Rights of Consumers and the Sale of Goods Act - Essay Example

Rights of Consumers and the Sale of Goods Act Introduction: The Supply of Goods and Services Act of 1982 included some significant provisions that were geared towards ensuring the protection of the consumer, notably the implied terms about the quality of goods supplied. The Unfair Contract Terms Act of 1977 was also formulated with the objective of ensuring that individual consumers are protected from transcations that may be inequitable to them, for example, through the use of exclusion clauses.In addition, District Judge Peter Polly also provides insight on the EC Directive 1999/44, the goal of which is to harmonise consumer protection legislation throughout the European Community.1 Analysis: A consumer has been defined as “any natural person, who in the contracts covered by the Regulations, is acting for purposes which are outside his business”2. In order to protect the interests of the consumer, certain guarantees and implications about quality of goods supplied by sellers are included within the Act. As a result, the consume rcan be compensated for defective goods or products that not adhere to minimum standards of quality. The Supply of Goods and Services Act of 1982 makes it clear that while there is no general warranty about the quality of a product, there is an implied condition that the goods that have been supplied are of satisfactory quality.3 Firstly, goods are deemed to be satisfactory if “they meet the standard that a reasonable person would regard as satisfactory….taking into account all other relevant circumstances.”4 In the case of Reardon Smith v Hansen Tangen5 Lord Diplock clearly highlighted grounds that could exist for breach of contract through lack of identification of the goods being purchased: “Ultimately the test is whether the buyer could fairly and reasonably refuse to accept the physical goods proferred to him on the ground that their failure to correspond with that part of what was said about them in the contract makes them goods of a different kind from those he had agreed to buy.”6 Therefore, one of the notable aspects of the Sale of Goods Act in providing for the interest of the consumer is in setting out additional rights for consumers who find that they have been supplied with defective goods. The statutory test to determine the merchantable quality of goods is that they are fit for the purpose that they are to be used7. In cases where a customer may voluntarily opt to purchase an inferior product for price savings, Dixon X proposed the “relevance of the price” test for a product as being one where a buyer “fully acquainted with the facts and therefore knowing what hidden defects exist…would buy them without abatement in the price…..” 8 There is a reasonable duty of care that is expected from manufacturers and sellers in the nature of goods sold, based on the principle laid out in Donaghue v Stevenson9 that reasonable care must be taken to avoid injury to other persons. This provides furtehr protection to consumers who purchase goods. According to Lord Dunedin in the case of Dominion Natural gas Co Ltd v Collins and Perkins10, when a dangerous product is involved, there is “a peculiar duty to take precaution imposed upon those who send forth or install such articles when it is necessarily the case that other parties will come within their proximity.”11 Another factor that has been taken into consideration by the Courts in determining a breach of duty of care expected by a manufacturer or supplier of goods towards a consumer, is in the element of foreseeability about the harmful effects of defective products, especially when injuries have been caused to the Plaintiff.12 Therefore, consumers are to be protected from all foreseeable risks and especially misrepresentation about the products being sold.13.On this basis, a manufacturer or seller will be held to be in breach of its duty if it does not warn consumers about the dangers of improper usage of product, especially to persons in physical proximity to the product.14 The superior bargaining positions of sellers as opposed to an oridnary consumer have also bene acknolwedged in the Act, and especially through the Unfair Contrcat Terms Act of 1977 which even deals with the unfairness that may be generated towards the customer by exclusion clauses included in the contract for sale15. Section 16(1) of the SOGA 1982 deals with exclusion clauses, while Sections 1 to 14 and Schedule 2 of the Unfair Contract terms Act are the statutory provisions dealing with exclusion clauses. If an exclusion clause in a contract for sale is to be deemed to be invalid for any reason, it will be because it is unreasonable in its terms and conditions16. A contract that is deemed to be unfair due to the inclusion of an unreasonable exclusion clause will not be binding upon a customer17. A contract will be said to be unfair if “contrary to the requirement of good faith it causes a significant imbalance in the parties rights and obligations under the contract, to the detriment of consumers.”18 The UCTA (Unfair Contract Terms Act) generally provides more scope for an ordinary customer to contest a contract as being unfair, especially in terms of its exclusion Clauses, since an ordinary customer will be deemed to be in an inferior bargaining position as compared to the supplier. The supplier will also be deemed to possess greater knowledge and therefore redress will be offered to compensate for the unequal bargaining position.19. According to the UTCA, a contract may be unfair if its objective is that of “excluding or limiting the legal liability of a seller or supplier in the event of ….. personal injury to the latter resulting from an act or omission of that seller or supplier.”20 In making a decision about whether or not a contract in unfair in terms of its exclusion clauses, the UCTA 1977 specifies that a “requirement of reasonableness”21 must be satisfied22. Schedule 2 of the Unfair Contract terms of 1977 sets out the guidelines on reasonableness in contractual terms. These guidelines are relevant when applied according to sections 6 or 7 which deal specifically with the sale of goods.Generally, the Court will take into account the following factors in determining whether unfairness exists: (a)the information that was available to both the parties at the time the contract was drawn up (b) whether the contract was a standard one or whether it was negotiated (c) whether the purchaser had the option and the power to negotiate better terms (d) whether extent of liability was determined by customer’s compliance with some condition and whether such compliance was reasonable to expect in the circumstances. Furthermore Sections 16(3) and (4) of the SOGA of 1982 qualify exclusion Clauses and clarify that notwithstanding the provision for exclusions, they will not indemnify a seller of responsibility for maintaining the standards set out in Sections 14 and 15 of the SOGA, deemed necessary in the interest of consumers. In making a determination about the reasonableness of the exclusion clause, the time frame between the actual purchase and the breach will not be relevant, rather the contract terms should have been reasonable and fair in terms of the circumstances and the facts and the knowledge that the parties should have had23. The Unfair Contract Terms Act of 1977 does not exclude liability of the manufacturer of the product for injuries arising out of the use of the product24. For example, in the case of White v John Warwick and Co Ltd25 there was an exclusion clause that stated that the owners would not be liable for any personal injuries arising out of the contract. However, the Courts held that the defendant owed a duty in contract and tort to the plaintiff and while the clause excluded the contractual duty, it did not exclude the tortious liability and the defendant was obliged to compensate the plaintiff for his injuries. Polly points out how some of these consumer protection measures are further reinforned through the EC Directive 1999/44, which makes a seller of goods liable for the quality of goods26. It also includes a statutory right of the consumer for repair of goods in the first six months after delivery. Furthermore, manufacturers have also been made liable to carry through on the guarantees that they offer on their products. Conclusions: On the basis of the above, it may therefore be noted that the Sale of Goods Act has introduced comprehensive measures that are geared towards providing consumers with quality products and protecting them against defective goods.Moreover, while sellers relied on exclusion clauses to limit their liability, the Unfair Contract Terms Act of 1977 and enhanced provisions of the SOGA have ensured that contractual terms unfair to a consumer will be invalidated. With the move towards harminisation of UK law with community law, consumers are provided with further proteciton against defective goods or goods that could cause them injury. The element of foreseeability of injury must be taken into consideration by sellers and warningsprovided on products about dangers in use of such products. Therefore, these measures are significant in ensuring the protection of the consumer. It may thus be concluded that consumer rights are currently offered adequate protection under the law. Bibliography Books/Journal articles: * Macdonald, E, 1999. “Exemption Clauses and Unfair Terms.” London: Butterworths * McKendrick, Ewan, 2000. Contract Law 4th edition, Palmgrave Law masters at pp 360 * Polly, Peter, 2003. “Benchmarks - caveat vendor? The forthcoming improvements to consumer rights.” Law Society Gazette, 100.07 (37) * Thal, SA, 1998. “The inequality of bargaining power doctrine: The problem of defining contractual fairness.” 8 Oxford Journal of legal Studies 17 * Timewell, Michael, 2002. “New Consumer rights due soon.” New Law Journal, 152.7033 (796) Cases cited: * Donaghue v Stevenson [1932] AC 562 * Dorset Yacht Co Ltd v Home Office (1970) AC 1044 * Dominion Natural gas Co Ltd v Collins and Perkins (1909) 640 * Grant v Australian Knitting Mills [1936] AC 100 * Henry Kendall & Sons v William Lillico & Sons Ltd [1969] 2 AC 31 * Lambert v Lewis [1982] AC 225 * Lloyds Bank v Bundy (1975) QB 326 * Pegler v Wang (2000) 70 Con L.R. 68 * Photo Production Securicor Ltd (1980) AC 827 * Reardon Smith v Hansen Tangen (1976) 1 WLR 989 HL * White v John Warwick and Co Ltd (1953) 1 WLR 1285 ;(1953) 2 All ER 1021 Read More