Businesses

Information for businesses about compensation for a defect

When a product has a defect that falls within your liability, negotiate with the customer to find a suitable method of compensation. Also remember to compensate the customer for costs arising from the defect (expenses and damages).   

PRIMARY METHODS OF COMPENSATION

Repairing the product

Trying to repair the product is always possible, if it can be expected to be done within a reasonable time.

Replacing the product with a non-defective unit

If repairing the product is not possible or it would incur unreasonable costs, the product can be replaced. The quality and price of the new product must correspond with that of the defective product.


IF THE PRODUCT CAN'T BE REPAIRED OR REPLACED

Price discount

The price discount must reflect the extent of the defect.
A price discount can be used to compensate for minor defects such as a superficial defect on a home appliance.

Cancelling the sale

If the defect is not of a minor nature and can't be compensated for in other ways, the customer may demand cancellation of the sale. Debts can be considered minor e.g. when the product can be repaired quickly and easily or it has a superficial defect.  

 

Remember that the consumer is entitled to compensation for expenses incurred from the defect!

The seller must also compensate the customer for expenses incurred from the defect, such as:

  • travel, telephone, post and other expenses arising from dealing with the matter
  • damages caused to other property by the defect, if the damaged property is directly linked to use of the defective product (e.g. a defective washing machine causing damage to laundry)
  • costs arising from the seller's negligence. Including
    • lost income as a result of dealing with the defect (e.g. forfeited wages)
    • material loss of benefit from using the product. This refers to compensation for the product not being available to the buyer, for instance due to extended repair time

No compensation needs to be paid for emotional distress

 

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26/09/2011