My supplier delivered defective or late goods. What claim do I have in Malaysia?

The shipment of packaging arrives three weeks late and half of it is the wrong size. The machine you bought keeps breaking down. Your own customers are now complaining. Here is how Malaysian law deals with business-to-business claims for defective or late goods.

Conditions and warranties

Terms in a sale of goods contract are either conditions or warranties (Sale of Goods Act 1957, s.12):

• breach of a condition, a term essential to the main purpose, can give a right to treat the contract as repudiated and reject the goods;
• breach of a warranty, a collateral term, gives a claim for damages only.

Implied terms that protect buyers

• Description: goods sold by description must correspond with the description (section 15).
• Merchantable quality: goods bought by description from a seller who deals in such goods must be of merchantable quality, except for defects an examination you made ought to have revealed (section 16(1)(b)).
• Fitness for purpose: if you made known the particular purpose and relied on the seller's skill or judgment, the goods must be reasonably fit for that purpose (section 16(1)(a)).

The written contract and terms of sale may add or limit terms, so check them.

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Rejecting or keeping the goods

You are not treated as having accepted goods until you have had a reasonable opportunity to examine them (section 41). You are deemed to accept them if you say so, act inconsistently with the seller's ownership, such as using or reselling them, or keep them for a reasonable time without rejecting (section 42). After acceptance, breach of a condition can generally only be treated as a breach of warranty (section 13(2)).

So inspect promptly and reject in writing if the goods are unacceptable. You do not have to return rejected goods unless agreed; telling the seller you refuse them is enough (section 43).

Late delivery

Whether a delivery date is "of the essence" depends on the contract (section 11). If time is essential, or you made it essential by notice, late delivery can justify termination. Otherwise you may claim damages for delay. If the seller never delivers, you can claim damages for non-delivery (section 57).

What damages can cover

• The difference in value between what was promised and what was delivered.
• Extra costs of buying replacements.
• Losses that naturally arise or were in contemplation when the contract was made (Contracts Act 1950, s.74), such as lost resales if foreseeable.
• You may also set off the breach against the price (Sale of Goods Act, s.59(1)(a)).

Evidence to gather

Purchase orders, quotations, specifications, delivery orders with dates, inspection reports and photos, complaints sent, and records of your own losses.

Example

A Johor Bahru food producer orders 50,000 printed pouches to a specified size for a product launch. They arrive late and too small to seal. The producer inspects the same day, rejects in writing with photos, buys replacements at a higher price, and claims the extra cost and lost launch sales from the supplier.

Common mistakes

• Using or reselling the goods before complaining.
• Complaining only by phone.
• Paying in full without reserving rights.
• Ignoring exclusion clauses in the seller's terms.

When to speak to a lawyer

When the loss is significant or the supplier denies responsibility. See civil litigation or contact us.

Frequently asked questions

Can I just stop paying?

Withholding payment without a clear basis can put you in breach. Set-off for a genuine breach of warranty is possible, but document it.

Does this apply to consumer purchases?

Consumers also have rights under the Consumer Protection Act 1999 and may use the Consumer Claims Tribunal.

What if the supplier is overseas?

The contract may say which law and court apply. Enforcement abroad adds complexity.

Sources & fact check

Legal points in this article were checked against the primary sources below. The law can change; this is general information, not legal advice.

1. Sale of Goods Act 1957 (Act 382), AGC Laws of Malaysia
2. Contracts Act 1950 (Act 136), AGC Laws of Malaysia
3. Rules of Court 2012 (P.U.(A) 205/2012), text published by the Malaysian Bar, including Orders 12, 13, 18, 19 and 93

Fact-checked on 17 Oct 2026