When Product Quality Doesn’t Meet Standards: Who is on the Hook?

If your business depends on its suppliers to provide products and has entered into written agreements to govern those business-to-business relationships, it is natural to expect that the quality of those products will meet your organization’s needs. When sub-par quality products are delivered, it can have a material, negative impact on your business. Even if the other company “cures” its breach of contract by providing replacement products that do meet quality standards, you may still suffer economic losses. Your business may be able to recover certain damages under Wisconsin law.

Potential Remedies for Breach of Contract Based on Product Quality

If your company and the product vendor are not able to come to agreement to resolve the breach of contract and any resulting financial harm through non-legal channels, pursuing the matter through court may be the next step.

Your company’s rights will depend to a large extent on the terms of the underlying contract and specific details about the breach itself. In general terms, your organization may be entitled to compensation for losses you can show or demonstrate with reasonable certainty, and the supplier may be required to provide new products or to fix the original products so they meet quality standards. This is also referred to as “curing” the breach.

Wisconsin’s Economic Loss Doctrine May Limit Your Company’s Ability to Recover Additional Damages

In some cases, businesses that have suffered losses because a supplier provided inferior products are barred from seeking additional damages in court, beyond those damages specified in the contract.

The “Economic Loss Doctrine” is intended to protect the rights of businesses to enter into contracts with other businesses. If the doctrine applies to your transaction with your supplier and unless an exception to the doctrine applies, your company may not be able to recover any damages based on the other company’s negligence or misrepresentation, unless those damages were defined in the contract itself. This means that your business may end up footing the bill for your own losses.

That possibility underscores the importance of working with a skilled business law attorney when your company enters into contracts and agreements with other companies. Your attorney will play a key role in ensuring your business’ interests are contractually protected, and that the contract contemplates and addresses damages for a breach of contract based on products that do not meet your company’s quality standards.

Schott, Bublitz & Engel Can Help with Vendor and Supplier Disputes

If your company is engaged in a dispute with a supplier because you don’t believe the quality of products provided meets the agreed standards, Schott, Bublitz & Engel, s.c. may be able to help you resolve the matter.

To learn more and to schedule a case review, contact us in Waukesha today online or call us at 262.827.1700.