Q&A: Developer wants 40% reduction

I own and run a builders’ merchants and have recently had a developer who I had supplied with building materials challenge an invoice on the basis that the quality of the materials were not as high as had been advertised. The building materials he had ordered are one of our most popular products. They are not top of the range, but the price reflects this, and this is the first complaint we’ve had. What’s worse is that they have been used so the materials are not being returned, the developer has just said he wants a 40% reduction of the price. What are my rights?

During the recent downturn builders and developers have been working on low margins, and some of them try to increase profit margins or alleviate cash flow difficulties by not paying suppliers. This may be the backdrop to the problem you face here.

The low price should help you defend any allegations that the goods were not described accurately, but price is not the only indicator of quality, and representations made prior sale, in adverts or otherwise, will need to be accurate and not misleading. Otherwise you may have to reduce the price to that of an equivalent product.

Having said that, if the perceived issue with quality was evident prior to installation, you should be able to recover the amount due in full, as the goods could have been returned at that point, if they were not acceptable.

Whilst statute implies that the goods must be of a satisfactory quality, and are fit for purpose, it sounds like they have not been replaced and they therefore seem to comply with these requirements. Similarly, if the alleged issue with quality only became apparent after installation unless the developer replaces the installation he may not be able to prove or quantify loss and thereby justify a reduction in price.

Reducing your invoice may be sensible from a customer care point of view but unless the developer is a repeat customer, or just unable to pay, you should be paid in full and can issue a claim at Court, for the full amount plus interest, if not.

This Q&A was written for and first featured in the Financial Times.