Consumer Law, Unfair Contract Terms Act of 1979 - Essay Example

1 Consumer Law Andy purchased a used car for multi purpose usage; shopping, collecting the children from school and occasional business use. He paid for the car with a cheque drawn on his business account. When we view the Unfair Contract Terms Act of 1979 section 12 (a), this section defines a consumer as one who neither makes the contract in the course of a business nor holds himself out as doing so. Does Andy qualify as a consumer, since he paid for his purchase with a cheque drawn on his business account Does he forfeit his consumer status by exclusion via the definition of a consumer as per the Unfair Contract Terms Act of 1979 What is the statutory requirement for an individual to qualify as a consumer in the Sale of Goods Act 1979 The SGA 1979 states that; "any natural person who, in the contracts covered by these regulations, is acting for purposes which are outside his trade, business or profession; further that a "consumer guarantee' means any undertaking to a consumer by a person acting in the course of his business, given without extra charge, to reimburse the price paid or to replace, repair or handle consumer goods in any way if they do not meet the specifications set out in the guarantee statement or in relevant advertising. When Andy paid for the purchase of the car, with a cheque drawn on his business account, he ostensibly held himself out as being a business. Therefore, as per the statutory definitions above describing a consumer and consumer guarantees, he would not qualify as or for such. However, when we view case law we find the circumstance has been previously considered in R & B Customs Brokers Company Ltd. V. United Dominions Trust Ltd. [1988] 1 ALL ER 847, the facts in the case cited were almost 2 parallel to Andy's situation; Mr. & Mrs. Bell owned a shipping company and the company bought a car from D for both business and family use. As they were not in the business of car buying, it was held to be acting as a consumer. Thus, the court held; "it was possible that a business could deal as a consumer". On the surface it appears that the ruling in R & B Customs totally contradicts the basis of the statues themselves, But upon review, we see that the vehicle was in fact purchased for double use; partly for family use, and partly for business use. The family use of the vehicle, coupled with the fact that the purchaser was not in the car business influenced the courts decision to extend an exception to the statue. So in the case of Andy, he would now be in accord with R & B Customs, he would now be classified as a consumer availing him of protection under The applicable statues found in the UCTA and the SOGA. In that we have stratified him and established his privilege to coverage as a consumer, we can approach the remaining issues affecting the car and his likely remedy. The only acknowledged car fault was with the brakes, and the dealer acknowledged the fault by accepting a 400-pound reduction in his initial price. It was presumed by Andy that a repair of the brakes would render the vehicle totally road worthy, thus of satisfactory quality. And presumably place the sale in accord with the SGA. We find a similar case in Bartlett v. Sydney Marcus (1965) the claimant purchased a second hand car from the defendants and was advised that there was a minor problem with the clutch. Being offered the option of purchasing the car at a reduced price and effecting the repairs himself, or allowing the vendors to repair the car and paying full price, he chose to accept the reduction and get the work done himself. This was indicated on the sale documents. 3 The claimant drove the car about 300 miles in the course of four weeks before taking it to be repaired, whereupon it was discovered that the defect in the clutch was more serious, and therefore more costly, than either the claimant or the salesman of the defendant company had anticipated. At first instance the claimant was held to be entitled to recover damages, but the defendants appeal in the Court of Appeal was allowed on the basis that the car was of merchantable quality (Sale of Goods Act 1893, Section 14) after an appropriate allowance in the price for a known defect. The point of law was; the price paid for an item (and any allowance in that price for an existing defect) will be taken into account when determining that item is of merchantable quality for the purposes of the Sale of Goods legislation. Note: There have been changes in the wording of Section 14 SOGA which were brought about by the Sale and Supply of Goods Act (1994) also for the issue of merchantable quality we view the case of Business Applications Specialists v. Nationwide Credit (1988) where the court held; "minor" defects are to be expected in second hand cars. Thus, merchantable quality was an acceptable standard prior to the SGA (1994). Andy's case is similar to the two aforementioned cases except for two very critical variances; (1) the fault with the clutch was discovered after the contract was completed, but also like Bartlett it represented an additional problem, therefore an additional outlay which was not anticipated during the negotiation of the sale price. (2) Unlike Bartlett and Business Systems Specialist, Andy's problem with the clutch was neither acknowledged by the dealer nor anticipated by Andy, and it precluded him from getting from point A to point B, far exceeding the "minor" defect finding in Business 4 Systems Specialist. Andy's defect (with the clutch) could be characterized as an inherent fault, which the Sale and Supply of Goods Act describes as; the fault may not become apparent immediately but it was there at the time of sale and so the product was not of satisfactory quality. (SSGA) Here we see the wording in the act has changed from merchantable quality to "satisfactory quality"- which the SSGA describes as; "it must meet the standard a reasonable person would regard as acceptable, bearing in mind the way it was described, how much it cost and any other relevant circumstances. This covers for example, the appearance and finish of the car, its safety and its durability. The car must be free from defects, except when they were pointed out by the seller. After allowing Andy the reduction for the faulty brakes the dealer said: "This is a quality car; I don't want any complaints from you. You must take it in the condition which you find it". The dealer implies that the car is safe and durable. Moreover, if he knew of the additional defect, he failed to mention it. In the Product Warranty Liability Act a description of Implied warranty is provided to describe the suppliers contractual responsibilities (or guarantees) regarding the quality or fitness of the goods. Implied warranties, which don't depend simply on what the supplier says but based on the consumers' reasonable expectations about the goods in all circumstances. The supplier may be responsible under the implied warranty even if the supplier says nothing at all about the goods. The purpose and nature of implied warranties is to protect the reasonable expectations that a buyer would have about the goods considering all the circumstances of the sale. Because reasonable expectations do not simply depend on what the supplier says but on other circumstances as well, implied 5 warranties apply even when the supplier says nothing at all. (PWLA) The issue is supported in law by Smith v. Land and House Property Corporation [1884], 28 CHD 7 South Australia, where the court held; " a statement of opinion can be regarded as a statement of fact in certain situations. Such a situation will be where the maker of the statement has greater knowledge or appears by implication, to be able to support that statement". This case is buttressed by Dimmock v. Hallet [1866], and Bisset v. Wilkinson [1927] AC 177. Also in Schawel v. Reade [1913] 46 ILT 281, the court held; "the strength of the inducement can be important, the more emphasis put on representation, the more likely the courts will regard this as a term". Also see Rutledge v. McKay [1861] WLR 615, where the court cited section 14 (2) of the Sale of Goods Act 1979, and in Wilson v. Rickett, Cockerall and Company Ltd. [1954], the court concluded; " the goods supplied must be in the units and measures in which they were supplied when examining quality. Further in Wilson v. Rickett, the court goes on to point out that under the Soga 1979, Section 14; "that it apply only when the purchaser has relied upon the vendors skill and expertise. It goes on to point out that under the SGA 1979, the assumption that a purchaser, when purchasing goods under a trade name, does not rely on the vendors expertise, no longer exist. In the SGA 1979 Section 12 (3) states that; there is an implied condition that the goods will be fit for a particular purpose. The purpose of the goods can either be stated by the buyer or implied from the nature o9f the goods. In Kendall v. Lillico [1968] 2 ALL ER 444, the court held; "where the buyer states his purpose in general terms so as to give the seller some indication of the likely use of the goods, then, this will usually be enough to establish fitness for purpose. 6 In Hedley Byrne v. Heller the court stated; "the duty of care for negligent misstatement is not as wide as the general duty of care set by Donoghue v. Stevenson and is confined to those circumstances where parties are in a 'special relationship'. The court found that the duty applied only if the maker of the representation possessed special skill and applied that skill, regardless of contract, for the assistance of another person who relied on it. They were not prepared to extend the duty beyond this because, if the mere hearing or reading of words were held to create proximity, there might be a limit to the persons whom the speaker or writer could be liable. Further elucidation of Heller was provided in Mutual Life and Citizens Assurance Company Ltd. V. Evatt, the court held; "that a special relationship arises only when the party giving the advice carries on the business of giving advice and lets it be known that he or she claims to have skill and competence in the field in question and is thereby prepared to exercise the usual degree of skill and competence. Exercised by persons carrying on that profession. In my view it is almost certain that the court will view the seller as someone that had special skill and competence in the field of knowledge regarding the area of expertise-namely the safety and durability of cars. Also in Shaddock v. Paramatta City Council, the duty was extended to giving the information to another whom he knows will rely on it in circumstances where it is reasonable for him to do so, is under a duty to exercise reasonable care that the information is correct, it would certainly have been reasonable for Andy to rely on the dealers representations in this case regarding the condition of the car. "In addition the claimant must belong to a limited class of people to whom the defendant owed a duty of care'. (Law Essay) 7 Clearly, the car had an inherent defect which rendered it unsatisfactory, unsafe and not durable. And certainly not suitable for purpose. The dealer's misrepresentation in view of the problems which have surfaced makes him guilty of negligent misrepresentation. In all that I have presented above, it is clear that Andy has a prima facie case, to request a return of his monies paid for the vehicle. Concerning Andy's purchase of the gold lamp, we immediately find that the distributor of the lamp has few options for a defence open to him. George is entitled to recompense from the distributor. I would advise him that we can explore the prospects of an action against the distributor of the defective lamp. In our attempt to accomplish this we will review the Sale of Goods Act 1979, The Supply of Goods and Services Act of 1982, Sale and Supply of Goods Act of 1994 and the Sale and Supply of Goods to Consumer Regulations 2002. When goods are bought they must "conform to contract". This means they must be as described, fit for purpose and of satisfactory quality (i.e., not inherently faulty at time of sale). Aspects of quality include fitness for purpose, freedom from minor defects, appearance and finish, durability and safety. In Section 9 and Section 10 of the General Products Safety Regulations 1994, the requirements of distributors states: A distributor shall act with due care in order to help insure compliance with the requirements of regulation 7, in particular, without limiting the generality of the foregoing- 8 (a) a distributor shall not supply products to any person which he knows, or should know have presumed, on the basis of the information in his possession and as a professional, are dangerous products; and (b) within the limits of his activities, a distributor shall participate in monitoring the safety of products placed on the market, in particular by passing on information of the products risks and cooperating in the action taken to avoid these risks. 10-(1) Where in relation to any product such product conforms to the specific rules of the law of the United Kingdom laying down the health and safety requirements which the product must satisfy in order to be marketed, there shall be a presumption that, until the contrary is proved, the product is a safe product. (2) where no specific rules mentioned or referred to in paragraph (1) exist, the conformity of a product to the general safety requirements shall be assessed taking into account- (i) voluntary national standards of the United Kingdom or community technical specifications- (aa) standards drawn up by the United Kingdom; or (bb) the codes of good practice in respect of the health and safety in the product sector concerned; or (cc) the state of the art and technology and the safety which consumers may reasonably expect. (safety 1994) Taking into account the tragic events, it is clear the distributor did not totally 9 adhere to the special care of his product as cautioned by the General Products Safety Regulations. In Glasgow Corporation v. Taylor [1922] the point of law states; a warning of potential hazard must be intelligible to all those likely to be at risk from the hazard if liability in negligence is to be avoided. In subsequent sections of the act, (section 12-14), the 1994 act emphatically states that the tolerance level is zero for any person who knowingly or unknowingly violates the stipulations in sections 7-10 of the statues. When we view Frost v. Aylesbury Diaries [1905], we begin to get the tenor of the courts tolerance or intolerance level. The point of law states; "it was irrelevant that all reasonable precautions had been taken, liability for defective products is strict". However, one will be guaranteed a day in court, at which time he/she must show that they took all reasonable steps and worked to avoid the offence from happening. If the defence of the distributor is that he relied on the information of someone else to keep him abreast, it in all likelihood will be deemed an inadequate defence by the court. Moreover, the statue establishes a net to bring all the perpetrators before the bar. Additionally, under the SGA 1982, Part I Supply of Goods the statue reads as follows: (1) except as provided in this section and section 5 below and subject to the provisions of any other enactment, there is no implied condition or warranty about the quality or fitness for any particular purpose of goods supplied under a contract for the transfer of goods. (2) where, under such a contract, the transfer or transfers of the property in goods in the 10 course of a business, there is an implied condition that the goods supplied under the Contracts are of satisfactory quality. (Services 1982) Additionally when we view Barnett v. Chelsea and Kensington Hospital Management Committee [1968], the point of law states; the "but for" test in causation, the defendant will only be liable for negligence if the claimant would not have suffered the damage "but for" the defendants negligent act or omission. The "but for" criteria is commonly used to establish the causation element i.e., that there is a direct link between the harm suffered by the claimant and the breach of duty of the defendant. Also, the severity of Georges injuries will receive maximum consideration as we find in Vacwell Engineering Company Ltd. V. B. D. H. Chemicals Ltd. [1971], the point of law states; if the form of harm and its occurrence are reasonably foreseeable it is irrelevant that the damage is more extensive than would normally be foreseeable. To be sure the distributor erred when she sold the defective lamp and I would advise George to file a strict liability claim against the distributor. I have chosen strict liability because, the plaintiff only need to prove the defendants product caused the injury-the defendants negligence isn't necessary for a plaintiff to recover. Strict liability is reserved for "inherently dangerous" activities or products. (Tort reform) Considering Andy's third purchase of the computer we will view the Misrepresentation Act of 1967. The sales representative misrepresented the computer when he stated: "The best program in the country. No one has ever won a game against it". In my opinion the statement was inherently deceitful and a blatant misrepresentation. 11 The conventional measures of damages in deceit is the difference between the position of the injured party immediately before the deception and the position immediately after. The injured party is to be put in the position he would have been in had the representation not been made. Where the misrepresentation induces the acquisition of property, the comparison is between the price paid and the value of the property acquired, together with consequential losses. But this measure may be displaced where, on the facts, some alternative measure can be seen appropriate. (S116) When we view the Trade Description Act of 1968 we find additional relevance for Andy to base his case; In Sections (a), (b) and (c) of the act, we find the statue absolutely rebukes the practice of the salesman in Andy's case. (a) applies a false trade description to any goods; or (b) supplies or offer to supply goods which a false trade description is applied; or (c) makes certain kinds of false statements about the provision of any service, accommodation or facilitywhere accommodation is provided or what amenities it has. Here again the statement must be false to a material degree. Spoken as well as written statements, including statements in advertising, are covered. Not every statement about services etc.; which turns out to be wrong is covered. A trader commits an offence only when a statement is false when it is made, and the trader knows it to be false or makes it recklessly, not caring whether it is true or false. (TDA) Further in Wilson v. Rickett, Cockerell and Company Ltd. [1954], the point of law states; the goods supplied must be in the units and measures in which they were supplied when examining quality under s 14 (2) of the Sale of Goods Act. Section 14(3) will apply 12 only when the purchaser has relied upon the vendors skill and expertise. Note: under the SGA 1979, the assumption that a purchaser, when purchasing goods, under trade name, does not rely on the vendors expertise, no longer exist. Also in Baldry v. Marshall [1925] the court held; where a purchaser relies on the skill and judgment of a seller and that seller is acting within the course of his business, then for the purpose of S14 (3), goods must be suitable for the purpose made known to the buyer if a breach is to be avoided, even if the goods are of merchantable (satisfactory) quality, other implied terms must also be satisfied. Further in Bannerman v. White [1861], the point of law states; if special importance is put on a particular aspect of a contract it will make it a term of that contract. In the manner of suggesting a remedy we view the holding in Ministry of Housing and Local Government v. Sharp And Another [1964], where the court held; "a duty of care will arise when there is sufficient proximity between the claimant and the defendant. Economic loss may be recovered in negligence: Lord Denning MR: L "The duty to use care in a statement arises, not from any voluntary assumption of responsibility, but from the person making it knows or ought to know, that others, being his neighbors in this regard, would act on the faith of the statement being accurate. That is enough to bring the duty into being. It is owed of course, to the person to whom the certificate is issued and whom he knows is going to act on itit is also owed to any person he knows, or ought to know, will be injuriously affected by a mistake, such as the encumbrances here. And in Arcos Ltd. V. Ronaasen and Son [1933], the point of law states; the rule is strict in relation to performance of a contract-all obligations must be performed as agreed, if the goods do not comply with the description then the contract is 13 breached. The second part of Andy's claim concerning the computer deals with a faulty key pad. Under the Sale of Goods Act, we find the description of an inherent fault. Again we view Arcos Ltd. V. Ronaasen and Son [1933]. Andy can make a claim for the return of his money on the grounds of a breach of contract and misrepresentation. And lastly the matter of the washing machine which Andy's wife believes has been faultly manufactured. The first machine broke down after one month and it was replaced by another machine, which subsequently broke down. Now the buyer would like to execute a recission of contract. To do so, we will view the Supply of Goods and Services Act of 1982: Initially we will view S3 (3) and s (4). S 3(3) states; the goods which are sold either by description or sample or both, must conform to the verbal and physical representations. And S4 states; a contract is not prevented from falling within subsection (1) above by reason only that being exposed for supply. The goods are selected by the transferee. Also in S4, implied terms about quality or fitness the relevant citations are: (1) except as provided by this section and section 5 below and subject to the provisions any other enactment, there is no implied condition or warranty about the quality or fitness for any particular purpose of goods supplied under a contract for the transfer of goods. (2) where under such a contract, the transferor transfers the property in goods in the course of a business, there is an implied condition that the goods supplied under the contract are of satisfactory quality. 14 (2A) for the purpose of this section and section 5 below, goods are of satisfactory quality if they meet the reasonable standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all other relevant circumstances. What is satisfactory quality In S18 of the SGA 1979, Interpretation general s (3) for the purposes of this act, the quality of goods include their state and condition and the following (among others) are in appropriate cases aspects of the quality of goods- (a) fitness for all purposes for which the goods of the kind in question are commonly supplied. (b) appearance and finish freedom from minor defects (c) safety (d) durability In Andy's situation and in accordance with SGA 1979 criteria the machines supplied to them are not in conformity with items (a), (c) or (e). Clearly the machines have demonstrated that they are incapable of meeting the relevant circumstances of purpose for which they were purchased. Consequently the contract has been breached and Andy is entitled to a refund. Bibliography Arcos Ltd. V. Ronaasen and Son [1933] Baldry v, Marshall [1925] Bannerman v. White [1861] Bartlett v. Sydney Marcus [1965] Barnett v. Chelsea and Kensington Hospital Management Committee [1968] Bissett v. Wildinson [1927] AC 177 Business Applications Specialists v. Nationwide Credit [1988] Douglas v. Stevenson Dimmock v. Hallet [1866] Frost v. Aylesbury Diaries [1905] General Products Safety Regulations [1994] Glasgow Corporation v. Taylor [1922] Hedley Byrne v. Heller Kendall v. Lillico [1968] 2 ALL ER 444 Law Essay, Misrepresentation Ministry of Housing and Local Government v. Sharp and Another [1964] Misrepresentation Act of 1967 Mutual Life and Citizens Assurance Company Ltd. V. Evatt Product warranty Liability Act Rutledge v. McKay [1861] WLR 615 Sale of Goods Act 1893 Sale of Goods Act 1979 Sale and Supply of Goods Act 1994 Supply of Goods and Services Act 1982 Sale and Supply of Goods to Consumer Regulations 2002 Schawel v. Reade [1913] 46 ILT 281 Shaddock v. Paramatta City Council Smith v. Land and House Property Corporation [1884] 28 CHD 7 Trade Description Act 1968 Vacwell Engineering Company Ltd. V. B. D. H. Chemicals Ltd. [1971] Unfair Contract Terms Act 1979 Read More