What Do I Do If My Business Bought Faulty Products from a Supplier?

As a business, you may be familiar with your obligation to your customers. In particular, the Consumer Rights Act provides various remedies for customers if your product is faulty in any way. For example, your customers may be entitled to a full refund or a replacement product given in a reasonable time period. However, the rules for when you buy faulty products from a supplier are slightly different. The Sale of Goods Act largely governs them. This article will go through some of the relevant parts of contract law and the Sale of Goods Act to explain some of the options you may have.

Contractual Options

If you discover that some products you have bought are faulty, the first thing to do will be to check the contract. If there is a breach of a contractual term, then you may have a remedy available. For example, a remedy may be monetary compensation or the right to a refund or replacement. 

In the contract, you might find some terms stating what will happen if there is a fault. If this is the case, then your remedy will be whatever the contract states. 

In addition, you may also find that the supplier has made certain representations to you as part of the terms of the contract. This is a quick way of identifying the responsibility of the supplier. For example, the contract may say that the goods will be delivered to you ‘safely’. If so, then you may have a right to compensation for damage to the product that happens in transit. 

Representations

Both a representation and a warranty are terms of the contract. A representation is where the supplier leads you to believe a certain fact. Further, it is usually in relation to a ‘major’ term of the contract. A major term is simply one which is central to the contract on the whole. 

If a term is a representation and that term is breached, then you may have the right to damages and to rescind the contract. Rescinding the contract means that you return the faulty product, and the supplier returns the money they have received from you. Effectively, it places you back in the position you were in prior to entering into the contract. 

Warranties

A warranty, on the other hand, is usually a minor term of the contract. The breach of a warranty will give rise to damages (i.e. compensation), but will not give you the option to return the item and receive your money back. In many cases, however, compensation will be an adequate remedy. 

In summary, you may be able to base your claim on a breach of contract. You are advised to survey the terms of the contract when you realise that the product is faulty. This will give you a basis on which to work from. However, if the contract does not say what happens, you may also be able to engage the Sale of Goods Act. 

Sale of Goods Act

The Sale of Goods Act, unlike the Consumer Rights Act, applies to all sales of goods, including sales between a business and its supplier. The Act lays down conditions that all goods must meet. These conditions include that the goods must be:

• as described;
• of satisfactory quality; and
• fit for purpose. 

The term ‘as described’ refers to any advert or description made by the supplier.

The term ‘satisfactory quality’ means that the product must last a reasonable time, and it covers aesthetic as well as substantial defects. However, this section does not give you any rights if the fault was obvious or pointed out to you before the sale. 

The term ‘fit for purpose’ refers to the purpose for which you bought the goods. It also refers to any purpose which the supplier has assured you about.

Remedies Under the Sale of Goods Act

If the faulty product fails to meet the three requirements mentioned above, you may have the right to return the product or get a full refund. However, the right to return and to get a full refund has a time limit. If the time limit elapses, you may still be entitled to a remedy, but it might not be a full refund. Instead, it may only be for a partial refund. 

Key Takeaways

If you purchase defective goods from a supplier, then you may have a remedy under the general law of contract or under the Sale of Goods Act. The key differences will be the remedies that are available to you. If your remedy is under contract law, then it is advised that you seek professional legal advice before proceeding to a small claims court or another level of court because your likelihood of success might vary with the factual context.

If you need help understanding your rights regarding faulty products, LegalVision’s experienced disputes lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

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