November 2020

INDUSTRY THOUGHTS Guaranteeing future business

The world of electrical retail is fraught with difficulties, not least what happens when products fail, and the question of the guarantee comes into play.



onsumers have many legal rights they can fall back on should they ever feel that they have been wronged. The most significant piece of

legislation for traders to be aware of is the Consumer Rights Act 2015 (CRA) as it lists many of the statutory rights attaching to consumers. Under the Act, consumers have the right to expect, among other things, their goods to be of satisfactory quality, fit for purpose and as described. If the goods do not fulfil these standards, consumers can ask for a full refund, a repair or a replacement of the product from the retailer. But in addition to this statutory right, many

retailers and manufacturers extend an additional layer of protection in the form of a guarantee.

Legal requirements Matthew Gough, a Partner at law firm Eversheds Sutherland, says that while there is no obligation on retailers or manufacturers to offer consumer guarantees, once offered they must comply with certain legal requirements. He says: “Guarantees must be set out in plain and easily understandable language, and they must state that the consumer has statutory rights in relation to the goods and that those rights are not affected by the guarantee.” Additionally, Gough adds that “the guarantor must

ensure that the contents of the guarantee are clearly set out, including the essential details for making claims under the guarantee, the name and address of the guarantor, and the duration and territorial scope of the guarantee”.

As the goods are offered within the UK, the

guarantee must be written in English. Contractually, Gough says that “the guarantee takes effect, at the time the goods are delivered or as an obligation owed by the guarantor with the conditions set out in the guarantee statement and in any linked advertising”. Guarantees should not be confused with extended

warranties – an arrangement under which a customer pays a fee to receive services and spare parts over a specified period of time. These arrangements legally amount to a separate contract, subject to consumer legislation in the normal way. As Gough points out, those giving guarantees

must make sure that the level of protection offered under a guarantee ensures at least the same protection as that recognised by law. He explains: “The guarantee must not limit or

exclude the consumer’s statutory rights and remedies or contain terms which are otherwise unfair. When drafting guarantees, traders and manufacturers must achieve minimum compliance with legislation, and ensure consumers are not misled into thinking that statutory rights have been removed.”

No restrictions According to Competition and Markets Authority unfair terms guidance, a guarantee which offers more restrictive rights than a consumer has under law may be challenged as unfair, and therefore potentially unenforceable. This would include guarantees which offer lesser protection, either

because the benefits are less, or because their availability is made subject to special conditions or restrictions. Such restrictive wording could mislead consumers into assuming that it represents the full extent of their rights and cause them to refrain from exercising their statutory rights. Says Gough: “As a gesture of goodwill and

commercial pride, many manufacturers offer a guarantee for the lifespan and quality of their products, such as a three-year guarantee on goods akin to washing machines. This guarantee creates a legal obligation between the manufacturer and the customer, even where that manufacturer is not directly selling the goods.” He gives an example – should a washing

machine break before the guarantee period has elapsed, it would be the manufacturer’s duty to repair it under the guarantee. However, the trader who sold the product would still owe the consumer their statutory rights under the contract for the sale of goods. Matters of product safety are another matter entirely. “If a consumer has rights under a guarantee

provided by either the manufacturer or the retailer, it is up to the consumer to decide whether to exercise their statutory rights against the retailer, or the manufacturer as the provider of the guarantee,” concludes Gough. But if the guarantor refuses to repair goods as set

out under the terms of the guarantee, the customer may take legal action against that provider of the guarantee for breach of contract.

Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36