Seller’s Faulty Performance

The seller is under an obligation to deliver to the buyer a product, which corresponds with the type, quantity, qualities 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, then 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 occur when the goods are not fit for the purpose, for which that type of goods are generally used. The goods are also defective, if the goods 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 good are also defective if the characteristics of the goods do not correspond with the characteristics of a sample or model presented by the seller. Further, if the product does not conform to the information provided by the seller when marketing the goods, this 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 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 good are defective also if the seller has not disclosed to the buyer essential facts which the buyer reasonably could expect to be informed about. In both case it is also presumed, that the given information or the failure to give information can be presumed to have had an effect on the sale. In addition the goods sold “as is” are defective if the goods are in materially poorer condition than it is reasonable to expect taking into account the price and other circumstances.

Whether the goods are defective is determined with regard 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 delivery terms. If there are no provisions of passing of risk in the agreement the risk passes to the buyer according to the Sale of Goods Act generally 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, he/she has to pay the price even if the goods were faultless.

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 good are considered to be defective even though it appears after the passing of risk.

The buyer may not rely on a defect which he/she is assumed to be aware of before the conclusion of 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 rely on a defect that he/she 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, rely on the defect.

The buyer has to examine the goods after the delivery as soon as is practicable and give notice of the defect within reasonable time after he/she discovered or ought to have discovered the defect. Otherwise the buyer loses his/her right to rely on the defect.If the seller has been gross negligent or has acted contrary to the rule of good faith and honor, the buyer’s failure to examine the goods or to give the notice of defect does not, however, lead to loss of the buyer’s rights.