Problem Scenarios in Consumer Law - Case Study Example

Problem Scenarios in Consumer Law Q1 Purchase of Bed by Helen In order to advise Helen on the purchase of bed which subsequently broke and caused injury to her it is necessary to look into the relevant provisions of Sale of Goods Act 1979. The following provide a detailed account of the provisions and their applicability to various circumstances affecting the sale transactions in general. Consumers are provided with several protections under contract law when they deal with sellers in connection with their purchases. If a purchase is made from a shop then the shop only is made liable under the contract. However under the law of torts there lies a concurrent liability placed on the manufacturer under circumstances where the faulty goods caused any personal injury or damage to the purchaser's property. But the primary liability still lies with the seller who effected the sale transaction. Under the Sale of Goods Act, 1979 (SGA) the buyer of goods are entitled to the following protections covered by different sections of the Act. (i) Under section 12 the seller should possess an absolute right to sell the goods and enter into the contract of sale (ii) Under section 13 it is stated that the goods sold by description must correspond to the description (iii) Section 14 prescribes that the goods must be of satisfactory quality (iv) Under section 15 in the case of goods sold by sample there is an implied condition that the bulk of the goods must correspond to the sample In addition, when the goods are sold in the course of a business there is the additional protection available to the buyer in terms of the provisions of Unfair Contract Terms Act 1977 which prohibits their exclusion. The protections constitute statutorily laid implied terms of sale. The meaning of this is that SGA will render these terms made applicable to all contracts for sale of goods irrespective of whatever terms and conditions the parties to the sale have agreed at the time of entering into the contract of sale. Under Contract law there are three categories of terms are applied for the contracts. They are (i) conditions, (ii) warranties, (iii) innominate terms Conditions Conditions are the main terms of a contract which forms the nucleus of the contract. When the condition attached to a contract is breached the innocent party can claim damages and repudiate the contract. Damages represent monetary compensation for the loss suffered by buyer. Repudiation is the avoidance of the contract which has the effect of relieving both the parties to the contract from the obligations under the contract. Warranties Warranties represent technical legal term which corresponds to minor contractual terms. These terms are less important terms of the agreement between the parties. For the breach of any warranty the party who suffered losses can only claim damages. He cannot repudiate the contract totally. Innominate Terms Innominate terms are those terms attached to the contract which cannot be classified either as condition or warranty just by looking at the terms of the contract. These terms can be classified either as condition or warranty only looking at the effect of the breach. When the consequences of the breach are only slight not causing any major loss to the buyer it will be treated as a warranty. On the other hand when the impact of breach is great it will be categorized as a condition. Implied Term with Respect to Goods sold by Description Section 13(1) provides for the implied term that when the goods are sold by description the goods shall correspond with the description. For making this section apply the goods should have been sold exclusively by description.1 This provision shall not apply when the buyer sees the goods physically before the sales takes place. This position has been clearly explained in the case of Harlington & Leinster Enterprises v Christopher Hull Fine Art2 In this case the purchasers were unable to claim damages under section 13 when the painting they bought thinking as done by a famous artist turned out to be false for the reason that the agent of the purchasers have inspected the painting. However the purchaser can bring an action for damages under an express term of contract that may be relied upon or there could be an action for misrepresentation if the goods were seen before the purchase. Another point to be noted under section 13 is that section is concerned only with description and not with the quality of the goods as has been laid down in the case of Re Moore & Landauer3 In this case goods were described to have been packed with a specified number of tins per case, whereas actually some of the cases were containing less number of tins in the cases, although the same number of cases were delivered to the buyer. The purchaser in this case was given the protection under section 13 of the SGA. It must further be noted that the term implied by section 13 is a 'condition' in relation to the consumer sales. Implied Term with Respect to Quality The important element of section 14 is that this section can be applied only in cases where goods are sold in the course of a business. Therefore this section does not apply to a private sale. Even in the case of private sale action for damages can arise under an express term of the agreement or misrepresentation under certain circumstances. The courts have dealt with a number of cases to provide wide range of explanations to classify what constitutes sales. In the case of Stevenson v Rogers4 it was decided that a fisherman who sold his fishing boat was considered to have breached section 14 irrespective of the fact that he is not a dealer in fishing boats. Liability under Section 14 Liability of the sellers under section 14 of the Sale of Goods Act is an absolute one and the claim is enforceable despite proof of fault on the part of the seller. In applying this section the court will normally look into aspect of whether a reasonable person would regard the goods to possess satisfactory quality, by considering the stated aspects in addition to the circumstances affecting the sale. Similarly for deciding on the fitness to the purpose the court will look into the aspect of whether the goods are found to be fit for the purpose for which the goods are commonly supplied. For instance if a purchaser makes use of the hairdryer for drying the cloths then he may not be entitled to claim damages under s. 14. On the other hand a buyer for shoes which became unusable within few days due to poor quality is entitled for damages and in this case the seller cannot take the plea that the shoes were meant to be fashion ones and hence they could not have worn for all the time. In addition to the applicability of the provisions there are (i) Acceptability test and (ii) usability test which are applied by the courts to determine the satisfactory nature of the quality of the goods. Acceptability tests are undertaken in the case of consumer transactions while usability test takes care of business to business transactions. Acceptability Test The purpose of acceptability test is to look at the point that whether a purchaser with a reasonable knowledge would have accepted the goods at the same price had he known about the defect at the time of purchase. The ruling in the case of Shine v General Guarantee Corp5 is relevant here. In this case a second hand car was found to be extensively damaged after the purchase and the court in this case held that a reasonable person would not have bought the car at that price with the knowledge about the accident the car met earlier and its subsequent poor quality. In that case normally the buyer would have paid substantially lesser price for the car with the defect. Usability Test Under usability test the court would consider whether a reasonable purchaser could have used the goods for the purpose for which the goods were commonly supplied. This test was applied in the case of Aswan Engineering v Lupdine6. In this case some of the materials were held to be of satisfactory quality despite the fact that there were changes in the nature of the material, since the materials were exposed to extreme heat which caused the change. Otherwise the materials were of the quality normally used for the purpose for which they were intended. 7 Limitation of Applicability of Section 14 The implied term under section 14 shall not apply to any issues making the quality of the goods unsatisfactory (i) when the issue was specifically drawn to the attention of the buyer before the sale took place, (ii) where the goods were subjected to the examination by the buyer before the sale contract was entered and such examination ought to have revealed the quality. It is to be noted that section 14 is a condition in the case of a consumer sale. Applying the above provisions the following emerge in the case of the transaction of purchase of bed by Helen. (i) The contract of sale is to be considered as entered into between Helen and the shop. Since shop is out of business now she does not have recourse against any one. (ii) The implied term with respect to description under section does not apply in this case as bed cannot be considered to have sold exclusively by description. Moreover since Helen has physically seen the bed before buying section 13 does not apply (iii) Applying the acceptability test it may be concluded that a reasonable person would not have bought the bed by paying the high price. Therefore a liability arises under section 14 of the SGA. However Helen could not proceed against the shop as it is already out of business (iv) Only remedy available to her is to stop the credit card payment to the shop if it is not already made by the credit card company to Beds-u-Like. Even when the credit card company has paid the amount to the shop, she will be entitled to reimbursement of the amount paid through credit card as the bed was of a bad quality. 2. Sale of Imported Computer to Imran The first question to be ascertained is whether the sale by Helen is a private sale or a business sale. If the sale was a trade sale then Helen becomes a part of the supply chain and consequently has to take some responsibility for the goods with respect to safety of the product she sells. Therefore Imran would become entitled to bring the primary claim against Helen. He has also the right to involve Clef the importer also in the case. If Helen was aware of any defect in the computer at the time of sale and had she failed to bring this to the notice of Imran she automatically becomes liable whether the sale is a private one or a business one. If in this case the sale of computer represents a business to business transaction then the usability test primarily applies to decide the claim under SGA. Since in any case the goods have to be fit for the purpose and the condition of 'sold as seen' shall not apply in this case unless it is the case that faults in the computer were so obvious or the defect was pointed out to the purchaser. As far as Abigali is concerned she stands in a privity of contract and she will have a good chance to claim against Clef who imported the defective computers in to the EU. Clef as importer is endowed with a responsibility to ensure the safety of the items being imported by him under the EU laws. He is entitled to claim against the manufacturer in Vietnam. Clef has a duty to alert the EU authorities for a RAPEX notification and insist on recalling the product by the manufacturer. One major assumption in all the consequential claims and legalities is that the computer was defective as Imran bought it and it was not rendered defective by any of his action later. 4. Sale of Computers by Helen to Ben In this case Helen has the right to claim the balance amount due on the four computers she has delivered. In case if she is unable to recover the amount she can make an attempt to repossess the computers provided the terms of the contract of sale specifies that she can retain the title to the goods until she is paid and this term is not contradicted by the terms of the purchase order placed by Ben with Helen. However there is the distinct possibility that the purchase order of Ben would have incorporated the condition that the title to the goods will pass on the delivery or collection of the items by the transporter. In that case she will not have the right of repossession. However there are no established precedents as to which of the terms - whether the sales terms or the purchase terms - will prevail. Read More