Chinese Supplier Blames a Subcontractor: Who Answers for Defective Goods or Delay?
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A Chinese supplier cannot establish that it owes no remedy merely by saying that another factory made the defective goods or caused the delay. The first questions are which entity contracted as seller, what it promised, and whether any valid agreement actually changed that responsibility. The factory’s involvement and the buyer’s rights against the seller are separate issues.
This guide concerns commercial goods purchases from mainland China where the contracting supplier attributes a failure to a subcontract manufacturer. It does not assume that every trading company is the seller, that every factory is jointly liable, or that subcontracting itself permits immediate cancellation.
1. Identify the contracting seller before pursuing the factory
Match the legal name on the accepted order and framework agreement with the seller’s Chinese registered name and identifying number where available. Compare quotations, invoices, payment instructions, signatures, company stamps and correspondence. A factory address, a group logo or a shared salesperson does not by itself show that two companies are the same debtor.
A business that sells goods in its own name may arrange for another factory to manufacture them. That is different from an intermediary arranging a direct sale between the buyer and a disclosed manufacturer. Establish the actual contractual relationship before choosing the respondent or defendant. A separate claim against a manufacturer needs its own factual and legal basis, such as a direct contractual undertaking; participation in production alone does not establish joint liability for the seller’s debt.
2. Under Chinese domestic law, distinguish performance by a third party from transferring the debt
Where Chinese domestic law governs the issue, Civil Code Article 523 provides that an agreed arrangement for a third party to perform does not remove the debtor’s liability to the creditor if that third party fails to perform as agreed. Article 593 also addresses breach caused by a third party: the contracting party remains liable to its counterparty according to law, while its dispute with the third party is dealt with separately. These rules do not displace an independently established statutory or contractual defence.
For a goods seller, the promised delivery time and quality remain central; Articles 601 and 615 address those obligations. A seller’s statement that it is waiting for reimbursement from its factory does not, by itself, make the buyer’s remedy conditional on that reimbursement.
Approval of a production location should not be confused with consent to replace the debtor. Article 551 requires the creditor’s consent to a transfer of all or part of a debt. Article 552 separately addresses a third party joining the debt. Read any tripartite agreement, release or settlement carefully: who remains liable, who undertakes payment, and which claims are being discharged? A buyer’s acceptance of repair by a factory is not automatically an agreement to release the original seller.
3. If the CISG governs, outsourcing is not an automatic exemption
The United Nations Convention on Contracts for the International Sale of Goods (CISG) may apply to qualifying sales between parties whose relevant places of business are in different Contracting States, subject to its scope, applicable declarations and any effective exclusion. A general Chinese-law clause does not automatically exclude the Convention. China’s declaration concerning Article 1(1)(b) must be considered for a mainland transaction. Analyse applicability before selecting domestic or Convention rules.
Articles 33 and 35 concern the seller’s delivery and conformity obligations. Under Article 79(1), a party claiming exemption must prove the required external impediment, causation and inability reasonably to anticipate, avoid or overcome it or its consequences. A late subcontractor, rejected batch or shortage of production capacity is not, without further evidence, proof of that test.
When failure results from a third person engaged to perform all or part of the contract within Article 79(2), both the contracting party and that person must satisfy the relevant exemption conditions. The role of the particular factory must be examined; do not automatically classify every upstream supplier as that type of third person. Article 79(3) limits exemption to the duration of the impediment. Article 79(4) requires notice of the impediment and its effect, with liability for loss caused by failure to receive timely notice. Article 79(5) preserves rights other than damages, subject to their own requirements.
4. Separate factory approval, accepted variations and the cause of failure
A buyer may approve a factory for an audit or agree to a different production site without agreeing to inferior specifications or a later delivery date. Preserve exactly what was approved, by whom, and under what conditions. Conversely, an accepted specification change or extension may alter what the seller must perform. An email cannot be assessed in isolation from the documents it refers to.
The buyer’s own conduct also matters. Under CISG Article 80, a party cannot rely on the other’s failure to the extent it was caused by its own act or omission. Where domestic law applies, Civil Code Article 592 addresses both parties’ breaches and the injured party’s contribution to its loss. Distinguish mere approval of a subcontractor from a buyer instruction that actually caused the defect or delay; neither should be assumed from the factory’s name alone.
| Question | Useful evidence |
|---|---|
| Who promised performance? | Accepted order, framework contract, legal entity details, invoices and messages showing whether the supplier sold in its own name or acted as an intermediary. |
| What did the buyer approve? | Factory approval, audit conditions, controlled drawings, change requests and the complete replies; distinguish site approval from a release or accepted variation. |
| What failed, and why? | Batch identifiers, specifications, inspection and test records, promised and actual delivery dates, retained samples and the supplier’s order-specific explanation. |
| What remedy and loss are supported? | Notices to the seller, receipt records, repair or replacement proposals, documented loss, mitigation steps and any signed settlement or debt undertaking. |
5. Send the claim to the responsible party and preserve the remedy
Communications with a factory may help investigate or repair a defect, but do not assume they satisfy a notice obligation to the seller. Send a clear order-specific notice through the contractually appropriate channel and keep delivery evidence. For conformity disputes, check CISG Articles 38 and 39 or the applicable domestic inspection and notice rules, including Civil Code Articles 620–622 and relevant exceptions. Do not let discussions about the subcontractor replace that review.
Ask the contracting seller to state a workable remedy, the responsible entity and the proposed timetable. Repair, replacement, price reduction, termination and damages have different requirements. CISG Article 45 provides the buyer’s remedy framework; Article 49 does not make every subcontracting breach a ground for avoidance. Domestic remedies require their own analysis, including Articles 577 and 582–584. Preserve causation, foreseeability and mitigation evidence where damages are pursued, including under CISG Articles 74 and 77.
If the factory offers to repay or repair, document whether it is assisting the seller, assuming a separate obligation or participating in a settlement. Check how that arrangement affects existing claims and dispute resolution. Do not treat a promise as completed repayment or release the original claim unintentionally. Court or arbitration proceedings in China also require review of the dispute clause, party identity, jurisdiction and available evidence; adding another company simply because it has a factory is not a substitute.
6. Prepare a focused China dispute review
For an initial review, provide the parties’ legal names for conflict checking, their relevant countries, the order and contract terms, payment and delivery history, the supplier’s subcontracting explanation, factory approvals, defect evidence and any urgent deadline. State the practical objective: compliant delivery, repair, a negotiated refund or assessment of a claim against the contracting seller.
After conflict and matter checks, legal work can be scoped around identifying the responsible parties, reviewing notices and proposed settlements, and evaluating the agreed dispute route. The service scope, fees and engagement arrangements should be confirmed before representation begins. Sending information does not itself create an engagement or guarantee recovery.
Related guides: supplier force-majeure claims; inspection and defect notices; supplier and payment-recipient differences.
Cross-border business dispute services · Contact and initial information · panjianxing46@gmail.com
Official sources reviewed on 18 October 2026: CISG, Articles 1, 6, 33, 35, 38–39, 45, 49, 74, 77 and 79–80; United Nations depositary status and declarations (entry into force: 1 January 1988); Civil Code of the People’s Republic of China, Articles 523, 551–552, 577, 582–584, 591–593, 601, 615 and 620–622, effective 1 January 2021 under Presidential Order No. 45. General information, not a legal opinion on a specific order. Author: Jianxing Pan, Partner, Beijing Chang’an Law Firm. Cover: AI-generated conceptual illustration, not an actual client, case or shipment photograph.
