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A trader's guide to the civil law relating to the sale and supply of goods
This document is a guide to the rights and obligations that arise when a consumer buys goods from a trader. It answers questions which are commonly raised by traders about their obligations towards the individual consumer.
Contracts that involve credit or finance in any form are also subject to additional rules that are not covered in this document.
In the guide
What is a consumer?
Formation of a contract
Failure to comply with the terms of the contract is referred to as a breach of contract, and the person committing the breach normally has to correct it in some way. In order for an express term to be binding it must clearly be part of the contract and be legal. Terms given to a consumer after the contract is made (for example, terms written only on the back of a receipt) are not part of the contract and they have no effect.
A contract does not have to be written down, but where there are key express terms it is advisable to detail these in writing so there can be no dispute later on.
HOW IS THE CONTRACT MADE?
A genuine offer is different from an 'invitation to treat', were the trader is merely inviting offers which the consumer is free to accept or reject.
When a trader displays or advertises goods or services (for example, by displaying goods on a shelf in a shop alongside a price ticket) they are giving consumers what is referred to as an 'invitation to treat'. The consumer can then make an offer to buy the goods or services. At this point the trader is under no obligation to accept the offer - a contract is made if and when the trader accepts.
Sometimes, the process works the other way round - that is, the trader makes an offer to the consumer, and a contract is made when the consumer accepts the offer.
Under the contract, the consumer will agree to pay the trader a sum of money and/or to do something else in return for the goods or services the trader supplies. This commitment is known as the 'consideration' in the contract. If there is no consideration (that is, if a trader offers to supply goods or services completely free of any charge or other obligation) there is no contract at all.
WHAT HAPPENS WHEN THE CONSUMER CHANGES THEIR MIND?
When the consumer cancels the contract wrongfully the trader may not be able to recover the lost sale and could be entitled to claim loss of profit and any other reasonable costs incurred.
The implied terms
The person transferring or selling the goods must have the right to do so and the goods must:
- Correspond with the description: Many transactions involve a description of some kind. When goods are supplied and the consumer relies on such a description, the goods must be 'as described'. If the description is false, a criminal offence may also have been committed.
- Be of a satisfactory quality: Goods must be of a standard that a reasonable person would regard as satisfactory (taking into account any description applied to them, the price and all other relevant circumstances). Quality is a general term which covers a number of matters including:
In assessing quality, all relevant circumstances must be considered, including price and description. In consumer contracts, the manufacturer's advertising can also be taken into account.
- Be fit for the purpose: When a consumer indicates that goods are required for a particular purpose or where it is obvious that goods are intended for a particular purpose, and a trader supplies them to meet that requirement, the goods should be fit for that specified purpose.
Remedy for breach
When a consumer rejects goods they can claim compensation for their losses. This will normally amount to a full refund, plus compensation for any foreseeable losses that have been incurred. These losses might include the cost of any property damage caused by the goods, compensation for personal injury and compensation for the additional cost of buying equivalent goods if they are more expensive elsewhere. The consumer is also released from all their outstanding obligations under the contract - for example, the outstanding instalments in a contract of hire purchase.
If a consumer is buying goods for business use, they cannot reject goods if the breach of contract is very minor, but they will still be in a position to claim compensation.
WHAT ARE ACCEPTANCE AND AFFIRMATION?
Acceptance applies only in contracts for the sale of goods. Examples of acceptance are as follows:
A consumer is not considered to have accepted the goods just because they let the trader attempt a repair or where they have merely signed an acceptance or delivery note. A consumer must have a reasonable opportunity to examine the goods to check that they conform with the contract before they are deemed to have accepted them.
Affirmation applies in other contracts for the transfer of goods, including hire, hire purchase and contracts for work and materials. Affirmation takes place when the consumer, knowing that there is a breach of contract, chooses to keep the goods and not to reject them. Affirmation can occur if the consumer becomes aware of a breach but fails to complain within a reasonable time.
REMEDIES WHERE THE CONSUMER CANNOT REJECT THE GOODS
If a repair or replacement would put the breach right and the trader offers this, the consumer would normally be expected to accept it.
ADDITIONAL REMEDIES FOR CONSUMER BUYERS
If the consumer chooses one of these remedies, and if the defect is discovered within six months of delivery to the consumer, it is automatically assumed that the fault was there at the time of delivery unless the trader can prove otherwise. If more than six months have passed, the consumer has to prove the defect was there at the time of delivery (even if it was not apparent at that time).
If the consumer chooses the option of a repair or replacement, the trader must do this within a reasonable time and without significant inconvenience to the consumer. The trader must also pay all the relevant costs - for example, labour, postage, etc.
Where a consumer demands a repair or replacement, but that remedy would be disproportionate, then the trader would be entitled to offer them one of the other remedies. For example, if a consumer demands a repair, but it would be cheaper to replace the item than to repair it, the trader could offer a replacement. The consumer can only require a price reduction or rescission where the cost of repair or replacement is disproportionate or where repair/replacement are not provided within a reasonable time. (Rescission is the mutual agreement between the trader and consumer to terminate the contract and restore position prior to the contract.)
Exceptions - when the consumer cannot make a claim
A consumer cannot claim for damage they cause or if they simply change their mind about wanting the goods.
Neither can a consumer claim if they choose the product themselves for a purpose which is neither obvious nor made known to the trader and they then find that the item is simply unsuitable for that purpose.
A consumer has no rights to claim for faults that appear as a result of fair wear and tear.
Other laws affecting consumer contracts
LOSS OR DAMAGE IN TRANSIT
Dependent upon whether the misrepresentation was made fraudulently, negligently or innocently, the party who has relied on the misrepresentation will be entitled to a remedy that may include rescission, refund and/or compensation.
UNFAIR CONTRACT TERMS ACT 1977
In consumer contracts, traders cannot limit or exclude liability for breaches of the implied terms as to description, quality and fitness for purpose of goods. In addition, any attempt to mislead the consumer about their rights is an offence under the Consumer Protection from Unfair Trading Regulations 2008. (These Regulations cover traders' duties towards consumers in general - see our leaflet 'A guide to the Consumer Protection from Unfair Trading Regulations'.)
In business-to-business contracts, liability in respect of these implied terms can be limited, but only in so far as is reasonable, considering all of the circumstances under which the contract was made (see our leaflet 'A guide to the Business Protection from Misleading Marketing Regulations').
UNFAIR TERMS IN CONSUMER CONTRACTS REGULATIONS 1999
The regulations do not apply to terms negotiated with individual consumers, nor do they apply to the core subject matter of the contract (such as the description of the goods/services, and the price).
CONSUMER PROTECTION ACT 1987 (PART 1)
Compensation can also be claimed under this Act for damage to personal property (but not damage to business property).
For more information, see our leaflet 'Unsafe goods - liability for damage or injury'.
CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
THE TRADER'S IDENTITY
If a trader fails to disclose that it is a limited company and there is then a breach of contract, the consumer may be able to claim against the directors of the business as individuals. If a trader fails to disclose that it is acting as an agent for someone else, then the consumer may be able to make any claim directly against that trader.
Section 12 of the Torts (Interference with Goods) Act 1977 sets out what action a trader should take to get the goods collected and makes it clear what they can do if they are not.
It is sufficient to have a notice, which is easily visible to consumers, stating how long the trader will keep goods after repair and an intention to dispose of them after this date. The time period would need to be reasonable.
If no notice is displayed, the trader may need to send a registered letter to the consumer specifying that the goods are ready for collection and from where. The letter also should state the amount owing. Additional notification must also be given if the trader intends to sell or dispose of the goods after a certain date and how additional proceeds from the sale can be collected.
Q. The manufacturer offers a guarantee - can the trader refer the consumer straight to that manufacturer?
Q. If a trader sells sale goods or seconds, surely the consumer doesn't have the same rights against the trader as they would if new or perfect goods had been purchased?
Q. A consumer comes back to the trader about faulty goods purchased seven years ago. Does the trader have to do anything?
Q. Someone asks a trader for a quotation - how is this different to an estimate?
Q. Can a trader put a notice in their shop stating that refunds are not given in any circumstances?
Q. A consumer rings a trader to say that the TV they bought from that trader during the previous week is defective but they aren't prepared to return it to the shop. Can the trader insist that they return it?
Q. A trader gives a consumer a credit note but they cannot find anything they want? Does the trader have to then offer a refund and for how long should the credit note run? Can a trader offer a credit note instead of a refund?
Q. A consumer insists on a replacement but the item is no longer manufactured and there is none in stock.
Q. A trader cannot ascertain whether an item is faulty or whether it has failed due to misuse. What should they do?
Q. A consumer states a specific date for delivery of goods and the trader fails to deliver them on time - does the consumer have the right to cancel the contract?
Last reviewed/updated: April 2012
Vale of Glamorgan Trading Standards, Legal & Regulatory Services, Civic Offices, Holton Road, Barry, Vale of
Glamorgan. CF63 4RU
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