Consumer rights Reforming statutory implied conditions and warranties

United Kingdom

Relevant legislation

British law on sale of goods is principally set out in the SGA 1979 (UK) which has been amended by the Sale and Supply of Goods Act 1994 (UK) and more recently by the Sale and Supply of Goods to Consumers Regulations 2002 (UK) (collectively, the SG Act).

The Supply of Goods and Services Act 1982 (UK) (SGSA) applies similar remedies to those in the SG Act, where the seller installs the goods or a contract is agreed for goods to be manufactured or produced. The SGSA Act and the Supply of Goods (Implied Terms) Act 1973 (UK) (SGIT Act) provide protection for those who hire goods, or acquire them under hire purchase, or conditional sale agreements.

In May 1999 (when the UK became part of the European Union) the EU Consumer Sales Directive (99/44/EC) (CSD) was introduced. In 2002, changes were made to the SG Act and the SGSA Act in an attempt to transpose the CSD into the domestic law.

Definition of ‘consumer’

All buyers are entitled to remedies under legislation. However consumers are entitled to a greater range of remedies.

‘Consumers’ are defined as persons who buy for purposes not related to their trade, business or profession. A consumer’s rights in relation to the sale and supply of goods cannot be curtailed by a term in the contract. However, certain limitations of liability are available in business to business contracts subject to the Unfair Contract Terms Act 1977 (UK) (UCT Act).

When goods are faulty, buyers can generally only obtain a legal remedy against the retailer. Consumers may have additional rights under any guarantee supplied with goods.

Implied terms in sale of goods

The SG Act sets out implied terms that require that goods conform with the contract, and in particular:

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  Goods should match any description given to them.
  
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  Goods should be of satisfactory quality (that is, they should meet the standard a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all other relevant circumstances).
  
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    The quality of goods includes their state and condition, and the following (among others) are, in appropriate cases, aspects of the quality of goods:
    
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      fitness for all the purposes for which goods of the kind in question are commonly supplied;
      
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      appearance and finish;
      
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      freedom from minor defects;
      
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      safety; and
      
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      durability.
      
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  Goods should be reasonably fit for any particular purpose that was made known to the retailer (unless the retailer disputed their appropriateness for that purpose at the time).
  

Implied terms in supply of services

The SGSA Act requires a supplier of services acting in the course of business in England, Wales and Northern Ireland (and, in part, Scotland) to carry out services:

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  with reasonable skill and care;
  
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  for a reasonable price (unless a price has been agreed); and
  
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  within a reasonable time (unless time is made of the essence).
  

These terms apply unless they have been excluded, and there are strict limits on the circumstances in which an exclusion or variation will be effective. The common law in Scotland has similar effect to the SGSA Act in those areas not covered by the Act.

Rights and remedies

There are effectively two legal regimes relating to the breach of an implied term — the traditional UK remedies and remedies based on the CSD.

Under the traditional UK remedies for sale of goods, the consumer is essentially entitled to reject faulty goods and terminate the contract. The consumer may refuse to pay for the goods, or (if they have paid already) claim a full refund. However, consumers must act quickly, as the right to reject is lost once the consumer is deemed to have accepted the goods, which may happen ‘after the lapse of a reasonable time’. Thereafter, the consumer is entitled only to damages.

If an item has a fault that is present at the time of sale, the consumer can take action once it is discovered. However, consumers do not have a legal remedy where goods have faults they knew about before the sale or which should have been evident on reasonable inspection.

There are four new remedies under the CSD, organised into two tiers — (1) repair or replacement and (2) rescission or reduction in price. Section 48A of the SG Act creates a presumption that where goods do not conform to the contract at any time within the first six months, they are presumed not to have conformed at the time of sale.

Consumers must begin by asking for a first-tier remedy. In theory, consumers may choose whether to ask for a repair or a replacement, but the trader may decline either of these remedies and provide an alternative if the requested remedy is impossible or ‘disproportionately costly’.

If neither repair nor replacement is realistically possible, consumers can request partial or full refund depending on what is reasonable in the circumstances. If the consumer has enjoyed some benefit from the goods before the problem appeared, they may be entitled to a partial refund proportionate to the benefit of the goods enjoyed up to the date the fault or defect was discovered.

Retailers are required to carry out a remedy within a ‘reasonable time’ and without ‘significant inconvenience’ to the consumer. Consumers can switch between certain remedies if required to achieve a timely outcome, provided they give the retailer a ‘reasonable time’ to honour their initial request.

As the law currently stands, the consumer may choose either regime.

If the consumer returns the goods in the first six months from the date of the sale, they do not have to prove the goods were faulty at the time of the sale. If the seller does not agree, it must prove the goods were satisfactory at the time of sale. For goods returned after six months, the consumer must demonstrate they were faulty when sold.

Dispute resolution

The Small Claims Court procedure provides the means for consumers to bring a claim for damages up to £5,000 (in England and Wales). This is generally at moderate cost and without need for a solicitor.

However, court action is rare and, in the vast majority of cases, the buyer and retailer are able to reach a satisfactory solution without any need to consider going to court by engaging in an alternative dispute resolution procedure or trade association scheme.

Other relevant legislation

There are a number of other pieces of legislation in the United Kingdom which are also relevant to the law in this area:

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  Unfair Contract Terms Act 1977 — restricts a trader’s ability to rely on contract terms to limit liability otherwise imposed by law.
  
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  Consumer Transactions (Restrictions on Statements) Order 1976 — makes it a criminal offence to restrict the consumer’s statutory rights by means of a notice, statement or documents (for example, a notice that states ‘No Refunds’).
  
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  Misrepresentation Act 1967 — provides a party who has relied on the misrepresentation with a remedy ranging from the contract being rescinded to the payment of damages, depending upon whether the misrepresentation was made falsely, negligently or innocently.