1. Overall
The title is taken from the heading of NS 8411 paragraph 24 and NS 8412 paragraph 26, and the rule mirror below indicates the various sanctions.
In short, the register of sanctions includes the right to demand remedy, price reduction and/or compensation, as well as raise. For all options, there are special conditions that must be met, and these are the conditions that are the subject of the article.
Although the heading focuses on the buyer's rights in case of defects, one must not forget the seller's right to provide relief in the form of rectifying any re-delivery (NS 8411). In NS 8412, only rectification is the alternative.
In order to keep the articles at a reasonable level, we deal with the provisions on indemnification and claims against previous sales leads in another article which you can find here.
2. Rule mirror
3. Buyer's sanctions in case of defects
NS 8411 item 24 and NS 8412 item 26 are almost identical.
The sanctions options are listed the various in letters a — e.
Letters a — d deal with remedy, price reduction, raising and replacement, while letter e deals with the buyer's right to withhold their own performance.
Before we move on to dealing with the individual options we will spend a little on the last two paragraphs of the provisions.
Penultimate paragraph applies “missing parts of the agreed delivery”.
The provision does not say anything about how to deal in such cases, but refers to the Purchase Act §§ 43 and 44. These provisions can be read here.
As regards Section 43 (1) of the Purchase Act, it establishes that the rules on defects apply to the parts that are defective. This means that all possibilities of sanction are open to the defective part (s), including lifting if the materiality requirement for the part (s) in question is met. In this regard, it is pointed out that the provision allows the entire purchase to be raised if the materiality requirement is met.
Section 44 (1) of the Purchasing Act regulates partial deliveries where there is a reason for raising a partial delivery. Then the buyer can raise for the partial delivery in question and, implicitly, continue to receive the subsequent partial deliveries.
If the buyer “I have good reason to worry.” that there will also be grounds for raising the subsequent partial deliveries (antecipert default), the buyer may raise also for these, provided that”it happens within a reasonable amount of time”, cf. Section 43 (2) of the Purchase Act.
The conditions for terminating a contract are normally strict and we will deal with this below in clause 6. However, we would like to emphasize already here that it takes a good deal more before a buyer is granted the consent that the raising conditions have been met. We would also like to point out that it is not easier to assume that the seller would have materially defaulted on subsequent deliveries. For things that have not occurred, the assessment must necessarily become abstract and therefore also more demanding to probabilise for the person who has the burden of proof. It is natural to view this provision in the context of the rules on expected breach of contract dealt with in the last paragraph, ref below.
The last paragraph governs (also) expected breach of contract, insolvency etc and there is reference to Chapter VIII of the Purchase Act “Common rules on expected breach of contract, insolvency, etc.”, as one finds here.
This chapter consists of three provisions, namely Section 61 of the Purchase Act (Expected breach of contract), § 62 (Lifting in case of breach of contract) and § 63 (Insolvency proceedings).
The provisions are neutral in the sense that they are applicable to both parties. It is not only the buyer who can get into a situation where a future breach of contract must be expected on the part of the seller. This is at least as relevant when it comes to the buyer, and especially with regard to the ability to pay.
We will not go into further detail on these provisions. If you are faced with a situation where these are, or may become relevant, you will normally have a strong suspicion that things are not going as they should. You will normally have to contact a lawyer and thus also have good guidance. However, in order to show how high the list is, we will conclude by reproducing the main condition for applying these rules at all.
Section 61 of the Purchasing Act states that a party may withhold its own performance when it is stated by the counterparty “manner of action or of a serious failure in his creditworthiness or ability to fulfill that he is not going to fulfill a substantial part of his duties”.
4th. Buyer's request for rectification or re-delivery
4.1 Difference between NS 8411 and NS 8412
At this point, NS 8411 and NS 8412 differ from each other in that it is not applicable to re-delivery in manufacturing contracts.
Consequently, it is not “resupply” referred to in NS 8412 paragraph 27 - only “rectification”. Consequently, the term has not been used either “remedy” in NS 8412 (although rectification is remedy).
In NS 8411 paragraph 25 is used “remedy” as a common term for, respectively “rectification” and “resupply”.
The fact that re-delivery is not an option in NS 8412 is due to the fact that the product has been manufactured specifically for the buyer, and presumably it has been assumed that it would be too burdensome for the seller to have to manufacture the same product again in order to re-deliver.
That being said - one thing is that buyer should not be able to demand re-delivery in purchases governed by NS 8412, but re-delivery could have been mentioned as an option for seller in NS 8412 paragraph 27.2 “Seller's right to carry out rectification” provided that the other conditions for allowing this were met.
We use “remedy” as a common term hereinafter to simplify the manufacture.
4.2 Seller's right to remedy
In NS 8411 and NS 8412, the review of the remedy rules starts with the buyer's claim for remedy, cf. NS 8411 paragraph 25.1 and NS 8412 paragraph 27.1.
Nevertheless, we think it may be appropriate to start with the seller's right to demand assistance, cf. NS 8411 paragraph 25.2 and NS 8412 paragraph 27.2.
We do this to highlight that even if there is a defect that the seller has the risk of, the seller's interests (and rights) take second priority. It should be borne in mind that the seller has at least as great a desire to fulfill the right as the buyer has expectations that this will happen.
Regarding the seller's right to remedy, the provisions of the two standards refer to Section 36 of the Purchase Act, which can be found here.
The provision governs several matters, but we are content to highlight the main terms in the first paragraph of the provision. In short, the seller has the right to remedy “when this can be done without significant inconvenience to the buyer and without the risk that the buyer will not have his expenses covered by the seller”.
In practice, the key condition is that remediation can take place “without immaterial inconvenience to the buyer”.
In the case of deliveries to a construction or construction project, the buyer will normally need the relevant construction products or products relatively quickly so as not to suffer unnecessary delays in their own production. At the same time, it has the presumption against it that the buyer will not need the construction product or product under any circumstances. Therefore, it must be understood that the buyer's options for action are limited. As a starting point, it is difficult to imagine that the buyer will be able to obtain the corresponding construction product or product significantly faster than the time it will take for the seller to remedy.
Different will be the situation if the seller has made several attempts to remedy without success, or there are other circumstances that speak in the seller's disfavor. But, as a starting point, we believe what is written should, and is, the main rule of how to proceed in a situation of deficiency.
4.3 Buyer's right to claim relief
It follows then from NS 8411 paragraph 25.1 and NS 8412 paragraph 27.1 that the purchaser may claim relief.
The claim must be made.”in a separate message.”, ref what we have already written about form requirements for a complaint, read here.
If this is not done, the claim is lost.
The provisions refer otherwise to Section 34 of the Purchase Act, which contains the conditions that must be met in order for the buyer to be able to claim relief, and Section 34 of the Purchase Act can be read here.
For the record, it is clarified that when it comes to the buyer's right to claim relief, it is important to distinguish between rectification and re-delivery.
The main condition for the buyer to claim correction is that this “may occur without causing the seller unreasonable cost or inconvenience”. For construction products, the seller may, if he finds this to be a better option, “make resupply”, cf. Section 34 (1) of the Purchase Act.
What is”unreasonable cost or inconvenience” It will have to depend on a concrete assessment. In this type of contract, both parties are professionals and both must be considered to have the necessary knowledge. Both about how the correction should take place, and how the consequence of defects in the construction products or products can be taken into account without necessarily being corrected. The last alludes to the fact that in some cases a price reduction will be justified because it is seen that the subject matter of the contract may be used with modifications or slightly different ways than originally intended. (Price reductions are discussed below in section 5).
If the defect is significant, it follows from Section 34 (2) of the Purchasing Act that the buyer may demand re-delivery. The provision contains some restrictions on when re-delivery may be required, but we do not go into more detail here. We have posted a link to the above provision.
As stated in paragraph 4.1 above, the Buyer may not claim this in manufacturing purchases governed by NS 8412.
4.4 Remediation implementation
The standards also set out requirements for the parties on how they should deal with the implementation of seller's remedies, whether in the case of rectification or re-delivery.
The rules are also the same regardless of whether it is the seller who has taken the initiative or it is the result of the buyer's requirements.
The rules are contained in NS 8411 paragraph 25.3 and NS 8412 paragraph 27.3.
First, the seller must make the correction “within a reasonable time”.
This must be considered concretely, but the seller knows that the goods or product have been sold and delivered to be used in an ongoing building or construction project. The time element for the buyer will therefore be important, and the seller must be expected to understand that rectification must be carried out relatively quickly.
On the other hand, the buyer must be aware that the seller may need a certain amount of mobilization time, it may be necessary to obtain assistance from a third party or also carry out further investigations in order to clarify what the defect is due and how the defect can best be corrected.
These elements thus suggest that the buyer shows a great deal of care when receiving construction products and products in order to clarify as soon as possible whether these are in accordance with the contract or not.
As for the cost of rectification or re-delivery, this is the seller's responsibility. The costs involved are clearly stated in NS 8411 paragraph 25.3, second and third paragraphs and the corresponding paragraph of NS 8412 paragraph 27.3.
We therefore refer to these provisions.
In conclusion, it is pointed out that the buyer is, of course, obliged to participate so that the seller's work in rectifying any resale can be carried out in a sensible and rational manner. This is partly apparent from the last sentence of the first paragraph of NS 8411 paragraph 25.3 and NS 8412 paragraph 27.3 respectively. Secondly, such an obligation to participate can be anchored in the written loyalty obligation in paragraph 3.1 of the standards, and in the unwritten loyalty obligation. Buyer shall do his or her part to facilitate the rational implementation of the duty of remediation.
5. Price reduction
It follows from NS 8411 paragraph 26 and NS 8412 paragraph 28 that the buyer may demand a price reduction if the seller does not correct the deficiencies.
The amount of the price rejection shall correspond to the reduced market value of the construction product or product as a result of the defect.
6. Raising
Raising is regulated in NS 8411 paragraph 27.1 and NS 8412 paragraph 29.1 and the condition is that the deficiency causes a “substantial breach of contract”.
What is “essential” must be assessed in concrete terms, and that will depend on an overall assessment.
It is important to emphasize, as we have also done earlier in this article, that raising is a dramatic measure and the list for raising a contract is high.
We therefore recommend that you engage a lawyer before undertaking anything that could be perceived as a statement of revocation. In practice, the courts will also be very concerned about what has been done to give the seller an opportunity to remedy for himself the circumstances that justify the buyer's desire to terminate the contract.
The raising provisions in NS 8411 and NS 8412 are identical, but we do not disregard the fact that the list for raising a manufacturing purchase is somewhat higher than the list for raising a purchase of generic construction products. In any event, the result of an increase for the seller and manufacturer of a manufactured product would have to appear far more dramatic than the raising of a purchase of generic construction products where the seller is supposed to be able to carry out a cover sale at far better prices than in a manufactured sale.
In any case, a buyer considering canceling a contract must be careful to notify the seller.
This follows from the last paragraph of the provisions, which states that the buyer must provide “seller notice of uplift within a reasonable time after” that buyer received, or should have received, knowledge of the defect.
As we have stressed in other articles implies “message” that this must be sent electronically (e-mail) and to the agreed address, cf. clause 4.2 of the Standard Contracts.
The point of notifying the seller “within a reasonable time” is, of course, that the seller should be given the opportunity to avert the raise.
Finally, it is highlighted that the raising notice is an absolute requirement. This is stated in the preamble to the second paragraph of the two provisions on grounds for raising, where it is stated that “(K) jeeps can't upvote unless” the buyer has notified appropriately. If a notice is not (correct), the buyer must expect that the cancellation will be considered invalid.
In the case of the raising settlement dealt with in NS 8411 paragraph 27.2 and NS 8412 paragraph 29.2, these refer only to Chapter IX of the Purchase Act “Common Rules on Raising or Relocation”, which exists here. We will not go into these in more detail.
