TALKING SHOP
Selling faulty goods can have long term consequences
R
eports in the Daily Mail* at the end of May 2009 and on BBC Breakfast the day after made the point – correctly or incorrectly – that some retailers are deliberately withholding information from consumers about the rights they have when it comes to goods that they have bought which turn out to be faulty.
Consumer rights is an issue to which politicians quite rightly attach great
importance. As a result, we have acquired in this area a large body of legislation which seems to have an inexorable capacity for growth, the most recent development being the introduction in the UK in 2008 of new EU- derived rules which identify what amounts to unfair (and hence illegal) commercial practice. The EU is in fact currently in the process of consolidating the numerous consumer rights directives it has issued into one comprehensive statute. One of the key issues dealt with by the law in this area concerns the rights of
consumers where they are dissatisfied with the state of the product they have bought. As with other aspects of consumer law this issue is becoming more and more significant with the growth of cross-border and on-line trading. So if you are a retailer, and you are faced with a dissatisfied customer, what are his rights and your obligations? The basic rule under the EU’s directive on the sale of consumer goods is that
items sold must be fit for their purpose and be of the quality that the buyer can reasonably expect, taking into account any relevant advertising or marketing statements made about the product concerned by the retailer. If the product turns out to fail this test, the seller will be liable to the buyer as long as the fault is identified and reported within two years of the date of delivery. These consumer rights are in fact extended under UK law. The Sale of Goods
Act 1979, as amended, gives consumers – remember this does not apply to business buyers - up to six years to exercise rights of redress. The UK legal test involves the term ‘satisfactory quality’. This test will cover,
where appropriate, the item’s appearance and finish, durability, safety and fitness for all the purposes for which goods of its kind are commonly supplied. The test is thus sufficiently broadly framed so as to be capable of application to goods with all sorts of characteristics. The criterion relating to safety will be especially relevant to goods intended for sale to children, for example, while a degree of durability will invariably be expected in the case of electrical goods. The implied terms relating to satisfactory quality also, however, require to be taken into account relevant matters which are brought to the buyer’s attention prior to purchase – for example, higher than normal risk of mechanical breakdown - and matters which the buyer should have noticed on prior examination – for example, scratches and dents. Thus if the buyer is or is deemed to be aware of these potential problems it will affect their position in any subsequent case of complaint. Where a consumer considers that the goods he has purchased do not meet
the statutory test, he can return them forthwith to the retailer and demand a full refund, provided he does this within a ‘reasonable’ time of the sale – the earlier the better from his perspective. He has the separate, statutory right under section 48 of the Sale of Goods
Act to request that the item concerned be repaired or replaced. The retailer can decline the particular option requested and choose the alternative if he can show that the consumer’s preferred option would be disproportionately expensive as compared with the other. So if a consumer asks for an item to be replaced, but the retailer thinks that the problem can be rectified effectively, but more cheaply, by repairing the item concerned, he is entitled to carry out the repairs and return the item to the seller. But the seller is obliged to do one or the other within a reasonable time – this must take into account the nature of the item and the purpose for which it was bought - and without causing
significant inconvenience to the buyer. So if the item sold was a pair of shoes for a wedding and the seller knew the date of the wedding, he would be expected to conduct the repairs, or to provide the replacement, with this in mind. The seller must also bear all necessary costs relating to the repair and replacement, including labour and delivery charges. If the fault cannot be remedied by either repair or replacement, a second option open to the consumer under the Act allows him either to demand a reduced price to acknowledge the fault, or to rescind the contract altogether and demand a full refund of the price paid. This option is available where a) it is impossible or disproportionate for the seller to repair or replace the item concerned or b) the seller has previously been asked to repair or replace the item but has failed to do so within a reasonable time. Key to the consumer’s rights is that, provided the goods are returned within 6 months of the sale, he does not even have to prove that they were defective at the time of the original sale – if the retailer wishes to dispute the consumer’s claim the onus will be on him to prove that they were not faulty. Again, the exercise of this right is subject to the nature of the goods concerned. At the limit of the possible, consumers remain entitled to claim
compensation from the retailer for up to six years from the date of delivery (five years in Scotland), but always provided that the fault was present at the time of the sale – the right to claim compensation does not encompass reduction of effectiveness due to normal wear and tear. Thus, where an item is taken away from a shop or delivered to the
customer’s door and it is considered to be defective on inspection, the situation is quite clear-cut. A claim by the dissatisfied consumer, within 6 months of delivery, that the item fails the ‘satisfactory quality’ test will lead to the retailer being required to repair or replace the item or pay full or partial compensation, although no obligation will ensure if he can prove that the item met the test at the time of delivery. A claim submitted between 6 months and 6 years of the delivery date may
also lead to obligations on the part of the seller, although the longer the time lapse between delivery and the making of the claim, the less obvious it may be that any fault that has been identified existed at the outset, and the less likely it will be that any compensation due will be fixed at or around the original purchase price. Claims made after 6 months may also revolve more around alleged defects in the ‘durability’ of the item concerned than around other relevant factors. There is no hard and fast rule on liability for poor durability under consumer
law and the merit of such claims will depend to a great extent on the nature of the product and the particular performance of the item concerned. Longer claims can also lead to questions about the inter-relationship of statutory rights and the operation of guarantees and warranties. On this point, retailers should be aware that the expiry of a guarantee or warranty period in relation to a sold product does not, in fact, supersede the consumer’s legal right of redress – even if that period has expired, a consumer may still be able to argue that the fault being complained about existed from the time of purchase and consequently should activate his statutory rights.
John Davies John Davies is Head of Business Law at the Association of Chartered Certified Accountants.
More information:
www.oft.gov.uk
http://berr.gov.uk/whatwedo/consumers/buying-selling/ sale-supply/
page8599.html
38 • FOOTWEAR TODAY
• SEPTEMBER 2010
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