Picture this familiar scene. You have just returned to a shop with a faulty electrical product. The retailer insists that all was in order with your purchase when you left his premises. He offers you a credit note, but you want your money back.

It's a stand-off that is all too frequent and which is often exacerbated by the failure of consumers to know and to enforce their rights. Under contract law, purchasers are entitled to rescind the contract and demand their money back.

The Sale of Goods and Supply of Services Act 1980 automatically creates legal obligations between buyers and sellers, regardless of whether there is any written contract or not. Under this Act, the seller is responsible for any fault or failure in the goods sold.

The Act provides that the goods must be of a merchantable quality and fit for their intended purpose. In other words, they should be of a reasonable quality, taking into account what is said about them (either on the package or by the person selling them), what they are supposed to do, how long they should last and the price paid for them.

So what should shoppers do if they feel cheated or short-changed because the product they bought turns out to be shoddy or faulty? According to Prof Robert Clarke of UCD, they should go back to the shop with the faulty product, explain to the retailer that it is not of a merchantable quality or fit for its intended purpose as required by the Sale of Goods and Supply of Services Act and demand their money back in a forceful manner.

"The purchaser is free to accept a lesser offer than their money back such as a credit note or the replacement or repair of the product, but under the 1980 Act the purchaser is legally entitled to demand his money back," Prof Clarke says.

At the end of the day, it is up to the individual to decide whether he or she is happy to accept a credit note or the repair or replacement of the faulty product, but legally the purchaser does not have to accept a credit note, even if it is the shop's policy to issue one.

"It is important that the purchaser returns the product as soon as possible because the longer a person retains the faulty product the greater is the presumption that he has accepted the goods," Prof Clarke adds.

It is always advisable, though not a legal necessity, to produce a receipt as proof of the contract of sale. But if shoppers have lost their receipts this should not deter them from complaining, as they might be able to show that they know the shop assistant or that they are regular customers.

Prof Clarke also points out that a guarantee does not affect the rights of a consumer against a seller under the 1980 Act. "A guarantee is usually given against a manufacturer and even if the time period given by the guarantee has expired, the consumer can still sue the seller or supplier," he says. However, guarantees are very important for anyone who receives a gift of a faulty product, because the 1980 Act only protects the person who purchased the goods.

"If a person buys a television or a video on hire-purchase or borrows the purchase money from a finance company, the Act provides that the consumer also has an action against the hire purchase and finance companies," Prof Clarke adds.

This remedy would be particularly useful in a situation where the shop which sold the goods to the purchaser has gone out of business. The shopper still has a claim against the hire purchase company since legally it now owns the goods until all the payments are made.

As a last resort, if a shopkeeper refuses to deal with a complaint properly and tells the purchaser to go away, the aggrieved party should sue them in the Small Claims Court. For £6 a consumer can sue a shopkeeper (without the expense of a solicitor) for damages of up to £600.

It is an offence for a shop to display a notice saying "No Refunds" and the shop is liable to be prosecuted by the Director of Consumer Affairs for doing so.

The 1980 Act also covers a contract between someone who supplies a service and the consumer who pays for the service. The consumer would have good grounds for complaint if the supplier is not competent to provide the service it has agreed to provide, if the service is not provided carefully, or if the materials and goods provided are not as they should be. Usually, the compensation should be such as to make up the difference in value between the service actually provided and the service as it should have been provided.

Although consumers can seek the advice of the Director of Consumer Affairs in general terms about consumer law, he cannot give a decision on individual disputes between a consumer and a supplier. The Director's office was established to enforce the law in respect of false and misleading claims about goods and services in accordance with the Consumer Information Act 1978.

Shoppers should be aware that when a store claims a price has been reduced, the goods should usually have been on sale at the previous price for 28 successive days in the previous three months.

The 1978 Act covers all false and misleading claims and advertisements.

The Director generally makes a formal request to transgressors of the 1978 Act to halt their illegal practice. He also has powers to bring criminal charges against someone he suspects of breaking the law.