What is a latent defect? What are the remedies for latent defects?

Question

What is a latent defect? What are the remedies for consumers who receive goods with latent defects?

Answer

Goods must be of a satisfactory quality, correspond with their description and be fit for their purpose. Where they are not so, they can be described as ‘faulty goods.’ Where goods are faulty by way of a defect at the time of sale, this is known as a ‘latent defect’.

There are a number of legal remedies available to consumers who buy faulty goods. The law is complicated by the fact that there are two legal regimes engaged; the traditional UK remedies have been overlain by the EU Consumer Sales Directive 1999 (CSD). Consumers appear to be able to choose remedies from either regime.

The traditional UK remedies:

• A buyer has the ‘right to reject’ goods and, if they so wish, to bring the sale contract to an end (Sale of Goods Act 1979). This will enable the buyer to refuse to pay, or to demand a refund. For non-consumer sales, the goods must be shown to be defective to the extent that rejection is reasonable. There is no such requirement for consumer sales. The right to reject faulty goods and claim a full refund is lost ‘after the lapse of a reasonable time’ as the consumer is deemed to have accepted them.
• A buyer may be entitled to damages, payable whether the goods have been accepted or rejected. The consumer may seek to acquire the difference in value between the goods contracted for and the value of those received. Alternatively, they may seek any consequential losses caused by the faulty product.

CSD remedies (as per the amended Part 5A of the Sale of Goods Act):

• The consumer may choose between repair or replacement of the faulty goods (although the choice may be prescribed by what it is possible for the seller to do).
• Where repair and replacement are disproportionate, or the seller hasn’t carried this out within reasonable time, the consumer may seek rescission or a reduction in the purchase price. Where the consumer rescinds the contract, the sale contract comes to an end.

References

The Law Commission, ‘Consumer Remedies for Faulty Goods’, Consultation Paper No 188