I have a quick question. Something I never encountered in all my years. I have been dealing with a factory in China for many years. Over the past two years, there quality dropped significantly which has made us worry. We let the factory owner know we are very concerned and to be honest, we planned on leaving this factory.

The factory owner decided he would ship the next container of product to us without any payment up front. He sent us the original bill of lading and we received the goods at our location. Upon inspection, our worse fears were realized. The product was terrible, not saleable.

We contacted the factory owner and he said he would make good on any defective items. Since this trade is our specialty, we began to repair many of the defective items for resale, while the factory agreed to send replacements for all defective items.

Here is where the problem comes in........we sold the items we could sell, and still continued to have problems with these items and many buyer complaints. The factory owner did not make good and send us any of the replacement items. We did not pay for this container of goods as it was a total loss for us and in fact, cost us money in after sales service and support.

Now, many months later, since we ceased doing business with this factory, they are trying to come after us for payment. They started with a collection agency in China, and have now began a collection effort with an agency in New York.

My question is, am I legally responsible / liable for the payment of these defective items? We never had any contracts, agreements, gurantees, etc. This situation has just about cost me my business.

Thank you very much for any advice you can offer.

Ryan