Sometimes, suppliers will let you down, whether through supplying you with faulty products or failing to deliver their goods in time. The knock-on effects of this can be extremely disruptive to your business. So what are your legal rights when this happens?

What does the contract say?

 The first step is to determine what exactly your supplier’s obligations are. You should find these in your contract or terms of trade agreement with the supplier, which set out each party’s rights and responsibilities.

If your supplier isn’t meeting its obligations, they are in breach of contract. The contract should then set out consequences for this breach: for example, replacing defective products within a certain timeframe or damages for each day there’s a delay with delivery.

But what happens if the supplier says it wasn’t their fault and refuses to take responsibility?

Force majeure clauses

 As the pandemic proved, sometimes events occur that are well and truly beyond the reasonable control of a party in the contract. These events are commonly known as ‘acts of God’ and can be used to excuse a party from performing their contractual obligations under a ‘force majeure’ clause.

As always, the devil is in the detail with force majeure clauses – so it’s wise to get legal advice before accepting or challenging a force majeure notice if you receive one.

Your ‘consumer’ rights

Under Australian Consumer Law (ACL) your business is considered to be a ‘consumer’ when you purchase goods and services that are:

  • under $100,000 (from 1 July 2021)
  • over $100,000 and normally bought for personal, domestic or household use or consumption
  • vehicles and trailers used mainly to transport goods on public roads

However, these consumer rights do not apply if the goods are purchased to be resold or to be transformed into a product that is sold. For example, if your business bought a printer to use in your office, you will be able to rely on consumer guarantees if it doesn’t work. But if your plan was to resell it, then the consumer guarantee won’t apply.

Consumer guarantees are automatic guarantees that apply to all consumer transactions, which suppliers can’t opt-out of.

Products must

  • Be of acceptable quality
  • Match descriptions made by the salesperson, on packaging and labels
  • Match demonstration models or samples
  • Be fit for purpose
  • Meet promises made about performance, condition and quality
  • Have spare parts and repair facilities available for a reasonable time after purchase

Services must be:

  • Provided with due care, skill or technical knowledge
  • Fit for purpose
  • Delivered within a reasonable time when there is no agreed end date.

You can claim a remedy from the supplier if their services or products don’t meet any of the consumer guarantees. Remedies include repairs, refunds and replacements, and – in some cases – compensation for damages and loss.

Blaine Hattie is a commercial lawyer at Sutton Laurence King Lawyers.

Want a good commercial lawyer in your corner? Call Sutton Laurence King on 03 9070 9810 or email info@slklawyers.com.au