There will inevitably be a time in every contractors working life where the materials used on a job fail due to no fault of their own. However, as the person who installed the faulty part you may have far more legal responsibility than you might think.
Why are contracts with your suppliers different?
For example if you inadvertently install a faulty pipe into a customer's home and this pipe bursts causing £10,000.00 worth of damage it is possible that this customer can issue Court proceedings against you for £10,000.00.
You may think you could then pursue the supplier that sold you the faulty pipe blaming them for the defective part. However, if you're running a business, you may not have the same rights and protection as an ordinary consumer.
When you buy goods or services from a supplier for your own business, you'll need to check your contract very carefully to see what it says about what you can claim.
What to look out for
The following are some of the key things to look out for before purchasing goods from a supplier:-
- Limitation clauses - these clauses try to limit any claim you might have against the supplier. For example a common limitation clause is that you are only able to claim the value of the part or materials that are defective from the supplier. In the scenario above this could mean you have to pay your customer £10,000.00 because of the damage to the home but can only claim the value of the pipe from your supplier, which would be significantly less.
- Exclusion clauses - these are similar to limitation clauses but go further to fully exclude responsibility for certain types of damage. For example the contract could try to remove your statutory rights to goods being of satisfactory quality and match any description given.
What can I do to protect myself?
You can try to negotiate with the seller to take out any of these types of clause from the contract. However, many large suppliers simply sell goods on their standard terms and conditions.
You can consider seeking insurance to cover potential problems. Most contractors already have public liability insurance for injury but some insurance policies will also cover property damage. The important thing to remember is to check your policy wording carefully so that you are fully aware of what your policy does and doesn't cover and ensure you are not left carrying the risk.
Finally, if you have purchased goods on credit and you're a sole trader, you may be able to make a claim against the company that has provided you with credit if things go wrong. However, only sole traders have this right and not limited companies or partnerships
When things go wrong, it is important to be aware of the contracts and terms and conditions you have agreed in the past. A supplier selling materials to a trader can substantially limit their liability through carefully drafted exclusion clauses passing this risk to the contractor.
This can leave contractors in the position where they are responsible for damage caused by a faulty part but are unable to recover these monies from the supplier leaving them substantially out of pocket.