Business Clinic: Suspected faulty telehandler manufacture – what are my options?

Whether it’s a legal, tax, insurance, management or land issue, Farmers Weekly’s Business Clinic experts can help.

Here Russell Reeves, a partner in Thrings’ agriculture team, sets out how a reader might tackle a likely manufacturing problem with a telehandler.

See also: Business Clinic – what can I do about flooding after neighbours’ building work?

Q. I have a three-year-old telehandler bought new on a five-year hire purchase (HP) agreement. During the two-year warranty period we had axle oil seals replaced on three wheel hubs.

The tyres began to delaminate, so all new tyres were fitted even though they were only 50% worn. The tyre fitter discovered excessive side movement – wobbling wheels – so we removed the hubs to check and set the bearings.

We discovered that the inner bearing race was rotating on the stub shaft with 0.5mm to 0.9mm clearance. Bearings should be tight on the stub shaft and not rotate. Usually they have to be pulled off with a bearing puller, but all four could be spun on the shaft and pulled off easily by hand. 

We think the stub shafts had been over-machined in the factory, causing extensive hub component damage. Really we need complete new hubs, which are very expensive.

The telehandler has done 2,100 hours, 90% of which is light-duty work carrying two or three bales to fields within a three-mile road radius. Heavy use has been only occasional, at hay time for loading/stacking.

Where do we stand and what are our options? Can we pass the problem onto the HP company as inferior goods not manufactured correctly?

I have already spent £500 on additional seals (fitted ourselves) and £1,500 on new tyres when the originals were only half worn.

You may have been sold defective equipment, and there are a couple of options to explore.

First, I suggest reviewing the terms of your warranty and seeing whether you can make a claim for the money already spent, along with damages to fix the telehandler.

The warranty’s wording will need to be checked carefully to see whether it allows you to make a claim retrospectively, assuming you are outside the two-year period.

If so, this will likely be your cheapest and most efficient way of reclaiming the money and having the telehandler fixed (dependent upon what is covered under the warranty).

If the warranty does not help you then you may need to consider making a claim against the seller under the Sale of Goods Act 1979.

You have suggested bringing this against the HP company, but it is more likely that the seller of the telehandler will be the defendant.

This assumes that your contract was with the seller, because I suspect that the HP company simply provided finance to you – check the terms of sale.

Letter before action

You may be able to resolve the matter amicably with the seller, particularly if you have a good relationship with them.

If not, and you still wish to pursue your claim, then the first thing you need to do according to the civil procedure rules is send the seller a “letter before action”.

This letter will need to set out why you are making a claim and how much for.

This may allege that the telehandler was not fit for purpose or of satisfactory quality, which is a breach of a contractual term impliedly incorporated into your contract with the seller by way of Section 14 of the Sale of Goods Act 1979.

The sum you are claiming should be sufficient damages to put you in the position you would have been had there been no breach.

This would most likely be a sum to fix the problem.

You may not “better your position” through the claim – you can only be recompensed – so the sum claimed may be less than the cost of new hubs, to take into account the reasonable wear and tear they would have been subjected to if there had been no breach.

The seller will have to respond to your “letter before action” in a reasonable period of time, failing which you are entitled to issue court proceedings.

Whether that is advisable will be dependent upon your chances of winning and it is important to bear in mind that the burden of proof will be upon you to show that the telehandler was defective and that the damage was not caused, for example, by improper use.

Expert report

To do this you will probably need a report from an independent expert.

Subject to the expert’s cost it may be better to obtain a report at the outset and enclose it with your “letter before action” because that will look stronger.

You have not said how much the telehandler will cost to repair, but that should be factored in when deciding whether you wish to instruct solicitors to advise you.

It is also worth checking whether you have any legal expenses insurance which might cover your legal costs.

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