8. law and ethics consumer law

Law and Ethics

8. Consumer Law

By the end of this lesson you will

- Know the development of consumer protection legislation

- Identify the main terms implied into every sale of goods

contract

- Identify the remedies available

- Describe the additional protection afforded to consumers

by the Consumer Protection Act and Consumer Protection

Directive

- Understand the role of the Competition and Consumer

Protection Commission

Implied terms in consumer contracts

Implied terms custom, legislation or courts

Consumer contracts = 2 parties

Individual consumer is disadvantaged / forced to agree to

terms

All consumer and commercial contracts subject to law on sale

of goods

Sale of Goods and Supply of Services Act 1893/1980

Sale of Goods and Supply of Services Act 1980

S.1(1) of Act defines contract for sale of goods as seller

transferring goods to buyer for money consideration called

the price.”

1) Agreement must have objective transfer of **GOODS** i.e.

not land, shares or contract for services. Can be

existing goods, future or specific or unascertained goods

2) Contract must be for sale

3) Goods must be sold for price (money not trading stamps or

performance of service)

Implied Terms

Act implies terms regarding title,

description, merchantable quality and

fitness for purpose.

Implied terms apply to sales in course of

a business

Private sales are transactions carried

out between a private individual and a

consumer are not in course of business.

Section 12 Title of Goods

Sellers duty to pass on goods with a good

title

I.e. seller must have right to sell goods.

If they don’t have the right, the buyer is

entitled to a full refund…

Even if the buyer has taken goods for a

period of time

Rowland v Divall 1923

Plaintiff bought a car from the defendant and

used it for several months.

Discovered defendant never owned it so the

car had to be restored to the true owner.

Plaintiff sued = failure of consideration.

Court of Appeal held breach of contract

Good Title = free from encumbrances

Section 13: Description

Implied term in contract in private and

business that goods sold must correspond with

description

Breach of contract if they do not correspond

Varley v Whipp 1900

Section 14 Merchantable Quality

Implied term that goods sold must be of merchantable

quality

Merchantable quality also means safe quality

Must meet standard a reasonable person would expect

But courts will also take into account defects and

other conditions

Buyer cannot rely on this section if….

- The seller brought the defect making the goods

unsatisfactory to the buyer’s attention OR

- If the buyer examined the product and ought to have

noticed the matter OR

- If the buyer examined a sample good and ought to have

noticed

Grant v Australian

Knitting Mills

Buyer entitled to damages

after the underwear he

bought was held not to have

been of satisfactory

quality.

Sulphites caused a rash!

Buyer who purchased coalite

was entitled to damages as

coalite contaminated with

explosives

Wilson v Rickett

Cockerell

Section 14: Fitness for Purpose

Under S.14 where a buyer says specifically what the goods

are for, then there is an implied duty that he provides

goods that are fit for this purpose.

The buyer must prove that the seller made the purpose known

BUT! Seller can avoid liability if he can show that the

buyer did not rely on his judgment whether the product was

actually fit for purpose

Baldry v Marshall

Buyer who expressly

requested a comfortable car

was given a bugatti which

was not suitable for

touring

Man bought hot water bottle

that burst.

Court said that although he

had not expressly made

known to the seller the

purpose for which he wanted

the product, there was a

breach of the implied term

Priest v Last

Section 15: Sale by Sample

Duty imposed on the seller that when a sale is made on the

basis of a sample that

a) The goods that arrive must correspond with sample in

terms of quality and be free of defects

b) Buyer should be given reasonable opportunity to compare

the sample with the bulk of the goods

Godley v Perry 1960

Shopkeeper who purchased a large

number of catapults after

examining a sample was entitled

to repudiate the contract and

claim damages as the catapults

were unsafe and the defect

wasn’t apparent on examination

of the goods

Supply of Services

1980 Act extends consumer rights to contracts for the

supply of goods or services.

Services eg. plumbing, car service etc.

Any goods that are supplied under these services are

subject to the same implied terms

Supplier must also - have skills to do service, with

reasonable skill & care, supply satisfactory goods, within

a reasonable time and reasonable price

Remedies for breaches under the Act

Depending on what type implied term has been breached and

the seriousness of it, injured party may be able to

repudiate the contract and claim damages

Injured party may be granted “specific performance” where

damages are an insufficient remedy, which may involve a

repair or replacement of the good or service

Exclusions

Any attempt to exclude from the terms of the Sale of Goods

and Supply of Services Act 19080 is strictly prohibited

Such an exclusionary term is void and of no effect.

Consumer Protection Act 2007

EU Directive on Unfair Commercial Practices

Implemented into law by Consumer Protection Act 2007

Introduces general duty on all business to trade fairly

“Consumer” is defined as a natural person who purchases

goods for personal use

Protects consumers from unfair commercial practices

S.41 - General prohibition of unfair commercial

practices

Section 41 general prohibition on unfair commercial

practices

A practice is defined as unfair as it fails to meet the

standard of professional diligence, namely;

- Transaction not entered into in good faith by trader

- Standard of skill was likely to (1) cause appreciable

impairment of the average consumer’s ability to make an

informed choice and (2) make a decision they otherwise

would not have made

S.43 Misleading Practices Offences under the

Act

Section 43 Misleading Practices are

- Misleading the customer through the provision of false

information

- Deceptive presentation of the product and

- Action deceives in relation to 1) the existence of the

product or 2) the main characteristics of the product

AND

- Action causes the consumer to take a different economic

decision

Examples

Misleading Practices

Price of Goods ● Current price must be clearly shown

● Trader mustn’t prevent prices being red

● Manufacturer must state where offer applies

● If price is crossed out and lower price used, it

must have been previous price for 28 days

within previous 3mths

● If there’s no RRP do not add one

Geographical

origin

● Product must state where the product

originated from

● Especially important for food e.g. beef

Misleading Practices

Method of

manufacture

Offence to state that a product is handmade or

man-made when it is machine manufactured

Quality of product It is an offence to state grade, standard or style

incorrectly e.g. organic

Quantity of

product

Overstating weight of a product is misleading

(also actionable under SOG legislation

Where food is sold by weight, company must

provide a scales in store

Misleading Practices

Specification of a

product

It is an offences to incorrectly state the specs

of a product

E.g. 28” v 32” tv screen

Fitness of purpose Important to not mislead e.g. “helps with

weight loss”

Risks associated Any risks should be clearly stated on labels

especially cosmetic and medical products

Misleading Practices

Product ingredients Should be stated clearly

E.g. “no sugar added”

Trader must state all

the terms and

conditions

Offence to sell a mobile phone contract with

mentioning a period you have to commit for

Aggressive Practices

Sections 53/54 Consumer Protection Act 2007

An aggressive practice is any practice by the trader that:

Causes significant impairment of the “average consumer’s

freedom of choice”

AND

Causes the average consumer to make a different economic

choice

Aggressive Practices

Any practice that involves harassment, coercion,

undue influence

Courts will consider

1) Language used by trader

2) Timing of the contract

3) Location where contract was created

4) Tactics used by trader

Prohibited Practices - 32 in the Act

1. Representations about endorsements they

don’t have e.g. three star hotel

2. Representation that trader is about to

cease trading

3. Representation describing something as

“free” if consumer has to pay anything

other than what is necessary (e.g.

collection fee) - bans premium call scams

4. False representation on limited

availability

5. Using editorial content in media

Prohibited Practices - 32 in the Act

6. Promoting a product similar to another to

deceive a consumer into thinking it is the

same (e.g. using same logo)

7. Operating, running a competition or prize

promotion without awarding the prizes

described

Prohibited Practices - 32 in the Act

8. Failing to comply with a customer’s request to leave their

residence

9. Persistently failing to comply with a consumer's request

to cease (i) communicating with them or (ii) sending

unsolicited representations by phone, text, email etc

10. In relation ot a product that a consumer does not

solicit, demanding payment or inertia selling

Purely Creative v Office of Fair Trading 2011

ECJ said that where a customer is led to believe they have

won a prize, the promoter cannot make any requests for costs

whatsoever

Consumers in this case told to claim through premium rate

phone line

Action classified as prohibited commercial practice.

Penalties under the Act

Person found guilty liable to fine up to €3,000

And/or term of imprisonment up to six months fo first offence

Where offender prosecuted on indictment, liability is limited

to max fine of €60,000 or imprisonment of up to 18 months or

both

A consumer who suffered a loss can also sue the trader for

damages

Consumer Protection Directive

2014 EU Consumer Rights Directive transposed into Irish law

European Union (Consumer Information, Cancellation and Other

Rights) Regulations 2013

Provides additional protections for consumers who enter into

contracts with web traders based in Ireland & the EU

Consumer Protection Directive

These protections include:

a) Cancellation of contracts (14 days)

a) Refunds

a) Pre-ticked boxes

Consumer Protection Directive

These protections include:

d) Hidden Charges and fees

e) digital purchases

Competition and Consumer Protection

Commission

NCA was a statutory body established in 2007

Enforcement of consumer law

Merged with Competition Authority

Competition and Consumer Protection Commission

Functions to promote competition, investigate,

enforce the law, encourage compliance, set

strategic objectives

Enforcement Powers of the CCPC

Prosecution

Compliance notices

Undertakings

Prohibition Orders - through the courts

Fixed payment notices

Correction notice

Page 104

Practice Questions

Spend 15 mins on each

question

Exam Prep

● Take an exam topic

● Condense it all onto one

A4 page

● Condense it further onto

a flashcard