The production and provision of goods and services carry inherent risks. When products or services fail to meet expected standards, leading to harm or loss, businesses face significant legal and financial consequences. Within this framework, one of the critical aspects businesses must be aware of is handling defective products and services. This article delves into the types of defects, notification conditions, and the legal consequences of providing defective products and services(*).
1. Description of Defect
Defective products and services are those that fail to meet the standards promised by the seller or expected by the consumer. These defects can arise from various issues during production, design, or delivery of the product or service. Such as:
- Manufacturing Defects: These occur during the production process and result in products that deviate from the intended design. Common examples include products with missing parts, faulty components, or substandard materials.
- Design Defects: These are inherent flaws in the product design that make the product unsafe or unsuitable for its intended use. For example, a chair designed with a weak support structure that cannot bear weight is a design defect.
- Marketing Defects: Also known as labeling defects, these occur when there is a failure to provide adequate instructions, warnings, or labels. A product may be dangerous if not used properly, and without proper labeling, consumers are at risk.
- Service Defects: These involve inadequacies in the performance of services, such as incorrect installations, poor maintenance, or subpar customer support. For example, a service defect occurs when a technician fails to properly repair a device, leading to further issues.
2. Conditions of Liability Arising from Defect and Notification Obligation
2.1. In order to hold the seller responsible for defects;
- The goods subject to sale have been delivered to the buyer,
- The defect in the product sold must exist at the time the benefit and damage pass to the seller,
- The buyer does not know about the defect and the defect is important,
- Liability arising from defects must not be excluded by the contract.
Upon delivery of the product, the buyer has the obligation to inspect what is sold and notify the seller in case of defect. In cases where the legal notification obligation is not fulfilled, as a rule, it will be concluded that the thing sold has been accepted. Hidden defects will be examined separately below.
2.2. How Should Legal Notification Be Made?
In order for the notification to be made in accordance with the law, first of all, the notification should comply with the Turkish Code of Obligations (TCO) article no.223.
Review and Notify Seller -TCO m. 223 – The buyer is obliged to review the condition of the sold thing he has inherited as soon as possible, according to the ordinary course of business, and if he sees a defect in the sold thing that requires the seller’s responsibility, he must notify him about it within a reasonable period of time.
If the buyer neglects to review and notify, he/she will be deemed to have accepted what is sold. However, if there is a defect in the product sold that cannot be detected by ordinary inspection, this provision does not apply. If it is later discovered that such a defect exists, it must be reported to the seller immediately; If it is not notified, the seller is deemed to have been accepted with this defect.
As can be seen in the article of the law, the condition of the thing sold should be reviewed as soon as possible according to the ordinary course of business. According to this article, defects that can be noticed through ordinary inspection must be reported within an appropriate period of time, and hidden defects must be reported immediately. The appropriate period is determined according to the concrete case conditions and within the framework of the rule of honesty. It is seen that the Supreme Court also makes appropriate time control in its decisions by taking into account the unique characteristics of each case.
It is also important when it starts in order to determine whether the period is legal or not. The notice period begins to run from the moment the creditor detects or is obliged to detect certain breaches of contract. However, the beginning of the notice period varies depending on whether the defect in the goods is obvious or hidden.
2.3. Notification Period For Obvious Defects: There are two different types of obvious defects: the creditor can discover the defect as a result of ordinary inspection, or the defect in the goods is already visible. If the defect can be detected through an ordinary review, the defect will be deemed to have been detected upon the expiration of the review period and the notification period will start to run from this moment. However, if there is a visible defect without the need for ordinary review, there will be an obvious defect. Obvious defects can be described as obvious defects that the buyer can be aware of with normal attention at the time of the conclusion of the sales contract or at the delivery stage. If there is an obvious defect, the defect will be deemed to have been detected from the moment of delivery of the goods. Despite the existence of obvious defects, the goods received and sold are deemed to have been accepted with the existing defects.
2.4. Notification Period For Hidden Defects: Hidden defects, on the other hand, are defined as defects that cannot be detected by ordinary inspection and may only emerge over time depending on use. In case of hidden defects, the notice period starts from the moment the defect is learned. When it is understood that a hidden defect is found, the seller should be notified immediately. When the decisions of the Supreme Court are examined, it is seen that the shortest period in accordance with the rule of honesty is understood from the expression “immediate” (1). However, the buyer must prove when he detected the hidden defect. If the seller claims that the defect was known before, he is obliged to prove it.
The notification period for commercial sales is is regulated on Turkish Commercial Code (TCC) article no.23. Unlike the vague expressions stipulated in the Turkish Commercial Code regarding the periods for ordinary sales, a regulation has been made in line with the requirements of commercial life and absolute periods have been stipulated.
Commercial Sales and Exchange of Goods – TCC Article no: 23/c – If it is clearly obvious at the time of delivery that the goods are defective, the buyer must notify the seller within two days. If it is not obvious, the buyer is obliged to inspect the goods or have them inspected within eight days after receiving the goods, and if the goods are found to be defective as a result of this inspection, he is obliged to notify the seller within this period in order to protect his rights. In other cases, the second paragraph of Article 223 of the Turkish Code of Obligations applies.
Accordingly, if it is clearly evident at the time of delivery that the goods are defective, the notice period is 2 days. If it is not obvious, the buyer must examine the goods within 8 days after receiving them and notify the seller that the goods are defective. In other cases, that is, in the presence of hidden defects, second article of the TCO article no. 223 will be applied, immediate notification is required.
2.5. Method of the Notification: Defect notification is not subject to the strict form requirement. Therefore, if the buyer has made any notification within the time limit, this is a valid notification and this notification can be proven in any way. However, the creditor is obliged to prove that he notified the defect completely and on time, as specified by the law. It would be appropriate to make the notification in writing in order to prove that it is made in accordance with the law.
The content of the notice must also concretize this defect. It is not enough to state in the notice that “the goods are poorly processed”, “they are of the lowest quality” or “the goods are terrible”. It must be clearly stated what the defect is.
Finally, who the parties to the defect report are is important for the existence of a lawful defect report. The defect notification must be sent to the seller or his authorized representative by the fully qualified buyer or his authorized representative.
In cases where the legal notification obligation is not fulfilled, as a rule, it will be concluded that the thing sold is accepted as such. In this case, the buyer will not be able to claim compensation for any damage from the seller.
The exception to this is cases where the seller is seriously at fault or there are defects that professional sellers should be aware of.
3. Consequences of Serious Faults of the Seller
TCO article no. 225 – A seller who is seriously at fault cannot escape liability, even partially, by claiming that the defect in the product sold was not notified to him in time. The same provision applies to defects that salespeople should be aware of as a profession.
In case of serious defects or defects that professional sellers should have known about, it is not possible for the buyer to escape liability by claiming that he did not notify within the required time.
4. Legal Consequences of the Defected Product or Service
4.1. Optional Rights Arising in Favor of the Buyer Due to the Responsibility of the Seller
The buyer can exercise his optional rights only if the defect in the product is notified to the seller in accordance with the law. When the buyer applies to the seller to exercise one of these optional rights, the seller must fulfill it. However, the buyer also has the right to demand compensation according to general provisions.
The buyer’s optional rights are regulated in accordance with TCO article no. 227, which are:
- Reneging on the contract by returning the sold item,
- Requesting a discount from the sales price in proportion to the defect,
- Requesting repair of defective items free of charge when it does not require excessive expense,
- Requesting that the sold item be replaced with a similar one without defects.
The only way to prevent the exercise of optional rights is if the seller immediately gives the buyer a similar product without defects. However, even in this case, compensation may be claimed according to general provisions.
4.2. Compensation for Damages: If the defect causes additional damage or harm, the business may be liable for compensation. This can include direct damages, such as the cost of repairing property damaged by the defective product, and indirect damages, such as lost wages or medical expenses.
4.3. Administrative Sanctions: Regulatory authorities, such as the Turkish Ministry of Trade, can impose administrative sanctions on businesses that fail to comply with consumer protection regulations. These sanctions can include fines, product recalls, and mandatory corrective actions.
4.4. Criminal Liability: In severe cases, especially where defective products or services result in significant harm or fatalities, businesses and their representatives may face criminal charges. This can lead to severe penalties, including imprisonment.
5. Best Practices for Businesses
To avoid the negative consequences associated with defective products and services, businesses should adopt the following best practices:
5.1. Quality Control: Implement rigorous quality control measures at every stage of production and service delivery. Regular inspections, testing, and audits can help identify and rectify defects early. Conduct rigorous testing to identify and address potential defects before products reach the market.
5.2. Comprehensive Documentation: Maintain detailed records of all manufacturing processes, quality control checks, and customer complaints. This documentation can be invaluable in demonstrating due diligence and addressing any issues that arise.
5.3. Clear Communication: Ensure clear and transparent communication with consumers regarding the use, maintenance, and potential risks associated with products and services. Provide detailed instructions and warnings where necessary. Provide accurate and comprehensive information about product use and safety.
5.4. Legal Compliance: Stay informed about the latest consumer protection laws and regulations in Turkiye. Ensure that all products and services comply with these standards to minimize the risk of legal issues. Accordingly, adhere to all relevant product safety regulations and standards.
5.5. Proactive Recalls: If a defect is identified in a product already on the market, act swiftly to initiate a recall. Proactive recalls demonstrate a commitment to consumer safety and can mitigate the impact of potential legal consequences. Within this framework, develop a plan for handling product recalls and other crisis situations.
5.6. Product Liability Insurance: Consider purchasing product liability insurance to protect against financial losses.
6. Conclusion
Handling defective products and services effectively is crucial for maintaining consumer trust and avoiding legal repercussions. By understanding the types of defects, adhering to notification conditions, and being aware of the legal consequences, businesses in Turkiye can navigate the complexities of consumer protection laws. Implementing best practices in quality control, communication, and compliance will further help in minimizing the risks associated with defective products and services, ensuring a positive reputation and long-term success.
(*) Law No. 6502 on the Protection of Consumers does not address defective performance in this article. It is evaluated in the context of the Turkish Code of Obligations and the Turkish Commercial Code.
Disclaimer: The information and opinions on this page are for general information and academic contribution purposes. It may not reflect the views of Otto Law and Mediation. Due to the fact that law is a dynamic field, the information and opinions on the site may be out of date. The articles on the site may not reflect the prevailing doctrine or common judicial practices in that field and may contain the author’s own legal convictions. The information and legal opinions on this site are not legal advice and these contents are not intended to be legal advice. It is recommended to seek professional legal support for specific cases. Otto Law and Mediation or the author of the relevant article are not responsible for the consequences of applying the information and opinions on the site to concrete events. We present it to your information.
