Notices of Defects

A notice of defects means a notice issued by a buyer, stating that the delivered goods or services are not in accordance with the agreement.

A fundamental principle of commercial law is that the buyer may not refer to a defect (or delay), unless such defect (or delay) has been notified to the seller within a reasonable time from the date when the buyer became or should have become aware thereof. When a company purchases goods or services, it is important that it issues notices of defects to the seller regarding any defects without delay. Such notices should be issued in a verifiable manner, to ensure that issuance of the notice can later be demonstrated.

If a notice of defect is issued regarding a company’s performance or delivery, it is advisable to first establish the validity of the notice and, if it is valid, to remedy the notified defect. If the remedying action cannot be carried out immediately, the customer should be informed about the course and timing of the planned actions. This gives the company the chance to remedy the defective performance or delivery, and maintain important customer relations. On the other hand, the customer should be notified even if the company deems the notice of defect to be invalid or inappropriate.

Often contracts for the sale of goods and services provide that the notice of defects must be issued within a certain time period. The standard time period is eight days from the date of receipt of the goods or services. Such conditions are often perfectly valid as between companies. If the notice of defects is not made within the set time period, the seller can claim that the notice period has expired.