Contract Dispute with a Taiwanese Company? English-Speaking Taiwan Business Lawyers for Defective Goods and Claims

When a Taiwanese Company Breaches a Contract, Foreign Clients Need Local Legal Action

When a foreign buyer, distributor, investor, or business partner has a dispute with a Taiwanese company, the problem is often urgent and practical. The Taiwanese supplier may have delivered defective goods, missed the shipment deadline, refused to refund payment, ignored warranty obligations, or denied responsibility after the products failed inspection.
For foreign clients, the challenge is not only the legal claim itself. The real difficulty is distance, language, evidence, Taiwan court procedure, and communication with a local company that may suddenly stop responding. This is why working with an English-speaking Taiwan business lawyer can make a major difference.
Fuda Law Firm assists international clients in contract disputes, defective product claims, supplier disputes, commercial litigation, settlement negotiations, and cross-border business conflicts involving Taiwanese companies. Our lawyers can communicate directly in English, review contracts and evidence, explain Taiwan law, and help foreign clients take practical legal steps in Taiwan.

Common Disputes Foreign Clients Have with Taiwanese Companies

Defective goods or products that do not match the agreed specifications

One of the most common disputes is product quality. A foreign company orders goods from a Taiwanese manufacturer or supplier, but the delivered products fail inspection, do not match the sample, contain hidden defects, or cannot be used for the intended commercial purpose.
Under Taiwan Civil Code Article 354, the seller must warrant that the goods sold are free from defects in quality that destroy or impair their value, ordinary use, or the use agreed under the sales contract. The seller must also warrant that the goods have the guaranteed qualities at the time the risk passes to the buyer.
This means the contract, quotation, purchase order, product specification, sample, inspection report, email promises, and shipment documents can all become important evidence. A claim is stronger when the buyer can clearly show what was promised, what was delivered, how the goods failed, and what losses were caused.

Late delivery, non-delivery, or incomplete performance

Another common problem is delay. A Taiwanese company may miss the agreed shipment date, deliver only part of the goods, or repeatedly promise delivery without performance. If the delay causes cancelled orders, lost resale opportunities, penalties from downstream customers, or storage and logistics costs, the foreign buyer may need to claim damages.
Taiwan Civil Code Article 231 provides that when a debtor is in default, the creditor may claim compensation for injury arising from the default. Article 227 also allows claims when a debtor incompletely performs an obligation due to circumstances attributable to the debtor.
In practice, the key is to prove the agreed deadline, the breach, the connection between the breach and the loss, and the amount of damages. This is why foreign clients should preserve purchase orders, invoices, emails, payment records, shipping schedules, inspection records, customer complaints, and any written warning sent to the Taiwanese company.

Refusal to refund payment or compensate losses

Some Taiwanese companies initially promise to replace defective goods or refund payment, but later delay, reduce the amount, or stop responding. In these situations, a formal lawyer’s letter in Chinese and English may be an effective first step.
A properly drafted demand letter should identify the contract, summarize the breach, specify the evidence, calculate the claim amount, set a deadline for response, and reserve the right to take legal action in Taiwan. The goal is not only to pressure the other side, but also to create a clear record showing that the foreign client asserted its rights in a timely and serious manner.

What Legal Remedies May Be Available Under Taiwan Law?

Rescission of contract or price reduction for defective goods

If goods delivered by a Taiwanese seller are defective, Taiwan Civil Code Article 359 allows the buyer to rescind the contract or request a reduction of the price, unless rescission would be obviously unfair in the transaction.
This remedy can be important when the defective goods are commercially unusable, cannot be resold, or do not match the contractual purpose. However, the buyer must act carefully and preserve evidence. If the buyer continues using, reselling, modifying, or accepting the goods without objection, the Taiwanese company may argue that the buyer accepted the goods.

Replacement of defective goods

For goods designated only by kind, Taiwan Civil Code Article 364 allows the buyer to request delivery of non-defective goods instead of rescinding the contract or reducing the price. This may be useful when the foreign buyer still needs the goods for business operations and prefers replacement rather than immediate litigation.
However, replacement should not be handled casually. The parties should define the replacement deadline, shipping cost, inspection method, responsibility for defective goods, and consequences if the replacement also fails.

Damages for breach of contract

If the Taiwanese company’s breach caused financial loss, damages may be available. Depending on the facts, the claim may be based on non-performance, delay, incomplete performance, guaranteed quality, intentional concealment of defects, or other contractual obligations.
Under Taiwan Civil Code Article 360, if the goods lack a quality guaranteed by the seller, or if the seller intentionally concealed a defect, the buyer may claim damages for non-performance instead of rescission or price reduction.
For foreign businesses, damages may include direct losses such as payment already made, inspection costs, logistics costs, storage fees, repair expenses, replacement costs, and other provable losses. Claims for lost profit require stronger evidence, such as downstream purchase orders, resale contracts, customer cancellation records, and accounting documents.

Do Foreign Buyers Need to Notify the Taiwanese Seller Quickly?

Yes. Timing is critical in defective goods claims.
Taiwan Civil Code Article 356 provides that the buyer must examine the goods without delay according to the nature of the goods and ordinary business practice. If the buyer discovers a defect for which the seller is responsible, the buyer must notify the seller immediately. If the buyer delays notice, the goods may be deemed accepted, except for hidden defects that could not be discovered by ordinary examination.
Taiwan Civil Code Article 365 further provides time limits for rescission or price reduction after notice of defects or delivery. This is one reason foreign clients should not wait too long before contacting a Taiwan contract dispute lawyer.
In international trade, days matter. If your company discovers defective goods, you should immediately document the defect, notify the Taiwanese company in writing, preserve samples, keep packaging and shipping records, and avoid actions that could be interpreted as acceptance.

What Evidence Should Foreign Clients Prepare?

The contract and commercial documents

Foreign clients should collect the written contract, purchase order, quotation, invoice, pro forma invoice, payment receipt, bill of lading, packing list, product specification, technical drawings, warranty terms, emails, messaging records, and any document showing the agreed quality, quantity, delivery date, price, and dispute resolution terms.
Even if there is no formal contract, a Taiwan business lawyer may still reconstruct the agreement from emails, orders, invoices, shipment documents, and payment records.

Product defect evidence

For defective goods, evidence should be objective and organized. Useful evidence may include inspection reports, photos, videos, laboratory test results, customer complaints, comparison with approved samples, repair reports, internal quality control reports, and records showing when the defect was discovered.
If possible, the foreign buyer should preserve defective samples and avoid destroying all goods before legal advice. In some cases, court evidence preservation or expert evaluation may be considered.

Loss and damage evidence

A legal claim is not complete unless damages can be proven. Foreign clients should prepare payment records, refund requests, replacement purchase costs, shipping and storage costs, downstream customer claims, cancelled orders, lost resale documents, repair invoices, and internal accounting records.
Taiwan courts and opposing counsel will usually ask not only whether the Taiwanese company breached the contract, but also how the foreign client calculated the claim amount.

Consumer Product Claims May Involve Taiwan Consumer Protection Law

If the dispute involves consumer products and injury or damage to consumers or third parties, Taiwan’s Consumer Protection Act may also become relevant.
Under Consumer Protection Act Article 7, traders engaging in designing, producing, or manufacturing goods or providing services must ensure that the goods or services meet contemporary technical and professional standards with reasonably expected safety requirements. If violation causes injury or damage to consumers or third parties, traders may be jointly and severally liable.
Consumer Protection Act Article 8 addresses liability of distributors and marketers, and Article 9 treats importers of goods or services as producers or manufacturers for liability purposes. Article 10-1 also prohibits traders from excluding or restricting liability in advance against consumers or third parties in this section.
For willful misconduct, gross negligence, or negligence, Consumer Protection Act Article 51 may allow consumers to claim punitive damages within the statutory limits. Whether this applies depends on the nature of the transaction, the claimant, the damage, and the evidence.
For business-to-business international supply disputes, the Civil Code and contract terms are often the main legal basis. For consumer injury or unsafe products, consumer protection and product liability issues may need to be analyzed separately.

Should You Sue in Taiwan, Negotiate, or Start with a Lawyer’s Letter?

Not every dispute should immediately become a lawsuit. The best strategy depends on the claim amount, evidence strength, contract terms, urgency, the Taiwanese company’s financial condition, and whether the business relationship should be preserved.
A lawyer’s letter may be suitable when the Taiwanese company is still operating, the evidence is clear, and the foreign client wants a fast response before litigation. Negotiation may be suitable when both sides need a commercial solution, such as replacement goods, partial refund, repair, discount, or revised delivery schedule.
Litigation or arbitration may be necessary when the Taiwanese company refuses to respond, denies responsibility without basis, hides assets, continues selling unsafe products, or the claim amount justifies formal legal action.
An international business lawyer in Taiwan can review the contract’s governing law, jurisdiction clause, arbitration clause, limitation of liability clause, inspection clause, warranty clause, and notice requirement before recommending the next step.

How Fuda Law Firm Helps Foreign Clients in Taiwan Business Disputes

Fuda Law Firm assists foreign individuals and companies facing contract disputes with Taiwanese businesses. We handle matters involving defective goods, supplier disputes, unpaid refunds, breach of contract, commercial settlement, litigation strategy, product liability, and cross-border communication.
Our lawyers can communicate directly in English, review English and Chinese documents, explain Taiwan legal procedure, contact the Taiwanese company or its lawyer, prepare demand letters, negotiate settlement terms, and represent clients in Taiwan legal proceedings where appropriate.
For foreign clients, the value of local counsel is not only legal knowledge. It is also the ability to translate the dispute into a strategy that works in Taiwan. A good claim must be legally sound, commercially realistic, evidence-based, and presented in a way that Taiwanese companies, courts, and opposing counsel can take seriously.
If you have a contract dispute with a Taiwanese company, or if a Taiwan supplier delivered defective goods and refuses to resolve the matter, you may contact Fuda Law Firm at any time. Our English-speaking international business lawyers can help you assess your claim, preserve evidence, and decide the next step.

FAQ

Can a foreign company sue a Taiwanese company in Taiwan?

Yes. A foreign company may bring a civil claim in Taiwan if Taiwan courts have jurisdiction and the claim is properly supported by evidence. The contract, place of performance, defendant’s location, assets, governing law clause, jurisdiction clause, and dispute resolution clause may all affect the strategy.

What should I do if a Taiwanese supplier delivered defective goods?

You should inspect the goods promptly, document the defects with photos, videos, inspection reports, and sample comparisons, notify the Taiwanese supplier in writing, preserve the goods and packaging where possible, and consult a Taiwan contract dispute lawyer before accepting replacement, refund, or settlement terms.

Can I claim damages for breach of contract against a Taiwanese company?

Yes. If the Taiwanese company failed to perform, delayed performance, delivered defective goods, or incompletely performed its obligations due to circumstances attributable to it, you may be able to claim damages under Taiwan law. The strength of the claim depends on the contract, evidence of breach, causation, and proof of loss.

Does Taiwan law protect buyers against defective products?

Yes. Taiwan Civil Code provisions on sales warranties may allow rescission, price reduction, replacement, or damages for defective goods. If consumer products cause injury or damage, Taiwan’s Consumer Protection Act may also apply, including potential product liability and punitive damages in qualifying cases.

Can Fuda Law Firm communicate with foreign clients in English?

Yes. Fuda Law Firm assists foreign clients in English and Mandarin. Our international business lawyers can review English and Chinese documents, explain Taiwan law, communicate with Taiwanese companies, prepare legal letters, negotiate settlements, and advise on litigation or dispute resolution in Taiwan.

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