Consumer Rights under the UK Legislations - Assignment Example

CONSUMER RIGHTS UNDER UK LEGISLATIONS List of Abbreviations SGA – The Sale of Goods Act UK – United Kingdom UCTA- Unfair Contract Terms Act 1977 UTCCR - Unfair Terms in Consumer Contracts Regulations 1999 CPA - Consumer Protection Act Answer to Question 1 The first issue is supply of wrong car i.e. instead of 1960 Speedster; Tom has made delivery of 1970 Spudstar to Jerry which results in breach of contract. The Sale of Goods Act (SGA) is the nodal law assisting consumers to avail remedies when they land up in wrong purchases in UK. Under UK laws, breach of contract would rather be explained as non-performance which offers a right of action. “The SGA 1979” was amended by “the SSGA 1994” and “the SGA (Amendment) Act 1995.” It is to be noted that the general law of contract will be given due consideration if it impacts the special contract of sales. Section 14(2) of the Sale of Goods Act expresses that where the seller sells goods in the ordinary course of business or trade, there is an implicit condition that goods so supplied under the contract of sale are of acceptable quality and should rationally fit for their purpose. Thus , under SGA , a seller should sell products that well fit into its description , should conform to its purpose and should have acceptable quality and if the product fall short of these , then , supplier has the duty to redress the grievances raised by the buyer . Certain contract inserts clauses giving the right to buyer to terminate the contract under certain circumstances. For instance, when the market price for product decreases after the entering of a contract, a buyer in normal course is keen to take the privilege of termination rights as a result of delivery of non-conforming products or late delivery. However, a seller has the duty to make sure that the products sold “adhere to the contract.” For instance, if a car is sold, then the seller should clearly express the model of the car to be sold, the details about its engine size, its previous owner’s history. In case, if the seller has described the product imprecisely, then the buyer can make a claim against the seller for breach of contract and thus seller might be involved a breach under the Trade Descriptions Act 1968. (The UK insolvency helpline 2008). In Fletcher v Sledmore, a car dealer and his customer visited the defendant who was a dealer in second hand cars. The customer inquired the defendant about a specific car and defendant informed him that it was “a good little engine.” However, this was not true. Then, car was sold to the customer. It was held by the court that the defendant committed an offence under false trade description Act. Thus, this decision clearly demonstrates that Act can travel beyond the restrictions of contractual relationships. (Weatherill 2005: 402) If any seller has sold the product that does not adhere to the description in the sales contract, or if it is not suitable for the purpose intended or is of substandard quality, a seller has the legal responsibility to resolve the issue at the earliest. In UK, under SGA, there should be a provision in the sales contract to return or reject the goods by the buyer with in a reasonable time. SGA does not have any explanation over “what is a reasonable time “under the contract. Thus, it may vary from case to case basis. It could be within few weeks from the date of purchase of the product. Further, under SGA, if a customer returns the products within the reasonable time, then he is entitled to claim refund of money paid by him. Further, the customer is entitled to claim compensation from the seller for the supply of wrong product at any time if he prefer. (The UK insolvency helpline 2008). A buyer under SGA is having the right to either to get repaired or for replacement of product sold as an alternative to get refund within six years from the date of purchase. Under “SGA”, a seller is liable for supply of faulty or defective goods. Further, products received which are not one in line with its description by the seller can be returned within 28 days from the date of purchase. A seller has the right to replace the product or a full refund has to be made if replacement is not possible. (The UK insolvency helpline 2008). Thus, Jerry can return the car and can ask Tom to refund the money paid by him as per the various scenarios explained above. Answer to Question No 2 As regards to the second question, Tom cannot limit his liability for breach of contract to £100 under the SGA. The parties to any contract are at liberty to consent that only a restricted claim or no claim will be entertained against the default party if he fails to meet his commitments under the contract. This is made possible by including an exclusion clause or occasionally known as a limitation clause or an exemption clause in the contract. It is to be noted that though the courts are inclined to implement these varieties of clauses, there are normally restrictive bar on their operation. Some of these limitations are arising out of the common law. Some others arise due to statute, mainly the Unfair Contract Terms Act 1977.One possible grounds why courts are appear to be lean against exclusion clause is that they frequently mirror a gross inequality of bargaining power between the parties. The nodal statutory restrictions on the restriction or exclusion of liability are to be relied in the Unfair Contract Terms Act 1977 (UCTA). The Act’s fundamental effect is to make wholly redundant any apparent exclusion clauses which try to limit or eliminate liability for some types of losses. It subjects other attempted restrictions to a test of reasonableness. The broadest safeguard of the Act is restricted to what are known as consumer transactions. Casson v Ostely PJ Ltd (2001). The farm of the Casson was destroyed by the fire which seemed to have been stimulated by Ostely, a firm of builders who had been contracted to perform some repairing work of the farm building. In the Ostley’s standard contract, under the heading ‘insurance’, there was a clause explaining that all unfixed materials and present structures shall be at the sole risk of the client in respect of damage or loss caused by fire due to the negligence of Ostely and the client shall hold a proper fire insurance policy against that risk thereby covering their risk adequately. It was argued by Ostely that this clause exonerated them from being held liable, even where the fire was due to their own negligence. Drafting of several of these terms by Ostely was severely criticised by the Court of Appeals. It held that clause appearing in the heading “insurance” was misleading and confusing. Court observed that the insurance clause was connoting that it concerned only with insurance matters but in disguise, it was an effort to exclude liability. Court observed that it should have been put under “Liability or Limitations and exclusions”. The court of appeals was of opinion that the term was quiet harsh as it exonerated Ostely from accountability for fire which was caused by its own negligence. The Court of Appeal observed that Ostely failed to explicitly state that it was not responsible for any damages caused due to fire caused in the client’s premises due to its own negligence. Since there is no explicit clause, Ostely was held liable for damages caused to Casson. (Rush & Ottley 2006:86) In Houghton v Trafalgar Insurance Co Ltd 1 six passengers were travelling in a five-seater car. The insurance policy included a clause which excluded insurance company’s liability if the car was carrying more than permissible load limit. The insurance company relied on this exclusion clause. However, the court held that the term “load” should be interpreted to connote ‘goods’ only. Since the excess was the number of individuals, the exclusion clause declared to be ineffective. (Barnes et al: 230). Under UCTA, some limitation or exemption clauses are automatically invalid and unenforceable whereas in some cases, it may be implemented only if they conform to the reasonableness test. Under UCTA, exception clauses are one which contain terms of the contract that try to restrict or exclude the liability of one party to the other party in a contract. “The UCTA 1977” (The Unfair Contract Terms Act) permits parties to repudiate some types of exemption clause on the basis that they are too rigorous. A buyer who wants to repudiate an exemption clause can also the use the provisions of the” Unfair Terms in Consumer Contracts Regulations 1999” which is also known as UTCCR. It is to be noted that UCTA is only applicable where a business is attempting to restrict or prohibit its liability. Provisions of UCTA will not be applicable to sales made by individuals in their private capacity. If Jerry does not want to process a claim against Tom, then Jerry can use the small claims procedure for products with a value up to a maximum of £5000. Hence, in view of the various legal points illustrated above, Tom cannot limit his liability for breach of contract to £100 under the SGA. Answer to Question No 3 It is to be noted that selling price is being arrived at the mutual consent of parties in a sales contract. The current market value of the car Jerry purchased is £1000 while the current market value of the car Jerry thought he was purchasing is £1500. Section 8 (1) of the SGA states that parties of a contract are at their liberty to fix the price in a sale contract. Thus, this section states that the price can be fixed in a manner mutually agreed between parties or may be ascertained from the course of transaction between the parties. Section 8(2) stipulates that the buyer should tender a fair and reasonable price where the price could not be deduced as per the above subsection (1) of section 8. Thus, section 8(2) is applicable where contract fails to establish the price or where the price has been indirectly quoted in terms of a future or current standard. Section 20 of Consumer Protection Act prescribes punishment where a trader in the course of his business transaction quotes to his consumer any misleading price of the products sold by him. Thus, this pricing offence is limited to trade supplies made to consumers but covers both to services and products. The offence specifically centres on the price which has been defined as the “total of sums needed to be paid by a consumer.’ In R v Kettering Magistrates’ Court ex p MRB Insurance Brokers Ltd , the defendant ,insurance company facilitated the plaintiff not only with contract of motor insurance but also extended credit to make payment of insurance premium. In effecting the credit for the insurance premium, the defendant quoted a substantially incorrect APR. It was held by the Court that insurance company was liable under section 20(1) of the CPA. (Macleod John Keith: 260). In the given situation, Jerry was under impression that current market value of the car is £1500 but in actual parlance that current market value is only £1000. It is assumed that Tom has not quoted any misleading price thereby inducing Jerry to pay £1500. In such a situation, Tom cannot be blamed for indicating misleading price under s 20 of the CPA. However, if Tom has actually misled Jerry as it the current market value is £1500 and later if Jerry found that real market value at that time of purchase was only £1000, he may ask Tom to refund the excess price charged. Jerry can even return the car within reasonable time to Tom and ask him to refund the £1500 paid by him since the price is not reflecting a real market value. If tom fails to refund, legal action can be initiated against Tom by Jerry under section 20 of the CPA. List of References Barnes Elizabeth, Handley Peter, Worsam Mike, Vaughan John, O’Neill Tony and Tim. (1997).Business Law. London: Wiley –Blackwell. Bridge, Michael. (1998). The Sale of Goods. Oxford: Oxford University Press Macleod, John Keith. (2002). Consumer Sales Law. London: Routledge Rush Jon & Ottley Michael. (2006). Business Law. London: Cengage Learning. EMEA The UK insolvency helpline (2008). The Sale of Goods Act. [Online] available from http://www.insolvencyhelpline.co.uk/business_advice/sales_marketing/maximise_sales/soga.php> [accessed 20 April 2009 Weatherill Stephen. (2005). Consumer Protection Law. Ashgate Publishing Ltd. ] Read More