Podcast: the Fair
Historically, the concept of ‘deemed acceptance’ in s 11(4) and s 35 of the Sale of Goods Act 1979 operated quite harshly as far as consumer buyers were concerned, but the amendment of s 35 by the Sale and Supply of Goods Act 1994 and the introduction of new consumer remedies in s 48A of the Sale of Goods Act 1979 has satisfactorily remedied the situation.
Podcast: the Fair
In a contract of sale it is the duty of the seller to deliver goods that are in conformity with the contract (s 27 of the Sale of Goods Act 1979 (SGA). If the goods are not in conformity, the buyer may be able to reject the goods, and this is particularly so if there has been a breach of the implied terms in ss 12–15 SGA 1979, which are implied conditions of the contract. This will be the case if the seller does not have title in the goods (s 12 SGA), or the goods do not correspond with description (s 13 SGA), or if the goods are not of satisfactory quality (s 14(2)), or if they are not reasonably fit for their purpose (s 14(3)) or, if sold by sample, the bulk does not correspond with the sample. These implied terms are conditions, which permit the innocent party, the consumer buyer, at their election, either to affirm the contract or to reject the goods and recover their price, if paid and damages for breach of contract. In business to consumer contracts (B2C contracts) this right can be exercised even if the breach of the implied terms is of a relatively minor character, such as a minor defect of problems with the appearance of the product. However, there is an important qualification to this right, which is set out in s 11(4) SGA, stating that where the contract is not severable and the buyer has accepted the goods or part of them, the breach of a condition to be fulfilled by the seller can only be treated as a breach of warranty, and not as a ground for rejecting the goods and treating the contract as repudiated, unless there is an express or implied term of the contract to that effect – this is called ‘deemed acceptance’.
Historically, this rule worked very harshly as far as consumers were concerned. It assumed a decisive and clear break with the contract with a decision being taken in a relatively short time by the consumer to reject the goods; it was all or nothing – the consumer either had to accept all the goods or reject them all. The provisions were a legal snare for consumers, most of whom did not know the law. In reality many consumers were looking for repair or replacement of the product, or a reduction in price. The law historically gave them a stark choice between rapid rejection of the goods and monetary remedies or often being deemed to have accepted the goods and being confined to a claim for damages for breach of warranty. A further problem was the uncertain relationship between the acceptance provisions and the requirement that the buyer be given a reasonable opportunity to examine the goods to see if they complied with the contract (s 34 SGA 1979).
There were three ways in which goods could be accepted by the buyer set out in s 35(1) and (4):
Each of these grounds had pitfalls for the consumer. If the goods consisted of a number of items in unitary non-severable contract, all the goods had to be accepted or all the goods rejected. Often, when some large item, like a suite of furniture, was delivered to the consumer they would be asked to sign what they thought might merely be a delivery note, but this might contain a clause stating that the buyer accepted the goods as in compliance with the contract – so called ‘deemed acceptance’ notes – and these might be treated as an express acceptance within the first ground before they had had any chance to actually examine the goods. If the consumer altered the goods in any way the second ground might prevent rejection because they could not return the goods to the seller in the same condition as they got them. However, the most difficult ground was lapse of a reasonable time. The time ran from the date of the contract not the discovery of the defect. (Leaf v International Galleries (1950), where both seller and buyer innocently thought a painting of Salisbury Cathedral was by John Constable. Five years later, when examined prior to being put up for auction, the attribution was held to be wrong but it was held to be far too late to reject the painting.) The courts assumed a very rapid decision to reject often holding after a matter of days or even a couple of weeks that a reasonable time had elapsed – a typical case being Bernstein v Pamson Motors (1987), where the consumer had only had the car for some three weeks and for much of that time it was not in use as he was ill and he had not even used up the complimentary tank of petrol given on sale. The court was probably influenced by the fact that the defect was relatively minor and had been repaired but the buyer had lost confidence in the car. In some older cases a reasonable time has been interpreted even more strictly, coming down to a matter of three days in a case involving a defective dynamo in a purchased second hand lorry. The lorry was only on its second journey, but the court held that a reasonable time had elapsed (Long v Lloyd (1958). Uncertainty surrounded the issue of a request for repair – did this amount to acceptance or did it stop the clock running in relation to a reasonable time. Even when the consumer was legally advised, delays in negotiating a settlement of the dispute might mean that the consumer was held to have accepted the goods (Lee v York Coach and Marine (1977)).
A number of significant reforms were introduced:
Lapse of a reasonable time remains, fixed periods of rejection having been rejected, but in subsequent case law the courts have shown a greater flexibility and a willingness to allow longer periods to elapse without the consumer being deemed to have accepted the goods.(1) Key point is failure to mention the important Court of Appeal decision in Clegg v Anderssen (2003) and point out that the Court took the view that the first instance decision in Bernstein v Pamson Motors was wrongly decided. It must, however, be emphasized that even now the time is not open ended and a delay of nearly 18 months in relation to a fitted kitchen was held to be too long in Jones v Callagher (2005).
Nevertheless, the reforms of 1994 did not address the more fundamental issue that in many cases all the consumer wanted was either a replacement of the defective product or repair of the defects.(2) The implications of the House of Lords decision in Ritchie v Lloyd (2007) should have been mentioned – consideration of a section by the Supreme Court (or its pass incarnation, the House of Lords will usually merit a mention unless irrelevant to the answer.
The consumer’s position in this respect was further strengthened when s 48A–F was introduced by the Sale and Supply of Consumer Goods Regulations, which implemented the EU Directive on Consumer Sales and Associated Guarantees, Directive 99/44.
Instead of the single option of rejection and monetary compensation, s 48A provides for a series of graded remedies for consumer buyers only – the so-called ‘new remedies’ do not apply to business to business sales (B2B). Further, the hand of the consumer buyer is strengthened by s 48E, which allows court ordered specific performance of the obligations. The buyer can require the seller, within a reasonable time, to repair or replace the goods, but without being significantly inconvenient to the buyer. However, repair or replacement cannot be demanded if it is impossible (end of range product, no more available) or disproportionate in comparison to the other remedies (e.g. to repair a £30 kettle would cost at least £100 – this would not be reasonable) or disproportionate in relation to either a price reduction or rescission of the contract. However, if the contract is rescinded, the buyer must give the seller an allowance for any use that has been made of the product (s 48E(5) SGA). If the consumer had to go to court, then the court can impose such conditions on any court order as they think just.
A further advantage to the consumer in relation to these new remedies is that if, subject to the nature of the goods, the goods do not conform to the contract of sale at any time within a period of six months, starting with the date on which the goods were delivered to the buyer, they are taken not to have conformed to the contract, in effect, transferring the burden of proof to the seller to show that they did comply.(3) The controversy surrounding the UK's retention of a unilateral right of consumer rejection in light of the draft EU Consumer Rights Directive, which in effect forces the consumer to give the retailer the choice of repair and replacement – merited a mention – and the English and Scottish Law Commission response suggesting retention of the right but limited in most cases to a short-term right of 30 days.
This essay has shown that the candidate has understood the key legal principles. The main points are lucidly set out and there is mention of relevant legal provisions and some of the key cases. The main difference with the good essay are some omissions such as the key House of Lords decision in Ritchie v Lloyd (2007) and the Court of Appeal judgment in Clegg v Anderssen (2003) and the key point there that they disapproved of the decision in Bernstein v Pamson Motors. Also unlike the good answer the ‘cream on the cake’ point about potential developments flowing from the potential implementation of the draft EU Consumer Rights Directive was omitted. That being said, a solid pass, which should produce a mark in the upper 2:2 range (55-58%).