Consumer Law of Sue and HBS - Case Study Example

The case of Sue and HBS came with a couple of hitches attached; Sue made her purchase under the auspices of a business, and then she sought damages for her ill-fated use of the defective product which she purchased. I was compelled to locate the appropriate statues and case law which would qualify her as a consumer, which would in turn qualify her to file for damages. Also, the manufacturer of the defective product had liquidated, so Sue did not have a recourse in pursuing the company which was originally at fault. As a consequence I was again compelled to research the appropriate statues and case law which would be applicable in providing her with the desired relief. Subsequent to establishing her legal standing and identifying who she would qualify to bring a case against, I could then proceed with the two remaining questions. 1 2 Consumer Law Sue inquired of the sales assistant whether the labeling means the dye would be suitable for use by those with skin allergies; the assistant replies, I suppose so, that's what it says on the telly. The statue covering breach of stipulation can be found in the Sale of Goods Act of 1979 in section 14 2(b). Implied terms about quality or fitness is where the seller sells goods in the course of a business, there is an implied condition that the goods supplied under the contract are of merchantable quality, except there is no such condition. If the buyer examines the goods before the contract is made, as regards to defects, which that examination ought to reveal.1 An implied warranty is the shorthand label used in the Product Warranty Liability Act to describe the supplier's 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 are based on the consumer's 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, 2 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 simply on what the supplier says but on other circumstances as well, implied warranties apply 1Sale of Goods Act 1979 2Product Warranty Liability Act 3 even when the supplier says nothing at all.3 The issue is supported in law by Smith v. Land and HousePropertyCorporation (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.4 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 that; "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".5 Also see Rutledge v. McKay (1861) WLR 615, where the court cited Section 14 (2) of the Sale of Goods Act of 1979, and in Wilson v. Rickett, Cockerall and Company LTD. (1954), the court concluded; "the goods supplied must be considered in the units and measures in which they were supplied when examining quality".6 Further in Wilson v. Rickett, the court goes on again to point out 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 SOGA 1979, the assumption that a purchaser, when purchasing goods under a trade name, does not rely on the vendors expertise, no longer 3ibid 4Smith v. Land and House Property Corporation (1884) 5Schawel v. Reade (1913) 6Wilson v. Rickett, Cockerall and Company LTD. (1954) 4 exist.7 In the SOGA 1979 Section 12(3) states that there is an implied condition that the goods will be fit for a particular purpose.8 The purpose of the goods can either be stated by the buyer or implied from the nature of the goods. In the case of Grant v. Australian Knitting Mills LTD. (1936), woolen garments were held to be unfit for the particular purpose where they had caused the plaintiff to develop a rash.9 A contrasting case is Griffith v. Peter Conway LTD. (1939) where a tweed coat was held to be fit for its purpose as the plaintiff had not made it known that she suffered from a dermatitis condition, which the coat had aggravated. The coat was therefore fit for its particular purpose.10 Aside from the fact that Sue was exploring the purchase of hair color dye, she queried the sales associate on its appropriateness for those with skin allergies. 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.11 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 7ibid 8Sale of Goods Act 1979 9Grant v. Australian Knitting Mills LTD. (1936) 10Griffin v. Peter Conway LTD. (1939) 11Kendall v. Lillico (1968) 5 is confined to those circumstances where the 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.12 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 advise 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.13 In my view it is almost certain that the court will view the sales assistant as some one that had special skill and competence in the field of knowledge regarding the area of expertise-namely the hair color product HBS was selling. Also in Shaddock v. Paramatta City Council, the duty was extended to giving information as well as advice and it was held that the person 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.14 It would certainly have been reasonable for Sue to rely on the 12Hedley Byrne v. Heller 13Mutual Life and Citizens Assurance Company LTD. V. Evatt 14Shaddock v. Paramatta City Council 6 sales assistants' representations in this case regarding the dyes. "In addition the claimant must belong to a limited class of people to whom the defendant owed a duty of care".15 While I have established prima facia evidence that HBS has committed a breach, there are at least two very pertinent matters which must be advanced before we can determine whether Sue is eligible to present a case for damages. In the first instance, we know that Sue made her purchase under the auspices of a business. So we must determine if we can qualify her as a consumer. And in the second instance; the manufacturer of the hair dye has since gone into liquidation. Where does this leave Sue in filing a claim When we view the Unfair Contract Terms Act of 1977 Section 12 (a): that a consumer is defined as one who neither makes the contract in the course of a business nor holds himself out as doing so.16 This would preclude Sue from receiving any consideration for damages. However, we do know that Sue ultimately acted as a consumer when she personally used one box of the dye on her hair. So, when we view R & B Customs Brokers Co. Ltd v. United Dominions Trust LTD. (1988) 1 ALL ER 847, where the court held; "it was possible that a business could deal as a consumer".17 It appears that the ruling totally contradicts the basis of the statue itself, but upon closer 15Law Essay on Line, Misrepresentation 16Unfair Contract Terms Act 1979 17R & B Customs Brokers Co. LTD. V. United Dominions Trust LTD. (1988) 7 where the vehicle was purchased for double use; partly for family use, and partly for business use. The family use of the vehicle influenced the courts decision to extend the exception to the statue. Therefore, Sue would qualify as a consumer and entitled to file a review of the facts of the case, one is careful to note the exception found in this case; claim. Now the matter arises as to who can she file a claim against. Since the manufacturer has since liquidated. In the General Product Safety Regulations 1994 the requirements of distributors states: A distributor shall act with due care in order to help insure compliance with requirements of regulation 7, in particular without limiting the generality of the foregoing- (a) a distributor shall not supply products to any person which he knows, or should 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(Safety 1994) Further the General Product Safety Regulations of 1994 in Sections 10 (1) (2) (i) (aa) (bb) and (cc) goes on to stipulate the perimeters for health and safety in accordance with United Kingdom standards.18 18General Products Safety Regulations 1994 8 In viewing the Sale and Supply of Goods to Consumer Regulation 2002 which in part states: Whenever 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 the time of sale.) Aspects of quality include fitness for purpose, freedom from minor defects, appearance and finish, durability and safety.19 In Arcos v. Ronaasen (1933) ALL ER 646 the court held; "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 breached.20 Also in Frost v. Aylesbury Diaries (1905) 1 KB 608, the court leaves no room for an out on liability when it held; "it was irrelevant that all reasonable precautions had been taken, liability for defective products is strict".21 Sue's unfortunate set of circumstances clearly point out that HBS did not adhere to the special care of the product as cautioned by the General Products safety Regulations. In subsequent sections of the act, (sections 12-14), the 1994 act emphatically states that the tolerance level is zero for any person who knowingly or unknowingly violates the stipulations of sections 7-10 of the statues.22 Anyone who violates the statue will be guaranteed their 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 19Sale and Supply of Goods to Consumer Regulations 2002 20Arcos v. Ronaasen (1933) 21Frost v. Aylesbury Diaries (1905) 22General Products Safety Regulations 1994 9 distributor is that he or she relied on the information of someone else to keep him abreast, it in all likelihood would be deemed an inadequate defence by the court. Moreover, the statue establishes a net to bring all of the responsible parties before the bar. Therefore, Sue would clearly qualify as a consumer and she has the basis to file a negligent misrepresentation claim against HBS. On the matter of the exclusion clauses, we will view the Unfair Contract Act Section 2 (1) (2) and (3): which carries particular significance in Sue's case and states: (1) a person cannot by reference to any contract term or to a notice given to persons generally or to particular persons exclude or restrict his liability for death or personal injury resulting from negligence. (2) In the case of other loss or damage, a person can not so exclude or restrict his liability for negligence except in so far as the term or notice satisfies the requirement of reasonableness. And (3) where a contract notice purports to exclude or restrict liability for negligence a Person's agreement to or awareness of it is not of itself to be taken as indicating his voluntary acceptance of any risk.23 The court addressed the issue of unfair contract terms in Chapleton v. Barry UDC (1940) 1KB 532, it held; where notice is given in a document rather than by notice, care must be taken to ensure the document is a contractual document. A document containing an exclusion clause given to a party after the contract had been concluded will not be incorporated into the contract and will not therefore be 23Unfair Contract Act 1979 10 binding or enforceable. Even when a document is preferred before a contract is concluded it must be a 'contractual' document in the sense that it is the type of document which a reasonable man would expect to contain "terms and conditions".24 Also in Olley v. Marlborough Court Hotel (1949) 1KB 532, the court held; a notice on the back of a door disclaiming liability was not enforceable. The disclaimer or exclusion clause should have been drawn to the attentionbefore the contract was concluded.25 Also we find in Canada Steamship Lines v. The King (1952) AC 192, Lord Henryton makes an emphatic pronouncement on exclusion clauses; "if the clause contains language which expressly exempts the party relying on the exclusion clause from the consequences of his own negligence, then effect must be given to the clause".26 Thus, neither the purchasers card nor the leaflet would not provide HBS with any cover from liability. Sue would now be in a comfortable legal position to seek a number of remedies for her losses. In the case of Goss v. Chilcott Holdings Company LTD, where the court held; "when one is considering the law of failure of consideration and the quasi-contractual right to recover money on that ground, it is generally speaking not to the promisethere are endless examples which show that money can be recovered, as for a complete failure of consideration in cases where the promise was given but could not be fulfilled.27 24Chapleton v. Barry UDC (1940) 25Olley v. Marlborough Court Hotel (1949) 26Canada Steamship Lines v. The King (1952) 27Goss v. Chilcott Holdings Co LTD. 11 Sue's hair fell out of her head and she experienced a financial outlay for doctors treatment. Additionally, after two months of delaying her business start-up, she develops a case of depression as was subsequently advise by her doctor not to work for an additional six months. We find in Heron II (1969) 1 AC 350, the court awarded damages for loss profits, on the basis that although the appellant, a ship owner, did not know the respondent intended to sell a cargo of sugar immediately on its arrival, nevertheless the appellant knew that the respondent was a sugar merchant, and should have contemplated some financial loss, as a result of a cargo of sugar arriving nine days later. This is the first part of the rule in Hadley v. Baxendale. It would seem, from Heron, that a higher degree of foresee ability is required to satisfy the test of remoteness The rule requires the type of damage sustained to be foreseeable. If the type is foreseen the defendant is liable for "all" damages of that type, even though it may be far greater in extent as envisaged- subject always, to the duty to mitigate, which may lessen the loss sustained.28 Also in Victoria Laundry (Windsor) Limited v. Newman Industries (1949), that for damages to be recoverable, loss must arise normally from the breach.29 Further in James v. Swan Tours (1973) 1 ALL ER 92, the court held; "damages do not have to be limited to financial loss. Mental distress can also be recompensed". Lord Denning MR added; in a proper case, damages for mental distress can be recovered in contract"30 In the UK 28Heron II (1969) 29Victoria Laundry (Windsor) Limited v., Newman Industries (1949) 30James v. Swan Tours (1973) 12 there are two types of grounds on which the court bases the premise for mental distress damages; narrow and wide. The narrow ground was pursued by the court in Haley v. Dodd (1990) 2 ALL ER 815 when Slaughton LJ stated: "the foresee ability test might not be the correct test to apply to claims for damages under this head. Instead he took the view that the issue was one of policy, i.e., it was for the courts to decide as a matter of policy the classes of case in which the damages for mental distress may be awarded. He noted that in some cases in the USA, damages may be awarded for distress caused by wrongfully defending an action, but stated that; "there is no such remedy in this (UK) country"31 And when we look at Perry v. Sidney Phillips and Son (1982) 3 ALL ER 705, we see the wider view when the Court of Appeals awarded damages for distress, inconvenience and trouble"32 Also in Farley v. Skinner (2001) 4 ALL ER 705, the Court of Appeals held; "if a loss of amenity is to succeed it is not essential for the contract to be one which the object of which was to provide pleasure, relaxation etc., an award could be made where the defendant is in breach of a contractual duty".33 Further in Jackson v. Horizon Holidays (1975) 3 ALL ER 92, the Court of Appeal held; "that not only was the plaintiff entitled to recover damages for the discomfort and disappointment experienced-as a result of the company's' breach of contract, but also the plaintiff could 31Haley v. Dodd (1990) 32Perry v. Sydney Phillips and Son (1982) 33Farley v. Skinner (2001) 13 recover for similar losses incurred by spouse and children.34 34Jackson v. Horizon Holidays (1975) Bibliography Arcos v. Ronaasen (1933) ALL ER 646 Bisset v. Wilkinson (1927) AC 177 Canada Steamship Lines v. The King (1952) AC Chapleton v. Barry UDC (1940) 1 KB 532 Dimmock v. Hallet (1866) Farley v. Skinner (2001) ALL ER 705 Frost v. Aylesbury Diaries (1905) 1 KB 608 General Products Safety Regulations 1994 Goss v. Chilcott Holdings Cpmpany LTD. Grant v. Australian Knitting Mills Lts. (1936) Griffith v. Peter Conway LTD (1939) Haley v. Dodd (1990) 2 ALL WR 815 Hadley Byrne v. Heller Heron II (1969) 1 AC 350 Jackson v. Horizon Holidays (1975) 3 ALL ER 92 James v. Swan Tours (1973) 1 ALL ER 92 Kendall v. Lillico (1968) 2 ALL ER 444 Mutual Life and Citizens Assurance Company LTD v. Evatt Olley v. Marlborough Court Hotel (1949) 1 KB 532 Perry v. Sidney Phillips and Son (1982) 3 ALL ER 705 Product Warranty Liability Act R & B Customs Brokers Co. LTD, v. Dominions Trust LTD. (1988) 1 ALL ER 847 Rutledge v. McKay (1861) WLR 615 Sale and Supply of Goods to Consumer Regulation 2002 Sale of Goods Act 1979 Shaddock v. Paramatta City Council Schawel v. Reade (1913) 46 ILT 281 Smith v. Land and House Property Corporation (1884) 28 CHD 7 South Australia Unfair Contract Act 1979 Victoria Laundry (Windsor) Limited v. Newman Industries (1949) Wilson v. Rickett, Cockerall and Company LTD. (1954) Read More