Points to Consider When Buying Used Equipment (Including Risk Provisions)

It provides useful advice on key issues such as drafting contract clauses, setting standards for equipment acceptance, and apportioning responsibility for breaches of contract.This helps both parties understand their responsibilities, prevents disputes, and guarantees the safety of second-hand equipment purchases.

Preparation before the contract is signed.

(2) To verify equipment status.

Under no circumstances should you sign a contract based only on the seller's photographs or oral description. It's best to personally inspect the equipment, record the serial number, production date, and any signs of actual use.If you don't know much about the product, you can hire a professional to help you inspect it. Write all the key specifications and any defects on paper and attach it to the contract.

Confirming ownership and legitimacy.

I know of many cases where buyers have been swindled by equipment that was under mortgage or in dispute.Remember to ask the seller to provide the original invoice and repair record, and to check if there is any record of the car being impounded by the court.If the equipment is imported, you also have to check the customs declaration form and make sure the taxes have been paid so that you don't end up with smuggled equipment.

Points to note about the core clauses.

Prices and methods of payment.

The price of used equipment can fluctuate widely, so it is recommended that the contract specify whether the price includes taxes or is for the equipment alone.Payment is divided into three installments: 30 % at the time of signing the contract, 60 % after acceptance, and 10 % as a quality guarantee.I've run into sellers who, after receiving the full payment, have delayed delivery. So it's important to tie the payment schedule to the delivery date.

Standards for completion must be specific.

Don't just write "the equipment can be used normally." Be specific, giving figures for production capacity per hour, the range of acceptable error, and so on.For example, when a factory buys a second-hand CNC machine, the contract may stipulate that "the machine must have a 98 % pass rate on parts produced in a continuous eight-hour period." Later, the machine can be inspected directly using production data, thus eliminating any chance for argument.

How to avoid pitfalls in the risk clause.

Division of responsibility for hidden faults.

The biggest fear of buyers of used equipment is hidden defects. Buyers can agree in the contract that "if a major hidden defect is found within 30 days of acceptance, the goods can be returned.Take the case of a buyer who bought a used air compressor, which seemed to be working fine when he inspected it, but which broke down two weeks later. Because the contract didn't specify a warranty period, the buyer had to pay the repair bill himself.

Calculation of damages for breach of contract.

It is suggested that rather than simply setting a fixed amount, the penalty should be calculated at 0.5-1 % of the contract price per day.In one case, a seller delayed delivery by 20 days, and under this system had to pay 10 % of the price of the item as a penalty, which was a lot more reasonable than a flat 5000 NT dollar fine.If the shutdown is due to a quality problem, it should be stipulated how the indirect losses will be calculated.

Preventive measures for handling disputes.

The parties agree on the place of arbitration.

Try to select a court in your own area, so that if there is a lawsuit, you won't have to travel.One buyer from Zhejiang Province signed a contract with a seller in Guangdong without paying attention to these details. Later he had to travel to Guangdong to go to court over a 20,000 NT deposit, and ended up spending NT $ 10,000 on travel expenses.

Keep a record of communications.

WeChat chat records and e-mails all have to be regularly backed up.In one case, a buyer agreed to change the terms of payment, but the seller did not get the agreement in writing. When the buyer later went back on his word, the seller was left in the lurch.Any important matters should be confirmed in writing, so don't be afraid of a little paperwork.