification, photographs, and a record of when you raised the problem. See using Alibaba safely.

Suing the factory is possible, but it is a Chinese-law case unless your contract said otherwise, and even an English judgment then has to be recognised in China before it can be enforced. For most small importers the practical protections are the ones that operate before shipment: an audited factory, a written specification, an inspection before the balance, and, where it matters, buying from a seller you can hold to account in the UK.