Supplier Delivered Defective Goods? Rejecting Goods and Claiming Under Singapore’s Sale of Goods Act

Short answer: If a supplier delivers goods that are faulty or not as described, Singapore’s Sale of Goods Act 1979 usually gives the buying company two remedies. It can reject the goods and recover the price, provided it has not yet accepted them, or it can keep the goods and claim damages. Acting quickly and in writing is what preserves the right to reject.

A pallet of parts arrives with the wrong specification, a machine fails within a week, or a batch of packaging does not match the approved sample. Under the Sale of Goods Act 1979, Singapore law decides whether a business buyer of defective goods can send them back and stop payment, or is left with a claim for money. This guide covers company-to-company (B2B) purchases. Consumer disputes run under different rules, which we covered in our guide to responding to a CPFTA claim.

Raffles Corporate Services works with a panel of experienced Singapore law firms who offer cost-effective and efficient legal service and advice. This article is general information only and is not legal advice.

What is a defective goods claim between two businesses?

It is a claim by a buying company that the goods its supplier delivered breached the contract of sale, usually because they were faulty, did not match the description, or did not match a sample. The claim is built on the contract itself plus the terms that the Sale of Goods Act 1979 reads into every contract for the sale of goods.

A legal claim usually becomes necessary when the supplier denies the defect, says the goods were accepted, or relies on a liability clause. The outcome then turns on which term was broken, whether the buyer can still reject, and what loss it can prove.

What does the Sale of Goods Act say about defective goods in Singapore?

The Act implies conditions about description, quality, fitness for purpose and correspondence with sample, and then sets rules on acceptance, rejection and damages. A condition is a term important enough that breach allows the buyer to reject the goods; a warranty is a lesser term whose breach gives only a right to damages (s 11(2)).

If the claim goes to court, procedure is governed by the Rules of Court 2021. Order 5, Rule 1 requires a party to consider amicable resolution and to make an offer of amicable resolution before starting the action unless it has reasonable grounds not to. Under Order 6, Rule 1(2), a claim where the material facts are in dispute, as defect claims usually are, must be started by an originating claim.

How do exclusion clauses affect the implied terms?

Many supplier terms try to exclude the implied terms or cap liability. Under section 6(3) of the Unfair Contract Terms Act 1977, against a buyer that is not dealing as consumer, liability under ss 13 to 15 can be excluded or restricted only so far as the term satisfies the requirement of reasonableness. The implied term about title in s 12 cannot be excluded at all (UCTA s 6(1)). How courts assess reasonableness is covered in our article on exclusion clauses and the Unfair Contract Terms Act, so we do not repeat it here.

Can a company reject defective goods, or has it already accepted them?

A company can reject goods for breach of an implied condition only until it is deemed to have accepted them. After acceptance, under a contract that is not severable, the breach can generally be treated only as a breach of warranty, which gives a right to damages but not to reject (s 11(3)).

Under section 35, a buyer is deemed to have accepted goods when it:

• tells the seller it has accepted them;
• does an act in relation to the delivered goods that is inconsistent with the seller’s ownership, such as incorporating them into its own products; or
• keeps the goods beyond a reasonable time without telling the seller it rejects them (s 35(4)).

There are important protections. A buyer that has not previously examined the goods is not deemed to accept them until it has had a reasonable opportunity to examine them (s 35(2)), and on request the seller must allow that opportunity when tendering delivery (s 34). Asking for, or agreeing to, a repair by the seller does not by itself amount to acceptance, and nor does delivering the goods on to a customer under a sub-sale (s 35(6)). Signing a delivery order is therefore not necessarily acceptance, although wording on the delivery order may be used as evidence against you.

If only part of a delivery is defective, section 35A lets the buyer accept the conforming goods and reject the rest, unless the contract shows a contrary intention. A buyer that rejects is not obliged to ship the goods back; it is enough to tell the seller it refuses to accept them, unless otherwise agreed (s 36). Where the wrong quantity is delivered, section 30 applies, but a non-consumer buyer cannot reject for a shortfall or excess that is so slight that rejection would be unreasonable (s 30(2A)).

The Act does not fix a number of days for “reasonable time”, so inspect promptly and reject in writing as soon as a defect is found.

How do you bring a claim for defective goods, step by step?

The process moves from inspection and notice to negotiation, and only then to a tribunal or court.

1. Inspect the delivery promptly against the purchase order, specification and any sample. Photograph and log defects with dates.
2. Quarantine the affected goods. Stop using, processing or reselling them if you may want to reject.
3. Check the contract: the supplier’s terms, any warranty period, inspection or notice clauses, liability caps, governing law and dispute resolution clause.
4. Send a written notice to the supplier identifying the defect, the term breached and whether you reject the goods or require repair, replacement or a price reduction.
5. Preserve evidence, including emails, chats and test results. Our guide to a litigation hold explains what to keep.
6. Make an offer of amicable resolution, which may include mediation, as Order 5 of the Rules of Court 2021 expects before a court action.
7. If there is no settlement, issue a formal letter of demand setting out the sum claimed.
8. Choose the forum based on the amount and complexity, then file the claim in the Small Claims Tribunals or, through a lawyer, in the courts.

What evidence and documents do you need?

You need to prove the contract terms, the defect, that you acted before acceptance (if rejecting), and the amount of your loss.

For technical defects, an independent expert report is often the most persuasive evidence. Keep the defective goods, or a representative sample, until the dispute ends.

What can you recover as damages?

If you reject, you can generally recover the price paid where the consideration has failed (s 54). If you keep the goods, you can deduct the loss from the price or sue for damages (s 53(1)).

The basic measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of events, from the breach (s 53(2)). For a breach of a quality warranty, the starting point is the difference between the value of the goods as delivered and the value they would have had if they had met the warranty (s 53(3)). Setting the defect off against the price does not stop you from also suing for further loss (s 53(4)). Section 54 preserves claims for interest and special damages where the law allows them, subject to proof. A liability cap in the contract may limit these heads of loss.

Which forum should you use, and what are the typical timelines and costs?

The forum depends mainly on the value of the claim. Claims up to S$20,000, or S$30,000 with both parties’ written consent, can go to the Small Claims Tribunals; larger claims go to the State Courts or the High Court.

Limits are taken from the Singapore Courts guidance. A negotiated settlement can take weeks, while a contested court claim with expert evidence may run for many months. Legal fees depend on the law firm, the value at stake and how hard the supplier fights, so we do not quote them. If the contract has an arbitration clause, the claim may have to go to arbitration instead. Our guide to the Small Claims Tribunals for companies explains filing in more detail.

On time limits, the Small Claims Tribunals require filing within 2 years, and court actions founded on contract generally must be brought within 6 years from when the cause of action accrued (Limitation Act 1959, s 6(1)(a)). Do not wait for the limit; delay weakens rejection rights long before then.

What does your corporate secretary prepare, and what does the lawyer handle?

Court proceedings are conducted by a Singapore Advocate and Solicitor. Your corporate service provider supports the company with records and governance, not with legal advice or court work.

• Corporate secretary or CSP: board resolutions authorising the claim, settlement or lawyer; authority for a representative at the Small Claims Tribunals; purchase, payment and delivery records; credit notes and write-downs in the accounts.
• Lawyer: advice on rejection and exclusion clauses, pleadings, filing the originating claim, expert evidence, trial and enforcement.

If you need advice on the merits, speak to a lawyer before you send a rejection notice, because the wording of that first letter can shape the rest of the dispute.

What happens after a settlement, order or judgment?

The company records the outcome in its books and, if the supplier does not pay, takes enforcement steps. A defective goods dispute does not normally require any ACRA lodgement.

Record any credit note or refund, adjust the purchase cost and inventory, and file the settlement or order with the transaction records. If the supplier ignores a tribunal order, see our guide on enforcing an unpaid Small Claims Tribunal order. Where the settlement involves returning goods, agree in writing who collects them, by when and at whose cost.

What are the most common mistakes buyers make?

Most lost claims come from delay, poor evidence or overlooking the supplier’s terms.

• Using, processing or reselling the goods after discovering the defect, then trying to reject.
• Complaining by phone only, with no written rejection or complaint.
• Withholding payment without first deciding whether you are rejecting or keeping the goods.
• Ignoring the supplier’s standard terms, including liability caps, short notice periods and arbitration clauses.
• Splitting one claim into several smaller claims to fit the Small Claims Tribunals limit, which is not permitted.
• Rejecting for a trivial defect, which section 15A may turn into a damages claim only.

Frequently asked questions

Does the Sale of Goods Act apply to purchases between two companies?

Yes. The implied terms in sections 13 to 15 apply to business purchases. The main differences for a business buyer are that the supplier can exclude or limit them if the clause is reasonable under the Unfair Contract Terms Act 1977, and that slight breaches may not justify rejection under section 15A.

Is signing the delivery order the same as accepting the goods?

Not necessarily. A buyer that has not examined the goods is not deemed to accept them until it has had a reasonable opportunity to examine them (s 35(2)). Wording on the delivery order can still be used as evidence, so inspect promptly and record any defects.

If we let the supplier try to repair the goods, do we lose the right to reject?

Asking for or agreeing to a repair by or under an arrangement with the seller does not by itself count as acceptance (s 35(6)(a)). Keep the repair period short and confirm in writing that your rights are reserved.

Can we reject only the faulty part of a shipment?

Generally yes. Section 35A allows a buyer to accept the conforming goods and reject the rest, unless the contract shows a contrary intention. Special rules apply to goods forming a single commercial unit (s 35(7)).

Last reviewed: 21 October 2026. The Editorial Team, Raffles Corporate Services.