Consumer Law under the EC - Essay Example

Consumer Law Under the European Community (EC) Directive on Liability for Defective Products, considered to be the basic level that provides protection to consumers in member states, a producer shall be liable for damage caused by a defect in his product (Narita, 1996, p. 6). A producer may include the following: 1) the one who manufactures a finished product or component part, 2) the one producing any raw material, 3) anyone who applies an industrial process and 4) “any person who, by putting his name, trademark or other distinguishing feature on the product presents himself as its producer.”1 The importer of a product into any member state of the European Union may also be considered as a producer under the said directive.2 However, where the producer cannot be known or identified, the supplier of such a product is treated under the directive as the producer unless the identity of the producer or the one supplying the product can be identified by him.3 In the case at bar, if the buyer would identify specifically the manufacturer of Aquawash-09 in Korea, such manufacturer may be made liable under the directive. If not, the importer of such washing machine, specifically, Heinz which is a German Company, can be made liable under the EC directive. The buyer can therefore claim against the manufacturer, the supplier or both under the EC directive. Furthermore, under the EC directive, a defect in a product exists if the so-called objective test is established which includes “either or both the cost-risk analysis and the consumer’s expectation of safety.”4 A product is considered as defective under the EC directive if such product does not make available the safety which any person could “reasonably entitled to expect,” taking into account the following: “the presentation of the product, the use to which the product could reasonably be expected to be put, and the time when the product was put into circulation.”5 Defect may also be present in the design or the manufacturing of the product, in the failure to warn, in the instructions, and in the “developmental defects.”6 If then the product does not provide the level of safety which is expected by the consumer, it would then be considered as defective under the directive even though it functions under the designed specification.7 In the case at bar, the washing machine then may certainly be considered as defective not only because it did not function properly but because it does not provide for the level of safety reasonably expected from the product, as Jon, the friend of Deepak had an electric shock while opening the said washing machine. In the EC Directive, damage has been defined as “death or personal injury, and/or damage to or destruction of physical property worth at least 500 ECUs, if the damaged property was both intended for private use and consumption, and was used mainly by the injured person for his or her own private use and consumption.”8 Hence, the damage done to the buyer’s or to Deepak’s expensive clothes, may be considered as damage if worth at least 500 ECUs and thus, should be properly compensated. If however, less than 500 ECUs, the compensation shall then be according to the national law of each of the member states. The severe electric shock done to Deepak’s friend Jon, is also considered as personal injury which may then be compensated by those liable. The EC Directive stresses that the liability to an injured person shall not be limited nor exempted under the directive.9 The claims which Deepak and Jon may bring against either the manufacturer or the producer, or if unknown, the supplier, may be brought “within three years of the date upon which the injured person became aware, or should reasonably have become aware, of the damage, the defect, and the identity of the producer.”10 If two or more persons are found to have been liable for the same damage, then they are considered as jointly and severally liable, the liability being strict.11 Also, under the Sale of Goods Act, the buyer may ask that a replacement or repair be made.12 The buyer may also claim for a diminution in the price of the goods diminution of extinction of the price, or may maintain an action against the seller for damages for the breach of warranty and hence may claim damages.13 In this case, Deepak may avail of the said remedies and for breach of warranty since at the time of the sale, the seller, Sparks in this case, maintained that the product is the most reliable and advanced washing machine. Finally, since the product did not conform to the contract especially as to the quality, which includes the state and condition in terms of the “(a) fitness for all the purposes for which goods of the kind in question are commonly supplied; (b) appearance and finish; (c) freedom from minor defects; (d) safety; and (e) durability,”14 Deepak may claim for compensation by way of damages and for consequential loss suffered. 2. a) In case of hire-purchase agreements, the buyer’s rights will be against the finance company.15 The buyer, in certain circumstances, can reject the goods or claim compensation.16 In the case at bar, Deepak can claim his rights against Happy-Kash, can reject the used car or claim compensation in certain cases. Under the Sale of Goods Act, the buyer may reject the goods and require a refund provided that his complaint is within a reasonable time, taking into consideration all the circumstances.17 Hence, Deepak must inform the seller immediately of what happened to the car, and notify of his intention to reject the car and claim for a refund in case he has already paid an amount. Although as a rule, a buyer is not obliged to be the one to send back the goods, he must however make sure the availability of the goods for collection, and in this case, Deepak must make available the car. Deepak can also ask that the car be repaired or replaced in accordance with 48A of the Sale of Goods Act, if the purchase made, does not conform to contract and Deepak does not want to reject the car. This repair and replacement must however be carried out within reasonable time.18 Furthermore, if due to the circumstances, Deepak is not entitled to reject the car because of failure to inform immediately his intent to reject the car, Deepak can claim compensation by way of damages to compensate the actual losses he has incurred or for the “cost of repair or replacement.”19 Consequential losses or those considered as “direct and predictable expense” as a result of the faulty goods delivered, may be claimed by the buyer, in this case Deepak. Cost of the return of the goods can be part of this consequential loss.20 In some cases, the defect may be remedied by someone other than the seller and thereafter, may claim from the seller for compensation under the breach of contract.21 There may however difficulty in proving when the problem occurred counted from the time of the sale. Hence, such action is not advised.22 Deepak can also choose to ask for a reduction of the purchase price if he did not require for a repair or replacement of the car or if he did, but then such repair and replacement could not be done within a reasonable time without significant inconvenience to the buyer.23 Finally, he can also ask for the rescission of the contract but any reimbursement made may be reduced to account for the time that Deepak used the car.24 The best action that Deepak can make among the remedies available to him though is to ask for a rescission of the contract since it is still within a reasonable time and because of the breach made as to the quality of the car and the wrong representation made that it was regularly serviced and is in sound condition. This is especially since there was no ample time to reasonably inspect to ensure that the car was in good condition. Furthermore, it is still within the buyers rights to rescind the contract as to the goods delivered if the buyer did not ask for any repair or replacement of the goods, in this case, the car, as provided under Section 48C of the Sale of Goods Act (1979). Or if it would cause significant inconvenience on the part of the buyer, Deepak in this case, then, he certainly has the right to rescind such contract with respect to the car. b) Deepak’s best action in this case is to ask for a repair or replacement of the car, as the option to reject the car or have the contract rescinded may not be within the reasonable time since the buyer is expected to have already inspected the car. Furthermore, he still received the copy of the second agreement despite his discovery of the defects of the car instead of immediately informing the Happy-Kash of his intent to reject or to rescind the contract. This therefore signifies his acceptance to be bound by the agreement. Hence, asking for a repair or replacement may be the best option for him. 3. Deepak is entitled to a refund of his deposit if the seller, in this case Chipper, could not deliver the specific goods agreed by them. As provided under the Sale of Goods Act (1979), the goods remain at the sellers risk until the property in them is transferred to the buyer or purchaser.25 Furthermore, as provided under the said Act, “Where there is a contract for the sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them into a deliverable state, the property does not pass until the thing is done and the buyer has notice that it has been done.” 26 This explains that at the time of the contract, the goods are not yet in its deliverable state but are later put into such a state.27 Once the necessary work is undertaken by the seller in order that the goods be in its deliverable state, property shall then “pass when the buyer has been given such notice as the contract specifies or, failing that, such notice as a reasonable person would require.”28 In this case, Deepak had no such notice that the furnitures can already be collected before the fire occurred. Deepak had no knowledge before the fire happened, that the goods were already in the shop to be picked up by him. Before Deepak had the chance to pick up Chippers message on his voicemail, that the furniture was ready for collection, a fire had happened in Chippers shop where all the furniture was destroyed. Unless there is an agreement to the contrary, which in this case is absent, the goods or the furnitures remain at the sellers or Chippers risk until the property is transferred to the buyer or to Deepak. Hence, if the goods to be delivered cannot anymore be delivered, having been destroyed by fire, Deepak therefore should be entitled to a refund of his deposit. 4. As regards to the chair that has already been delivered, Deepak being an unpaid seller has “a lien on the goods or right to retain them for the price while he is in possession of them.”29 As for the cabinet that is with the carrier which have yet to deliver the said furniture, Deepak as an unpaid seller has the “right of stopping the goods in transit after he has parted with the possession of them.30 As for the table, under the Sale of Goods Act (1979), when goods have not yet passed to the buyer, “the unpaid seller has (in addition to his other remedies) a right of withholding delivery similar to and coextensive with his rights of lien or retention and stoppage in transit where the property has passed to the buyer.”31 In the stoppage in transit, the seller “may resume possession of the goods as long as they are in course of transit, and may retain them until payment or tender of the price.”32 The duration of the transit as regards the cabinet which is with the carrier, said furniture are still in course of transit being delivered to the carrier “for the purpose of transmission to the buyer, until the buyer or his agent in that behalf takes delivery of them from the carrier or other bailee or custodier.”33 The stoppage in transit may effected by the seller “taking actual possession of the goods or by giving notice of his claim to the carrier or other bailee or custodier in whose possession the goods are.”34 As defined under the Sale of Goods Act (1979) that “when a bill of exchange or other negotiable instrument has been received as conditional payment, and the condition on which it was received has not been fulfilled by reason of the dishonour of the instrument or otherwise,” the seller of the goods is considered as an unpaid seller.35 The check then issued by Anna to Deepak, being dishonoured by the bank, Deepak can certainly be considered as an unpaid seller and is entitled to the rights provided under the Act. Anna does not have any legal rights under the Act. Under the Sale of Goods Act (1979), the buyer can maintain an action against the seller for damages for non-delivery only in case “where the seller wrongfully neglects or refuses to deliver the goods to the buyer.”36 In this case however, Deepak the seller did not wrongfully neglect or refuse to deliver the goods to the buyer, but merely exercised his right under the Act being justified as an unpaid seller. Hence, Anna cannot claim to have an action against Deepak. Conclusion Remedies and rights therefore of either the buyer or the seller depends on the circumstances present if satisfies the requirements, specifically that provided under the Sale of Goods Act. Aside from this are the regulations or directives provided by the European Community to which each member state must adhere to in terms of product liabilities for the protection of consumers. References Directive 85/374/EEC. OJL 210 of 07.08.1995, p. 29. Narita, S. (1996). Product Liability Claims in Europe. Retrieved on 7 January 2010 from [http://www.swissre.com/resources/f343ce80455c7e3bba60ba80a45d76a0-product_eng.Paras.0007.File.pdf]. Sale of Goods Act of 1979. University of London. Sale of Goods: Contract, Property and Risk, Chapter 4. Retrieved on 7 January 2010 from [http://www.londonexternal.ac.uk/current_students/programme_resources/laws/subject_guides/commercial/commercial_ch4.pdf]. Department of Trade and Industry, United Kingdom (2005). The Law Relating to the Supply of Goods and Services. Retrieved on 7 January 2010 from [http://www.berr.gov.uk/files/file25486.pdf]. Read More