Seller’s Defect

The seller is under an obligation to deliver to the buyer a product which corresponds with the type, quantity, quality and other characteristics agreed in the contract. If the product does not correspond with what has been agreed, it is defective.

If no contract of delivery has been made or the parties have not agreed on the quality or other properties of the delivered goods, the Sale of Goods Act will determine what constitutes performance in accordance with the agreement. A breach of contract and a defect in the goods occurs when the goods are not fit for the purpose for which that type of goods are generally used for. The goods are also defective if they are not fit for their intended special purpose and the seller knew of that intended purpose. In practice this covers situations where the buyer wishes to use the goods for a particular purpose and informs the seller of this at the time of purchase.

The goods are also defective if the characteristics of the goods do not correspond with the characteristics of a sample or model presented by the seller. Furthermore, if the product does not conform to the information provided by the seller when marketing the goods that also constitutes a defect. If the packaging is an integral part of the goods or necessary for the protection of the goods, a defect in the packaging may also constitute a defect in the goods.

The goods sold “as is”, e.g. used products, are defective if the goods do not conform to the information given by the seller before the conclusion of the agreement. The goods are defective if the seller has not disclosed to the buyer essential facts which the buyer reasonably could expect to be informed about. In both cases it is also presumed that the information given or the failure to do so can be presumed to have had an effect on the sale. In addition, the goods sold “as is” are defective if they are in materially poorer condition than it is reasonable to expect considering the price and other circumstances.

Whether the goods are defective is determined according to their properties at the time when the risk passes to the buyer. The risk passes to the buyer at the time determined in the agreement or in the delivery terms. If there are no provisions of passing of risk in the agreement, the risk typically passes to the buyer, according to the Sale of Goods Act, when the delivery of the goods takes place. The risk means liability for destruction of the goods. If the goods are at the risk of the buyer, they have to pay the purchase price even if the goods were faulty.

If the seller has given a guarantee for fitness or other properties of the goods and the deterioration relates to a property of the goods during the guarantee period, the goods are defective even if the defect appeared after the passing of risk.

The buyer cannot raise a claim regarding a defect that they reasonably should have been aware of prior to finalizing the sale. If the buyer has examined the goods or failed to comply with the seller’s exhortation to examine the goods before the sale, the buyer may not appeal to a defect that they ought to have discovered in the examination. If the seller has acted contrary to the rule of good faith and honor, the buyer may, however, appeal to the defect.

The buyer has to examine the goods after the delivery as soon as it is practicable and give notice of the defect within a reasonable time after they discovered or ought to have discovered the defect. Otherwise, the buyer loses their right to raise a claim regarding the defect. If the seller has been grossly negligent or has acted contrary to the rule of good faith and honor, the buyer’s failure to examine the goods or to give notice of defect does not, however, lead to loss of the buyer’s rights.