#13883 - Consumer Protection Performance Standards And Implied Terms Exemption And Limitation Caluses Unfair Terms - Commercial Law

Consumer protection: performance standards and implied terms, exemption and limitation clauses, unfair terms

PRELIMINARY COMMENTS

• The law commission does a lot on developing & proposing changes to consumer legislation.

• But we can see quite a lot coming from the EU as well.

Definitions of consumer

• S.12, Unfair Contract Terms Act (UCTA) 1977

• Gives us a definition of a consumer. Nowhere in the SGA, while it talks about consumers it doesn’t give a definition of a consumer.

• More specifically UCTA gives us a definition of one who deals as a consumer.

• You deal as a consumer if you do not hold yourself out in the contract, to be dealing in the course of a business. You can see that even in the case of R&B Customs v UDT – in the context of buying in the course of a business or buying as a consumer. Even where a business buys certain good, which are not integral to the business, they will be treated as a consumer. Relevant now moving forward because this means they will be afforded extra protection under the SGA, but also the fall back protections of UCTA.

• Reg. 2, Sale and Supply of Goods to Consumers Regulations (SSGCR)

  • Same definition of consumer here.

Goods v services: Goods

• Public statements

• UCTA talks about public statements. But UTCCR goes on to talk more about public statements.

• Traditional remedies

  • Moment of acceptance is really important, because once the goods are accepted, the buyer loses his right to reject under s.35

• ‘New’ remedies

  • SGA 1979, s.48

  • We then see new remedies such as those in s.48, A,B,C,D – the 4 r’s

  • We also see consumer guarantees and extended warranties

  • On consumer guarantees, that we have got a new directive on consumer rights

Consumer Rights Directive 2011/83

• Just recently replaced some of the other consumer legislation.

• We can see this bringing about harmonised consumer right bills across the EU

• A lot of these things coming out for instance the Consumer Contracts Information, Cancellation and Additional Charges Regulation

• We can see that clarity & transparency in all the terms in what is being charged to consumers must be showed. There must be transparency in information in the fees/charges that consumers are paying

  • Seen in the airline industry.

Goods v services: Services

• s. 3, Supply of Goods and Services Act 1982

  • Implied term with respect to description

• s. 4, Supply of Goods and Services Act 1982

  • Implied term with respect to reasonable care and skill

• Duty

  • Donoghue v Stevenson [1932] (Neighbour Test)

  • Caparo v Dickman [1990] (3 stage test)

• Standard

  • Bolam Test (case [1957]) ? now Bolitho [1997]

  • There are performance standards. The standards are set in the legislation, in the two acts for instance vis-à-vis the implied terms.

  • But we will also see that there are additional things that sellers will do in order to get your confidence to buy the goods. And so they will offer you additional guarantees. This is important because we always see on receipts that our statutory rights are unaffected. So what are our statutory rights? We have performance guarantees vis-à-vis the implied terms, we know what our statutory rights are with respect to goods, services and contract for goods and services.

  • So now it’s about where the seller lays out additional guarantees. Before he lays out additional guarantees, he may seek to limit your rights. So vis-à-vis an exclusion clause or a limitation clause

Exclusion/Limitation clauses

• What is an exclusion clause? For example: “the university is not liable for the injury of the light bulbs falling on your head”

• Is this a valid exclusion clause or not? No because of UCTA, s.2 & s.3, talking about things like: you cannot exclude liability for personal injury or death. You can exclude liability for other things apart from injury and death subject to the test of reasonableness.

• What are limitation clauses then? So the university is liable for 1000 pounds, an example of a limitation clause. Again the question of whether this is valid or not. What are the restrictions on the use of them?

Incorporation

• In order for an exclusion clause, or even to apply UCTA to the exclusion clause, you need to first show that the exclusion clause is properly incorporate into the contract.

L’Estrange v Graucob [1934]

• If the contract is signed, then it is incorporated. So if you don’t read the small print but you sign the contract, it is incorporated.

Parker v SE Railway (1877)

• On the back of the ticket it said have a look at our printed timetable, for our terms and conditions. Question whether this is too far away, is too onerous on the consumer, on the user of the service?

Interfoto v Stiletto [1988]

• COA case about is the author of the terms required to draw attention to them?

• Interfoto takes from the Bradshaw case - Lord Denning’s red hand rule.

• Quite often people say that Interfoto is the red hand rule, but in fact in Interfoto, Bradshaw was applied.

Olley v Marlborough Court [1949]

• Relating to hotel and the fur coat. Question is whether the term located on the back of the door, whether that can be incorporated into the contract

• Court said that the contract was formed at check in. So it’s too late you cannot add terms on the back of the door they are not incorporated so they do not form part of the contract

Thornton

• All cars were parked at the owners risk, at the parking garage. About taking the ticket. Another COA case.

Curtis v Chemical Cleaning

• Dress at the dry cleaners, that had sequences on it. The beads were in tact but dress was stained. So again the question of whether the shop assistant (SA) could be liable for damage in the form of the stain.

• When the SA said that they were not liable for damage to beads/sequences.

• COA said that dry cleaners could not rely on that in effect.

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Construction

Houghton v Trafalgar Insurance [1954]

• In this case there was a motor insurance policy, which was for a 5-seater vehicle.

• The insurance policy had a clause in it which said that the policy would be void if the driver carried an excessive load.

• There was an accident, and the car was at a total loss and so the owner went to claim for his insurance policy

• And on the facts the insurance company got information that there were 6 persons in the car. They sought to rely on that excess load provision, and the owner of the car succeeded on here as the term was ambiguous.

• It was contra proferentum – the court will construe the clause in the favour of the party who needs the protection - as against the person seeking to rely on it (the person seeking to rely on it is probably the person who drafted it, but not always)

Unfair Contract Terms Act 1977 (UCTA)

s.2

• Talks about death & personal injury

s.6(2) - addresses sections ss. 12 -15 SGA.

• It says that where the buyer is dealing as a consumer, that is defined in s. 12 of UCTA. Then any attempt by the seller to exclude or limits or negative rights of the consumer buyer’s rights that he has under implied terms then the clause is automatically void.

• So any exclusion/limit clause which seeks to limit or negative the rights of the consumer buyer for the implied terms of ss.12-15, is automatically void.

• These implied terms are effectively statutory rights. Interesting that quite often we see cases of consumers signing up to agreements where their rights with respect to these provisions are excluded.

• The law will give you the rights, and the seller will want to reduce it somehow.

• As it reduces his duty – makes it more about buyer beware, rather than seller beware.

• UCTA steps in as a fall back provision – voids it (even if incorporated, simply ripped out of the contract)

s.6(3)

• Talks about non-consumers. In the case of non-consumers these implied terms and the clause will be valid if reasonable. The whole objective of UCTA with respect to s.6 is about bargaining position/power.

• SGA is to do with B2B, here it’s B2C. Perhaps we can say that the parties knew very well about what they were getting into.

• Perhaps the buyer here as a business (as a non-consumer), has given a really good deal. Now can he turn around & seek to rely on this. And say the clause is unreasonable? Difficult to say.

• about personal death/injury

s.11(1)

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