Your Chinese supplier delivers magnets or parts that are not as agreed

The case, in five lines

What is brought

Notice of the lack of conformity, specifying its nature (art. 39 of the Vienna Convention), with a request for replacement or repair (art. 46). Depending on how serious it is, a price reduction (art. 50), avoidance for fundamental breach with restitution of what was paid plus interest from the date of payment (arts. 25, 49(1)(a) and 84(1)) and damages for foreseeable loss (art. 74).

Before which court

Whichever the contract designates. With an arbitration agreement, the arbitral tribunal of the agreed institution, such as CIETAC; where the seat is in China, the agreement must name the institution (arts. 27 and 29 of China's Arbitration Law). Without one, the sección civil del Tribunal de Instancia (the civil section of the court of first instance) if the parties submitted to the Spanish courts (art. 25 of the Brussels I bis Regulation) or if the obligation in question was or should have been performed in Spain (art. 22 quinquies(a) of the LOPJ, Spain's Judiciary Act). Whatever is won is enforced in China: a Spanish judgment, before the Intermediate People's Courts (1992 Treaty); an award made outside China, under the New York Convention; and an award seated in China, as a Chinese award, before the people's court under China's civil procedure law (art. 75 of China's Arbitration Law).

Deadline

Examination within as short a period as is practicable, which, where there is carriage, may be deferred until arrival (art. 38). Notice within a reasonable time after the defect was or ought to have been discovered and never later than two years after receipt, unless a longer contractual guarantee applies or the seller knew of the defect and did not disclose it (arts. 39 and 40). Replacement and repair are requested with the notice or within a reasonable time afterwards (art. 46), and avoidance is declared within a reasonable time (art. 49(2)(b)). To sue or arbitrate, four years if Chinese law governs (art. 594 of China's Civil Code) or five if Spanish law governs (art. 1964(2) of the Spanish Civil Code).

Who can bring it

The buyer that signed the order, against the seller named in it: the factory or, if you bought from a trading company, that trading company, including one in Hong Kong, where the Convention has applied since 2022. If you resold the goods, your customer claims against you and you claim against your supplier.

Financial risk

Late or vague notice means losing the right to rely on the defect. Assembling or selling the whole batch before it has been examined by an expert may cost you the right to avoid the contract and to require substitute goods (art. 82). Paying the balance without an inspection report throws away your strongest card. And whatever is won has to be enforced where the supplier has assets, usually in China, at a cost in time and money: nobody can promise you the outcome.

When a magnet or a part does not conform to the contract

Between a company established in Spain and one established in China, the sale is governed by the 1980 Vienna Convention on Contracts for the International Sale of Goods (CISG), because both countries are Contracting States (art. 1(1)(a)), unless the contract excludes it (art. 6). It also applies if the seller is a Hong Kong trading company, since the Convention has applied there since 2022. And because China withdrew its written-form reservation in 2013, an order or a change to the data sheet agreed by email is not invalid for lack of form. The Convention does not govern the validity of the contract (art. 4) or limitation, which are left to the applicable law.

The seller must deliver the quantity, quality and description agreed (art. 35(1)). For a magnet, that means the grade, remanence, coercivity, maximum operating temperature, dimensions with their tolerances and coating set out in the accepted data sheet; for an actuator, the torque, speed and service life. In addition, the goods must be fit for the particular purpose you made known to the seller when contracting (art. 35(2)(b)) and possess the qualities of the sample it presented (art. 35(2)(c)): if you bought robots to sell them in the European Union and told the seller so, failure to meet that market's safety, radio or cybersecurity requirements may be a lack of conformity. ‘Within tolerance’ only counts if the tolerance is in the contract.

The seller is liable for a defect that already existed when risk passed, even if it only becomes apparent later, such as demagnetisation that only shows once the motor is running (art. 36(1)), but, as regards fitness for purpose, the sample or packaging, not for what you knew or could not have been unaware of when contracting (art. 35(3)). Not all damage is a manufacturing defect: if the goods arrived dented or wet, the cause may be the carriage, and the claim then lies against the carrier, with written notice on the working day after delivery if the damage is apparent or within the following three working days if it is not (art. 285 of the Ley de Navegación Marítima, Spain's Maritime Navigation Act). The Incoterm tells you where risk passed. And what the authorities can require of you as importer is covered in "You are ordered to withdraw robots or machines imported from China".

The deadlines that shut the door: examination, notice and the two years

The buyer must examine the goods, or cause them to be examined, within as short a period as is practicable, and where there is carriage it may wait until arrival (art. 38). It must then give the seller notice of the lack of conformity, specifying its nature, within a reasonable time after it discovered it or ought to have discovered it (art. 39(1)). The Convention sets no number of days: the period is measured by the goods, by how easy the defect was to detect and by what the seller needs in order to react, and with components assembled in series it runs in days or a few weeks, not months. The notice must say what fails, in which batch and how it was measured: ‘the quality is poor’ is not enough.

Whatever happens, the right is lost if notice is not given within two years of the date on which the goods were actually handed over to you, unless a longer contractual guarantee applies (art. 39(2)). Art. 44 does not save that cap: with a reasonable excuse you keep the price reduction and damages other than loss of profit, but only against the reasonable-time requirement. It is lifted by art. 40, where the defect relates to facts the seller knew or could not have been unaware of and did not disclose. What nobody tells you: neodymium magnets containing terbium or dysprosium have needed a licence from MOFCOM (China's Ministry of Commerce) since Announcement 18/2025, and those without them are not on the list. If the supplier quietly swapped the agreed grade for one without those elements, it knew what it was delivering. The licence itself is dealt with in "Your Chinese supplier fails to deliver, saying it cannot get the export licence", and commitments towards China in "You use Chinese magnets or rare earths and are told to comply with China".

If the contract excluded the Convention and the Spanish Commercial Code governs, you are worse off: a buyer that examined the goods to its satisfaction on receipt loses its claim, for defects in the quantity or quality of packed goods there are four days from receipt, and claims for hidden defects lapse thirty days after delivery (arts. 336 and 342). If Chinese law governs without the Convention, notice must be given within a reasonable time and at most two years after receipt (art. 621 of China's Civil Code), and signing a delivery note stating quantity, model and specifications raises a presumption that quantity and patent defects were inspected (art. 623): sign it with a reservation. To sue or arbitrate, absent a choice of law a Spanish judge applies Chinese law (art. 4(1)(a) of the Rome I Regulation), which allows four years (art. 594); under Spanish law it is five (art. 1964(2) of the Spanish Civil Code).

The decisive evidence is obtained in China, before you pay the balance

A dispute with a Chinese supplier is won or lost on the technical evidence, and that evidence is at the factory. That is why the firm works with partners that have offices in China and with expert engineers in Spain and in China, who check the goods and their specifications at three points: at origin, before shipment, with sampling, measurement and testing; on arrival in Spain, against the agreed data sheet; and, if a claim has to be made, as the basis of the expert evidence. It fits the Convention, which requires the buyer to ‘examine or cause to be examined’ (art. 38(1)). Nobody can guarantee what an inspection will find; what can be ensured is that it is done in time and methodically.

Timing is everything. The buyer is not bound to pay the price until it has had an opportunity to examine the goods, unless the agreed procedures for delivery or payment are inconsistent with that opportunity (art. 58(3)). If the contract says the balance is paid against a conforming inspection report, that report decides whether the money leaves; if it is paid against the copy of the bill of lading, with no prior inspection, the goods travel and so does the money. Samples destroyed in testing do not cost you avoidance or replacement (art. 82(2)(b)), but the rest of the batch must be preserved, isolated and identified (art. 86).

In proceedings in Spain, the expert report is signed by an expert holding the official qualification for the subject matter and with recognised expertise (art. 340 of the Ley de Enjuiciamiento Civil, Spain's Civil Procedure Act), under an oath of objectivity (art. 335), and it is filed with the claim (art. 336); the court assesses it according to the rules of sound judgment (art. 348). The inspection reports, photographs, sealed samples and tests carried out in China are the basis of that report, not the report itself. Commercial inspection at origin is a private activity; if arbitration seated in China follows, Chinese law allows preservation of evidence and of assets to be requested, in urgent cases even before the arbitration starts (arts. 58 and 39 of China's Arbitration Law), and before the Chinese court the party acts through a lawyer qualified there, whom we coordinate from Spain with our partners.

Replacement, repair, price reduction or avoidance: what you can demand

Delivery of substitute goods, meaning the supplier makes and ships another batch, can only be required if the lack of conformity is a fundamental breach and it is requested with the notice or within a reasonable time afterwards (art. 46(2)). A breach is fundamental when it substantially deprives you of what you were entitled to expect under the contract (art. 25): magnets that demagnetise at your motor's operating temperature may be; a dimensional deviation that machining can correct, hardly. Repair, such as replacing a safety component or updating a robot's software, is requested within the same periods and is available unless it is unreasonable (art. 46(3)).

The supplier holds one card: it may remedy at its own expense, even after the delivery date, if it can do so without unreasonable delay or unreasonable inconvenience to you (art. 48(1)). If it asks whether you will accept a replacement and you do not answer within a reasonable time, it may perform within the period it indicated (art. 48(2)), so always answer, in writing. If it remedies, or you refuse its remedy, you lose the price reduction, which is proportionate to the difference between the value of what was delivered and of what was agreed at the time of delivery and also applies to the part not yet paid (art. 50). Damages are kept in any event (arts. 45(2) and 48(1)).

Avoiding the contract once the goods have been delivered requires a fundamental breach (art. 49(1)(a)) and a declaration within a reasonable time after you knew or ought to have known of it (art. 49(2)(b)): an expired additional period only allows avoidance where there was no delivery (art. 49(1)(b)). If only part of the batch fails, the remedies apply to that part, and the whole contract can only be avoided if that is fundamental (art. 51). Once the contract is avoided, the supplier repays what it received with interest from the date of payment (art. 84(1)), and you must be able to return the batch substantially in the condition in which you received it (art. 82): do not assemble or sell all of it while you decide. While you reject it, you must preserve it and may deposit it (arts. 86 and 87).

Damages, a negotiated replacement and the prior attempt to negotiate

Damages cover the loss suffered and the profit lost, up to what the supplier foresaw or ought to have foreseen, when contracting, as a possible consequence of the breach (art. 74). They include testing and inspection, dismantling the motors already built, storing the rejected batch and, if the supplier knew what the magnets were for, your customer's penalties and the line stoppage. That is why the emails before the order in which you explained the application are worth so much. If you avoid and buy elsewhere, you may claim the price difference (art. 75) or, without a purchase, the difference from the current price (art. 76). If the defect has already harmed third parties, see "Your robot or battery from China caused damage: why you are liable".

You must take reasonable measures to mitigate the loss, including loss of profit; otherwise damages are reduced by the amount that could have been avoided (art. 77). Leaving the container in port running up demurrage while the dispute goes on, or waiting months for a replacement that never comes when another source was available, will be held against you. What nobody tells you is that a discount on the next order is not compensation: it ties you to buying from the same supplier and, if you accept it as a settlement, it may be read as a waiver. Any replacement agreement is signed in writing, with dates, acceptance tests and what happens if the new batch also fails.

Negotiation also has a legal effect. Before bringing a civil claim in Spain, an appropriate dispute resolution method must be attempted, also against a Chinese company, and direct negotiation or negotiation between lawyers on the same subject matter as the claim qualifies (arts. 3(1) and 5(1) of Organic Law 1/2025). A request that properly defines that subject matter interrupts limitation from the date of the attempt to communicate it, and if there is no written answer within thirty calendar days the period starts again (art. 7(1)); for the attempt to count, the claim is filed within the following year (art. 7(3)). It is not required for interim measures sought before the claim or for pre-action disclosure (art. 5(3)), nor for arbitration.

Where to claim, how to collect and which clause prevents it

The forum is set by the contract. If the supplier's terms refer disputes to CIETAC, the matter goes to arbitration; where the seat is in China, the agreement must name the institution and without one it is void unless a supplementary agreement is reached (arts. 27 and 29 of China's Arbitration Law, in force since 1 March 2026). Even so, a Spanish court may grant interim measures in support of that arbitration, for example over the supplier's assets or receivables in Spain (arts. 8(3) and 11(3) of Law 60/2003, Spain's Arbitration Act). With a submission to the Spanish courts, the clause is valid whatever the supplier's domicile (art. 25 of the Brussels I bis Regulation); without it, they have jurisdiction if the obligation in question was or should have been performed in Spain (art. 22 quinquies(a) of the LOPJ), which is open to debate with an Incoterm that places delivery in China. This is developed in "You want to sue your Chinese supplier: arbitration or the courts?", and the general case in "You bought abroad, the goods arrived faulty and the supplier will not answer".

Winning is not collecting. Suing in Spain means serving the supplier under the 1965 Hague Convention, through China's Ministry of Justice, which takes around six months; a burofax (Spanish certified letter) is not valid service. A Spanish judgment is recognised and enforced in China under the 1992 Spain-China Treaty, before the Intermediate People's Courts and without review of the merits, if the Spanish court had jurisdiction on the Treaty's terms, where a written submission is the safest route, and if the supplier was duly summoned (arts. 17 to 23). An award made outside China is enforced there under the New York Convention, before the Intermediate People's Court for the debtor's domicile or assets (art. 88 of China's Arbitration Law); an award seated in China can only be set aside there, within three months (art. 72), never in Spain. That is why the unpaid balance and the second batch that has not yet left the factory carry more weight than any lawsuit.

The clause that would have prevented it has several parts. The data sheet as a signed annex, with each critical property, its tolerance, the test method and the approved sample. Inspection at origin with factory access, a sampling plan and the right to test samples, with the balance paid against a conforming report or, with a letter of credit, the report listed among the required documents. A guarantee of more than two years over properties that fail late, such as demagnetisation or a robot's regulatory compliance, which extends the cap in art. 39(2). Who pays for testing, replacement and return carriage. The Convention left in place. And the governing law and forum: a written submission to the Spanish courts or arbitration with the institution clearly named.

How we run the case, step by step

1. 1

   Isolate the batch and fix the date of receipt

   Assembly is stopped, the batch is separated and identified, packaging and labels are kept, and the transport documents are used to fix the date on which the goods were handed over to you: the reasonable time and the two years run from there (arts. 38, 39 and 86 of the Vienna Convention).

2. 2

   Technical examination by our expert engineers

   Our expert engineers in Spain measure the batch against the agreed data sheet, take sealed samples with a chain of custody and coordinate the testing. If batches are still at the factory, our partners with offices in China inspect them before they are shipped and before you pay the balance.

3. 3

   Specific notice and request for a remedy

   A letter to the supplier setting out the nature of the defect, the batches, the measurement method and the results, the request for replacement or repair (art. 46) and an express reservation of the price reduction, avoidance and damages. Framed as a request to negotiate with a clearly defined subject matter, it also serves as the prior attempt required by Organic Law 1/2025.

4. 4

   Decide what happens to the balance and further shipments

   We check whether the contract allows you to withhold the balance: with payment against a conforming report, the balance waits for that report; without such a term, payment is only deferred until you have had an opportunity to examine the goods, unless the payment procedure is inconsistent with examination (art. 58(3)), and after that stopping payment without grounds makes you the party in breach: the route is the price reduction (art. 50). If there is a letter of credit, we review with you the documents your bank must require.

5. 5

   Negotiate the replacement with the report on the table

   With the technical report, replacement, repair or a price reduction is negotiated, plus costs and damages (arts. 48, 50 and 74). Offers to remedy are always answered, and the agreement is signed with acceptance tests, dates and what happens if it fails again.

6. 6

   Failing agreement, avoid or claim in the contractual forum

   A declaration of avoidance if the breach is fundamental (art. 49), or a claim for a price reduction and damages before the agreed arbitral tribunal or the sección civil del Tribunal de Instancia, with the report of an expert holding an official qualification (art. 340 of the Civil Procedure Act) and, if the supplier has assets in Spain, interim measures.

The law that applies

• Arts. 1, 6, 35 y 36 de la Convención de Viena de 1980. It applies to sales between parties whose places of business are in different Contracting States, unless they exclude it. The seller must deliver the quantity, quality and description agreed, fit for any particular purpose made known to it when contracting and with the qualities of the sample; as regards fitness for purpose, the sample or packaging, it is not liable for what the buyer knew or could not have been unaware of when contracting, but it is liable for any lack of conformity existing when risk passed, even if it becomes apparent later. BOE-A-1991-2552
• Arts. 38, 39, 40 y 44 de la Convención de Viena de 1980. The buyer examines the goods, or causes them to be examined, within as short a period as is practicable, on arrival where there is carriage, and gives notice of the lack of conformity specifying its nature within a reasonable time and at most two years after the goods were handed over, unless a contractual guarantee applies. The seller may not rely on those periods if it knew the facts and did not disclose them; with a reasonable excuse, the buyer keeps the price reduction and damages other than loss of profit. BOE-A-1991-2552
• Arts. 25, 46, 48, 49 y 51 de la Convención de Viena de 1980. A breach is fundamental when it substantially deprives the other party of what it was entitled to expect. Replacement requires a fundamental breach, and repair that it be reasonable; both are requested with the notice or within a reasonable time. The seller may remedy at its own expense without unreasonable delay or inconvenience. The contract is avoided for fundamental breach or, where there is no delivery, when the additional period expires; where there was delivery, within a reasonable time. If only part fails, avoidance of the whole contract requires that to be fundamental. BOE-A-1991-2552
• Arts. 50, 74, 77, 82 y 86 de la Convención de Viena de 1980. Price reduction proportionate to the difference in value at the time of delivery, whether or not the price has been paid, unless the seller remedies. Damages for the loss suffered and the profit lost, up to what was foreseeable when contracting, with a duty to mitigate. Avoidance and replacement are lost if the goods cannot be returned substantially in the condition received, save, among other cases, deterioration caused by the examination. A buyer intending to reject goods received must preserve them. BOE-A-1991-2552
• Arts. 336 y 342 del Código de Comercio. Where the Commercial Code governs: a buyer that examined the goods to its satisfaction on receipt has no claim for defects in quantity or quality; for defects in quantity or quality of goods received in bales or packed, the claim must be brought within four days of receipt; and a buyer that does not claim for hidden defects within thirty days of delivery loses any claim on that ground. BOE-A-1885-6627
• Arts. 335, 336, 340 y 348 de la Ley de Enjuiciamiento Civil. The parties file the reports of the experts they appoint with the claim or the defence, and the expert states under oath or affirmation that it has acted with the greatest possible objectivity. The expert must hold the official qualification for the subject matter and have recognised expertise. The court assesses the reports according to the rules of sound judgment. BOE-A-2000-323
• Arts. 3, 5 y 7 de la Ley Orgánica 1/2025. In civil and commercial matters, including cross-border ones, a claim requires a prior appropriate dispute resolution method, including direct negotiation or negotiation between lawyers, on the same subject matter; it is not needed for enforcement proceedings, interim measures before the claim or pre-action disclosure. A request to negotiate that defines its subject matter interrupts limitation or suspends time bars, and failing agreement the claim must be filed within one year. BOE-A-2025-76
• Arts. 17 a 23 del Tratado entre España y China sobre asistencia judicial en materia civil y mercantil de 1992. Civil and commercial judgments of one Party are recognised and enforced in the other; in China, before the Intermediate People's Courts, at the direct request of the interested party, with an authentic copy, proof of finality, proof of service and a translation. The court of origin must have jurisdiction under art. 21, which includes written acceptance, defence on the merits without objection, and a contract signed or performed in the State of origin. Recognition is refused, among other grounds, if the party ordered to pay was not duly summoned and did not appear, and the merits are not reviewed. BOE-A-1994-2077

Each article checked against the consolidated text published in the BOE (the Spanish official gazette).

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