In 1999 the European Parliament and Council of the European Union passed Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated guarantees. It relied upon Article 153(1) and (3) of the Convention, which states "the Community should contribute to the achievement of a high level of consumer protection by the measures it adopts. " The Directive required Member States to implement it into their National Law. The Directive was designed to give consumers across Europe a minimum standard of rules that would strengthen consumer confidence and enable consumers to make the most of the internal market.
The 2002 Regulations have been implemented in 4 major pieces of legislation. The Sale of Goods Act 1979 (SGA), the Supply of Goods and Services Act 1982 (SGSA), the Supply of Goods (Implied Terms) Act 1973 and the Unfair Contract Terms Act 1977 have all had provisions inserted. In general the Regulations deal with consumer remedies for faulty goods and consumer guarantees. To assess the impact of the 2002 Regulations it is necessary to examine the provisions it implemented into UK law. If we compare these new regulations to the pre-regulations system we can identify the benefits consumers gain from these new regulations.
We can establish whether the new regulation rights are different to the already existing provisions and assess whether they are better? We can then establish if they provide a better system of recourse for the consumer? The important changes are highlighted and explained briefly. Who is a 'consumer'? Regulation 2 defines a 'consumer' for the purpose of the regulationsin the Unfair Contract Terms Act 1977. It provides that "consumer' means any natural person who, in the contracts covered by these Regulations, is acting for purposes that are outside his business (emphasis added).
" 1 The Regulations do not apply to services in general nor do they apply to second hand goods sold at auctions where the consumer had the opportunity to appear in person. By 'attending in person' they mean that web based auctions are not excluded. Conformity with the Contract The SGA governs whether there is a lack of conformity with the contract. Traditionally the buyer could only claim if either there had been a breach of condition or a breach of warranty. A condition is a term that goes to the heart of the contract. They are the important terms of the contract.
A breach of warranty is a breach of the less serious terms of the contract. A breach of warranty only entitles the buyer to claim damages, however a breach of condition entitles him to damages and/or the option of repudiating the contract. 2 Establishing if a term is or is not a condition or warranty has been a problem for the courts using the traditional system. Under the new 2002 Regulations the test is whether the goods 'conform to the contract' or not. This can be interpreted as relating to all or any of the terms in a contract.
However, when comparing the traditional system and the new provisions it is not immediately obvious of the advantages that consumers gain from this differing cause of action. Where the buyer communicates to the seller the specific purpose of the goods it will lead to an implied term of fitness for the purpose communicated. In relation to the implied term (s. 14 SGA), that of 'satisfactory quality' Regulation 3 added the provisions that a seller can be responsible for statements made by him or others, ss. 14(2D)-(2F).
This section makes the seller liable for misrepresentations made by him, the producer or his representative where the representations, made with actual or constructive knowledge, were made to the world at large about specific characteristics of goods that enticed the buyer into the contract. For example, a consumer could bring a possible action against the seller because of the advertising claims of either the seller himself or the producer. The idea here is that the consumer is the weakest party and as such he can sue the seller who in turn can sue the producer for the advertising claim if it is wrong.
However, there is a defence available to the seller. Under ss14(2E) if the seller can show that when the contract was made he could not reasonably have been aware of the statement, or that the statement had been withdrawn or corrected in public, or that the buyer could not have been influenced by the statement, then he will not be liable for statements made. Then ss14(2F) states that ss(2D) and (2E) do not prevent any public statement from being a relevant circumstance for the purposes of (2A) if the statement had been such a circumstance apart from those subsections.
This allows the buyer to pursue a remedy under 'satisfactory quality' in ss(2A). The 'satisfactory quality' test is that goods must meet a standard that the reasonable man would regard as satisfactory, taking account of any description of the goods, the price and all other relevant circumstances3. As such the buyer could argue that the description breaches the implied term of satisfactory quality without having to rely on the additional provisions. Under the new Regulations the onus of proof is on the seller to show that the buyer was not enticed into the contract by the misrepresentation (ss.
14(2E)(c)). It can be argued that as there is no requirement of 'reasonableness' the test can be construed as being subjective. However, it should be noted that there is no definition of what a 'public statement' is in the Regulations. This leaves the question open as to how exactly the courts are going to interpret this phrase in coming case law. Fair Wear and Tear Consumers cannot be expected to hold the seller responsible for fair wear and tear.
The fault needs to have been present on the day of sale even though it only became apparent later on, or a misdescription of the goods, or a lack of durability that suggests the goods were not of satisfactory quality to start with. 4 Remedies The consumer now has a number of remedies. These comprise the two previous remedies of rejection and compensation and four new ones of repair, replacement, partial refund or full refund (rescission). Regulation 5 implemented new consumer rights into the SGA 1979. Section 48(A)-(F) SGA deals with these 'new rights'.
The aim of the proposed sections is to give consumers additional remedies for goods that, upon delivery, do not conform to the contract. The Regulations have provided a tiered hierarchical system for different remedies. Both the systems use the terms of the contract as a means by which a claim can be brought. The traditional system immediately categorizes the breach as either a serious one that goes to the heart of the contract or a less serious one from which damages can be claimed. However, the new Regulations do not differentiate between serious and less serious in this way.
Initially, if the goods are faulty on delivery, the buyer has the right to make the seller repair or replace the goods. The seller must do this within a reasonable time and with as little inconvenience to the buyer as possible. He must also bear the cost of repair and delivery of the goods to the consumer (s. 48B(2)(a) & (b). Under the Regulations the buyers right to repair or replacement is not absolute. If it is impossible, or disproportionately expensive5, for the seller to replace or repair the goods, then under s.
48A(2)(b) the buyer has the right to require the seller to reduce the price of the goods or to rescind the contract. To seek reduction of the price or rescission of the contract, the remedies of repair and replacement must not be available. 6 The regulations give guidance on the circumstances in which repair or replacement would be deemed to be disproportionate, either it is disproportionate in comparison to the other remedy available (replacement vs. repair) or it is disproportionate in comparison to an appropriate reduction in the purchase price or rescission7.
Generally something will be disproportionate if the price to repair it or replace it would be unreasonable, taking into account the value the goods would have had if they had conformed to the contract of sale, the significance of the lack of conformity and whether the other remedy could be effected without significant inconvenience to the buyer. What a reasonable time or significant inconvenience is will depend upon the nature of the goods and the purpose for which the goods were acquired.
However, the precise wording of the section suggests that the possible disproportionate nature of the claim could tilt the balance of control over to the seller, in that he could then decide which of the remedies best suited him. It could be argued that the seller will try to go for the cheapest option and claim that the rest of the remedies are disproportionate in comparison to it. This does not seem to be in the intended spirit of the application. However it will become a practical reality in some cases.
Under the traditional approach it was possible to have the goods repaired, replaced, reduced in price or you could rescind the contract. These remedies that are available to you, are available dependant upon the seriousness of the breach. If it was a breach of warranty then you could pursue a reduction in the price and/or a claim for damages, under s. 53(1) SGA, but could not rescind the contract. If the breach was of a condition then it is possible for the buyer to either have the goods replaced or repaired or he could rescind the contract and sue for damages.
8 In using the sellers right to claim disproportion, it can be argued that in fact the two systems operate fairly similarly. The Regulations decipher between a serious breach and a small one by using the disproportionate test. If the defect is small, the breach is small, and it would probably be disproportionate to replace or repair the goods whereupon the seller would reduce the price of the goods. This would probably achieve the same result as would have been achieved under a warranty.
Similarly a serious fault, or a serious breach, would allow the purchaser the remedy of repair or replacement and if neither of those were available then he could rescind the contract. The main difference in the two approaches being that the remedy of rescission is only available under the 2002 Regulations after the remedies of repair and replacement are impossible or disproportionate.
It has been argued that one of the main aims of the new Regulations was to make the remedy of rescission a last and final option. Under s.48E(2) SGA, implemented by the 2002 Regulations, the court has the power to order specific performance of any obligation imposed on the seller. An order can be made unconditionally or on such terms and conditions as to damages, payment of the price and otherwise as seem just to the court. In this way the court will be able to reflect any usage by the buyer of the actual goods. This helps to maintain the court's overall power to grant relief and enables them to grant remedies that are appropriate in the circumstances.