Defective or Non-Conforming Goods: A Common Defense in New York Commercial Debt Collection Litigation

NYC_RedHookTerminal_920_607_80For commercial debt collection cases involving the sale of goods, we often see non-paying customers using the same (or similar) defenses to explain why they haven’t paid for products received. Typically, these non-paying customers will defend their lack of payment by saying the goods they received were defective or nonconforming.

Since our firm anticipates this common defense, we know it can be easily dismissed through a provision of the UCC (Uniform Commercial Code), which governs the sale of goods in New York pursuant to the UCC (sector 2-601).

Essentially, when a buyer receives an improper delivery, they can:

  1. Reject the entire delivery
  2. Accept the delivery
  3. Accept any commercial unit and reject the rest

Upon receiving the order, the buyer is given a reasonable opportunity to inspect the shipment. If the buyer accepts the delivery, this means either the buyer has indicated that the goods are conforming, or that they will keep the items despite any defects. Should the buyer accept the goods, they must pay the contracted rate.

If the customer––after reasonable time to inspect the goods––retained the goods, they cannot claim the goods were defective in the future. Meaning, if your client accepted your products without paying you, they cannot defeat your case by claiming the goods were defective.

Recently, we represented a Chinese manufacturer who was not paid for goods that were shipped to and accepted by a New York wholesaler. The debtor claimed that they did not have to pay our client because the goods they received were defective. Upon further examination of their claim, it was discovered that the debtor––in previous correspondence––only said that the containers the goods were shipped in, and not the goods themselves, were defective. However, the state of the containers did not matter, because the debtor was given reasonable time to inspect the shipment, and accepted the goods. Since the buyer accepted the goods, they were legally required to pay the contracted rate.

For creditors to get paid what is owed and due to them, anticipating common New York debt collection litigation defenses is a must.

If you are owed monies and have questions about debt collection in New York, please contact Jnager@ffgnesqs.com.

 

 

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