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Commercial Question

Is The Customer Right?

updated on 29 November 2005

Question

What should a business bear in mind when it comes to consumer rights?

Answer

As Christmas approaches and people start seriously shopping, the issue of consumer rights becomes ever more important. This is a fairly large area of law, with all sorts of nuances. For example, there is no single definition of a 'consumer'. Under EU law a 'consumer' generally means a natural person (ie, not a company). Under UK law the definition is not always so limited. The Consumer Protection Act 1987, for example, contains no statutory definition of the term.

A consumer's rights will depend largely on the type of contract he/she has entered, with the most relevant normally being a contract for the sale of goods. This exists where the seller transfers or agrees to transfer the property in goods to the buyer for money. If this type of contract exists, it will be subject to the Sale of Goods Act 1979 (as amended). This act is impacted upon by a number of other pieces of primary and secondary legislation, including:

  • the Supply of Goods and Services Act 1982, which requires traders to provide services to a proper standard of workmanship;
  • the Unfair Contract Terms Act 1977, which limits the use of exclusion clauses in contracts;
  • the Unfair Terms in Consumer Contract Regulations 1999, which provides that a standard term in a consumer contract is non-binding on the consumer if it causes a significant imbalance in the rights and obligations of the parties to the detriment of the consumer; and
  • the Sale of Goods to Consumers Regulations 2002, which provides consumers with additional remedies.

Sale by Description

Usually, goods bought in a shop will constitute a sale by description. Wherever items or goods under such a contract are bought they must 'conform to contract'. There are two aspects to this: first, the express terms of the contract must conform (ie, the goods must be as described), and second, the implied terms of the contract must conform (ie, the goods must be fit for their purpose and of satisfactory quality). Goods are of satisfactory quality if they reach the standard that a reasonable person would regard as satisfactory, taking into account the price and any description. Aspects of quality include fitness for purpose, freedom from minor defects, appearance and finish, durability and safety.

It is important to remember that the seller, not the manufacturer, is responsible if goods do not conform to contract. This means that if a consumer buys faulty goods from a shop, staff should not simply tell him/her to contact the manufacturer.

Acceptance and Affirmation

If goods do not conform to contract, the purchaser can request his/her money back, provided he/she has not already accepted or affirmed the contract. The buyer is deemed to have accepted the goods if he/she (i) intimates to the seller that he/she has accepted them when the goods are delivered, or (ii) does any act in relation to them that is inconsistent with the ownership of the seller. Affirming the contract is a slightly different concept, but arises in broadly similar situations.

One way in which it is possible to accept the goods or affirm the contract is by failing to return the goods within a reasonable time. This is not defined in the legislation, so common sense dictates what this means in each individual situation.

Another way of accepting the goods is by doing something to them to prevent their being returned in the same condition in which they were purchased. Thus, if a consumer bought a car and drove 20,000 miles in it, he/she would probably be deemed to have accepted the goods!

Sometimes repair/replacement is not possible or too costly, through no fault of the consumer. The consumer can then seek a partial refund, if he/she has had some benefit from the goods, or a full refund if the fault has meant that no benefit has been enjoyed.

Limitation

A consumer can demand repair, replacement or damages (usually the cost of a repair or replacement) for up to six years after purchase. However, this does not mean all goods have to last six years! This is simply the limit for making a claim in respect of a fault that was present at the time of sale. Clearly, you couldn't bring back a six-year-old packet of crisps and complain that they were mouldy!

Conclusion

Consumers have the right to buy goods that are:

  • of satisfactory quality;
  • fit for any particular purpose made known to the seller; and
  • as described.

A consumer has no real grounds for a complaint if he/she:

  • was told about the fault before he/she purchased the item;
  • examined the item when he/she bought it and should have seen the fault;
  • made a mistake when purchasing the item;
  • simply changed his/her mind about the item;
  • has damaged the item since buying it; and
  • has not returned the item within a 'reasonable time'.

If a product that was faulty at the time of sale is returned to the retailer, the consumer is legally entitled to a full refund, a reasonable amount of compensation, or a repair or replacement. A guarantee or warranty will grant additional rights.

Nick McDonald is a second-year trainee in Browne Jacobson's Insolvency Department.