Consumer law

Christina and Nicolas bought a second hand Renault Escape car from Perfect Motors which was offered for £4000. The salesman asserted them that the original engine of the car was replaced with a reconditioned engine and was good for many miles and been capable of cruising at 100 MPH as the car had only one owner. So Nicolas paid the amount through his credit card. Christina bought some dry cell batteries at the Perfect Motors outlet. The batteries were manufactured by Best Buy Ltd. She put them in her gold Rolex watch. Christina and Nicola went to visit their friends at Exeter in the car along with her grandson. In the course of journey, they discovered that the engine was malfunctioning so Nicolas left the motorway and took the car to a garage in Reading. The garage told Nicolas that the engine was defective and a replacement of the same would be cheaper than repairing it. The garage proprietor advised them to take the car back to London not faster than 50 MPH. The garage charged Nicolas £200 for checking the car. While coming back to London the watch batteries exploded damaging the watch and injuring Mark seriously that his left eye sight was impaired for life. On reaching London Nicolas went to the garage and demanded his money back and reimbursement of £200 which he paid at Reading garage.

Perfect Motors said they had no acknowledge of anything being wrong with the car and hence they would tune the engine free of cost. Regarding the defective batteries they said that it was not their lookout instead advised to take it up with the manufacturers. Christina approached Best Buy Ltd who claimed that they had good system of quality control and that this was the first time. They further claimed that no one in the trade could reasonably have expected that dry cell batteries would explode. With the depressing series of incidents, Nicolas decided to give Christina a birthday treat. He hired the services of Ben on the recommendations of colleague to repaint the exterior of her house. Nicolas instructed Ben to use a specific paint which was claimed by the manufacturers that it would last for years. Ben used the paint but after six weeks the paint flaked off. Ben failed to follow the preparation instructions correctly. Nicolas paid Ben £500 for the work and the paint cost £175. Nicolas also decided to get Mark a pedigree dog. He read an advertisement in the newspaper which said “Ignore the recent press! We have a litter of delightful, seven week-old Rottweiler puppies for sale. These particular dogs have a friendly temperament and will make excellent watchdogs. Price is £200 each or £350 for two”. Nicolas bought two dogs. Two months later he discovered that the dogs are not pedigree but a Rottweiler/German Sheperd crossbred. The dogs had become so aggressive that Mark is scared of them.

The legal issues to be addressed are, whether Perfect Motors can rely on the exclusion clause to escape liability and whether Nicolas and Christina have any remedy to recover the damages for the loss caused to them due to the defects in the car engine and the dry cell batteries bought from Perfect Motors and Best Buy Ltd, respectively.

It is essential to establish that Nicolas is a consumer. He had purchased the car for their personal use. According to the case of R&B Customs Brokers Co Ltd v United Dominion Trust Ltd[1], in which the contract excluded liability for breach of certain statutory implied terms and the exclusion clause, was subject to the statute[2].

The Court of Appeal held that the purchase of the car was only incidental to the company’s business activity, which meant that the purchase was not made in the course of business and so the plaintiff company was dealing as a consumer.

Thus the defendant could not exclude liability for the breach of implied terms[3]. The meaning of the phrase in the course of business in the statute[4]was clarified by the courts in Stevenson v Rodger[5]. In view of the above, Nicolas and Christiana are deemed to be consumers in the course of a business.

Nicolas has to establish that the garage owner cannot rely on the exemptions clause in the standard terms of the contract. An exemption clause in a contract purports to exclude liability of one of the parties to the contract, under certain circumstances. If a statement is made in pre – contractual negotiations and if that statement induces the other person to enter into the contract, it is termed as misrepresentation. A misrepresentation is a false statement of fact made by one party to another during negotiating the contract. A party suffering a loss due to a false statement by the other party to the contract can seek rescission of the contract and damages.

Misrepresentation is governed by common law, equity and statute.  Such misrepresentation is of three types, first, fraudulent representation where a false statement is made for pecuniary gain.

In Derry V. Peek[6], the House of Lords laid down that:

“(1) In an action for deceit it was unnecessary to prove mens rea and in order to prove it

       the plaintiff had to show either that the defendant knew or believed the statement in

       question to be false, or

  (2) that he did not believe it to be true or

 (3) he made it in reckless ignorance of whether it was true or false. ” -  and is either

      made knowingly, without belief in its veracity or is a statement made without

      bothering about whether it is true or false. The remedy available for this type of

      misrepresentation is claim for damages based on common law tort of deceit.

Negligent misrepresentation is described in Misrepresentation Act[7]. The presumption in law is that all misrepresentations are negligent. The onus of proving that it is a misrepresentation rests on the person making the representation. The remedies for the loss incurred due to such type of representations are rescission of the contract at the choice of the deceived party and claim for damages[8].

In the case Hedley Byrne v. Heller, the House of Lords held that in certain circumstances, damages could be recovered in tort for negligent misstatement causing financial loss[9]. This constitutes negligent misrepresentation under common law and a party may recover damages even when the representation is not fraudulent, unless the other party can prove that at the time of making the statement he believed it to be true and had reasonable grounds for that belief[10].

Although, the misrepresentation was made without fraudulent intention, the person making such a misrepresentation shall be held liable for damages. In the case Watts V. Spence, one of the joint owners of a piece of land contracted for the sale of this land without the knowledge of the other owners. This joint owner was held guilty of fraudulent misrepresentation[11].

Finally, even if innocent misrepresentation, which entails a statement which was believed to be true at the time of contracting, was involved; the burden of proof in this case rests on the person making such a misrepresentation. The remedies available in law are rescission of the contract and claim for damages[12].

Therefore, Perfect Motors, who sold the motor car to Cristina and Nicolas, stating that it was roadworthy and capable of being driven at a speed of 100 mph, had misrepresented facts. The garage at Reading told them that the car had a defective engine, which would prove cheaper to repair and that it was unsafe to drive the car at speed greater than 50 mph. Hence, the seller – Perfect Motors – is liable for the damages caused to them due to his misrepresentation in respect of the condition of the car.

If a trader has an arrangement with a credit card or finance company that allows you to pay by credit (for goods that cost more than £100) you may have extra protection because the credit card or finance company may also be liable for any claim you have against the trader.

For example, if the goods are not delivered or are not what you ordered, or a holiday was wrongly described or you didn't get what you paid for, you might be able to claim from the credit card or finance company.

Although it's a good idea to approach the trader first, you can make a claim against the credit card issuer or finance company without doing this. Contact Consumer Direct for advice prior to making a claim[13].

This implies that since the purchases were made with a credit card, Nicolas and Christina  can make good their losses by making a claim with the insurer.

In respect of the dry cell batteries, grievous injury was suffered by her grandson Mark. Further, the Statute sets out that no contract term can exclude or limit liability, in any way, for negligently causing death or injury[14]. Additionally, if there is other loss or damage, liability for negligence cannot be excluded or restricted if the term of notice is unreasonable. Finally, if a contract term or notice makes efforts to exclude or restrict liability for negligence, agreement to or awareness of this is not of itself to be taken as indicative of the voluntary acceptance of any risk[15].

The basic rule is that the seller is liable in contract to the buyer for goods sold. A manufacturer's guarantee cannot take away the retailer's responsibilities. An aggrieved buyer can claim under the guarantee or choose to claim against the retailer who sold the goods - assuming that the buyer has a valid complaint. Retailers sometimes believe that they have no responsibility during the guarantee period. Even if that was true in the past, it is not true now.

 Retailers sometimes feel that buyers should not have a claim against the retailer for defects, which are due to a manufacturing fault. It is worth noting that it is always the seller who is liable to the buyer in contract law. The retailer's responsibility is not something new that is invented by the Sale of Goods and Supply of Services Act although the Act does affect the trader's position in various ways.

The statute[16] gives various rights to consumers who buy or hire goods. The Act gives these rights by stating, in effect, that when goods are sold or hired both parties are assumed to have agreed on certain terms - regardless of whether these terms are in writing or even mentioned at all.

The UCTA[17] and the UTCCR[18] are applicable in this instance.  The relevant section of the statute[19] applicable to the contract for the purchase of the dry cell batteries states that the Act applies to business liability which is defined as "liability for breach of obligations or duties arising from things done or to be done in the course of a business”.

The contract entered by Christiana is included by virtue of section 3 of the UCTA, which covers consumer contracts and section 12 of the UCTA, which states that a person deals as a consumer if she neither makes the contract in the course of a business nor holds herself out as doing so and the shop owner makes the contract in the course of business.

The Unfair Contract Terms Act 1977 Sec.2 sets out that no contract term can exclude or limit liability in any way for negligently causing death or injury. It further states that, liability for death or personal injury cannot be restricted by reference to any contractual term or by means of a notice. Furthermore, if there is other loss or damage, liability for negligence cannot be excluded or restricted if the term of notice is unreasonable.

Moreover, if a contract term or notice endeavours to exclude or restrict liability for negligence, agreement to or awareness of this is not of itself to be taken as indicative of the voluntary acceptance of any risk[20].

The supposed exemption clause imposed by the shopkeeper, himself is invalid, so the shopkeeper cannot escape from his liability in respect of the injury caused to Mark. The relevant case is that of Curtis v Chemical Cleaning Company[21]. This is because the statute states that no contract term can exclude or limit liability in any way for causing death or injury[22].

Hence, it can be deduced that Perfect Motors cannot escape liability, according to the exclusion clauses in standard written terms of his business, and that the shop cannot be held liable for any personal injury, howsoever arising. The remedies available to Christiana are that she can sue the shop owner for the loss and damage caused to her. She can also claim damages for the grievous injuries caused to her grandson, resulting in permanent damage resulting in loss of sight in his left eye. This is in accordance with the ruling in Strathford East Kilbride Ltd v. HLM Design Ltd[23], wherein third parties were permitted to sue for damages[24].

Nicolas had engaged Ben to paint the exterior of his house with a special paint purchased from a specific manufacturer, the speciality of this paint as claimed by the manufacturer was that it would last for a long time. Moreover, this paint was exclusive in the sense that it was manufactured by only this company.

Six weeks after the application of this paint, it started to flake off. Ben on being appraised of this disheartening development stated that this particular paint was not meant for using outside. Nicolas made diligent enquiries and discovered that this flaking off was due to Ben having failed to follow the instructions of the manufacturer of the paint.

Therefore, Ben is solely liable for all the loss and anguish caused to Nicolas due to his negligence exhibited by him while painting the exteriors of Nicolas’ house.

            Finally, Nicolas had purchased two Rottweiler puppies based on an advertisement in a newspaper. Later on it was determined that these puppies were not pure Rottweilers, but a crossbreed between a German Sheperd and a Rottweiler. To compound Nicolas’ misery it was discovered, subsequently, that the sire of these puppies had been so vicious that he had to be exterminated and that these puppies were very aggressive.

            Even if the newspaper advertisement is considered to be an invitation to enter into a contract, all the same the fact remains that at the time of selling the puppies it was not revealed to Nicolas that the sire of these puppies had been exterminated due to aggressiveness. True to form after two months these puppies exhibited aggressive behaviour, which was terrifying in the extreme.

At the time of the contract these facts regarding the puppies and their sire were not disclosed. Hence, the seller had misrepresented the facts and thereby not only had cheated Nicolas but had also exposed him to the danger of being bitten by these vicious puppies. Therefore, the seller is liable under both civil and criminal law for breach of contract, misrepresentation and fraud.

            Finally, we can conclude that Perfect Motors is liable for misrepresentation under the statute[25] and so the contract is void at the option of the aggrieved party. Since the car is not of the quality represented by the shop owner the parties can claim damages or claim refund of the amount paid by them. The amount of £ 200, paid by Nicolas at a garage in Reading has also to be reimbursed by Perfect Motors.

In respect of the batteries purchased for use in the Rolex watch, Perfect Motors and Best Buy Ltd, have to make good the loss for the damage caused to the wrist watch. Further, they have to pay compensation for the loss of eyesight, caused by the exploding batteries to Mark. In addition, they are criminally liable for this grievous injury caused to Mark.

In respect of the painting work done by Ben, Ben is solely and totally liable for the monetary loss caused to Nicolas’ house. Accordingly, Ben has to reimburse Nicolas for the full extent of the damages and costs incurred in the painting process. Lastly, the seller of the puppies cannot exclude his liability by stating that the newspaper advertisement does not constitute a contract.  He is criminally liable for fraud and misrepresentation in addition to being liable for the monetary loss caused to Nicolas.


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[1] (1988) 1 ALL ER 847. [2] section 6 of the UCTA 1977. [3] (1988) 1 All ER 847. [4] Section 14 of Sale of Goods Act 1979. [5] (1999) 1 ALL ER 613. [6] (1889). 14 App Cas 337. [7] Section 2(1) of the misrepresentation act of 1967. [8] Halsbury’s Laws of England, 4th Edition. [9] Hedley Byrne & Co Ltd v Heller & Partners [1964] AC 465. [10] Section 2(1) of the Misrepresentation Act, 1967. [11] (1976). Ch 165, (1975) 2 All ER 528. [12] Trade Practices Act 1974, Section 52. [13] [14] Unfair Contract Terms Act 1977, Section 2. [15] Unfair Contract Terms Act 1977. [16] Sale of Goods and Supply of Services Act 1980. [17] Unfair Contract Terms Act 1977. [18] Unfair Terms of the Consumer Contract Regulations 1999. [19] Section 1(3) of the Unfair Contract Terms Act 1977.

[20] Unfair Contract Terms Act 1977. As amended up to 1st October 2003. [21] (1951). 1 KB 805. [22] Section 2 of the Unfair Contract Terms Act 1977 as amended up to 1st October 2003. [23] (1997) SCLR 877. [24] Outer House Court of Session 24 July 1997. [25] Section 3. Misrepresentation Act 1967.