Sounds like they have made their terms of business quite clear. Seems like you have been unlucky twice. Regarding original sale was it a dealer and if you can prove the fault was present at time of purchase they might be liable
Regarding the engine supplier I would have thought a reasonable place would have done a basic compression test before sale. Only need to connect starter motor to engine and give it a wiz round. What does it say on their website about any pre sale testing that is done, or do they just yank out of one vehicle and sell it on.
I would not have much confidence in them giving you another engine. Does the warranty mention money back ?
Personally I would consider getting one that has been re conditioned rather than just recovered from a donor vehicle. Might be more expensive outlay but got to be cheaper than gambling with another donor engine. Try someone who is a member of the Federation of Engine Remanufacturers
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