of them find it preferable to make a straight loan to the debtor without specifying, or being involved with, any particular supplier. Section 75 will not then apply.
Sub-section (2) provides that the creditor shall be indemnified by the supplier for loss suffered by the creditor in satisfying his/her liability under the previous sub-section. This indemnity is, for obvious reasons, of limited value. It is also probably otiose in that he/she would have this right of indemnity anyway by virtue of the Civil Liability (Contribution) Act 1978.
Section 75(3) further restricts the ambit of the section by excluding from it:
Non-commercial agreements
Agreements for a single item with a cash price of less than £100 or more than £30,000.
The lower limit is so that credit card companies especially are absolved from liability in respect of complaints from customers over relatively trivial transactions. The upper limit, apart from the fact that it would normally not be a regulated agreement anyway, is so high that it would probably have involved the debtor in getting independent advice.
Relationship between Sections 75 and 56
As we have seen earlier in this study unit, Section 56 ensures that any person who conducts antecedent negotiations with a debtor is automatically deemed to be the agent of the creditor, as well as acting in his/her actual capacity. Hence it creates a potential liability on the creditor in respect of any representations made before or at the time of the agreement. Furthermore, Section 56 applies to any regulated agreement. There is therefore an overlap between the two sections as follows:
In respect of antecedent negotiations, the creditor will be liable for the acts of his/her deemed agent – always under Section 56, and also under Section 75 if the agreement is one to which that section applies.
In respect of the goods themselves (as opposed to representations about them) the creditor will be liable only if the transaction is one to which Section 75 applies.
We have outlined the protection given to consumers by the Consumer Credit Act 1974 (as amended by the 2006 Act) – that is, protection in respect of certain transactions involving credit in all its various forms. However, in addition, for many years Parliament has appreciated that the common law does not provide an adequate remedy for consumers in their dealings with traders and manufacturers.
Consumers, in practice, are represented by the ordinary shopper, who has neither the knowledge nor the means of ascertaining whether goods that are offered for sale are in reality what they are claimed to be, or whether he/she is the victim of unfair practices agreed between traders, or whether the goods are in fact reasonably safe to use.
As a result, a number of Acts have been passed to regulate these matters. In general, they impose criminal liability on traders or others who infringe them, rather than providing an aggrieved consumer with a civil remedy. As a generalisation, the common law provides the remedy, whereas the consumer protection legislation deters traders and others from attempting malpractices in the first place.
B. TRADE DESCRIPTIONS ACT 1968
In the light of questions in past examination papers, it is very important that you concentrate carefully on the Trade Descriptions Act 1968. Make sure that you learn carefully the actual provisions of the Act, as there have been questions on its language and content. Learn also the application of the provisions in the decided cases.
The descriptions under which goods are sold, or which are applied to them for the purposes of sale, are of course covered to an extent by the Sale of Goods Act 1979, with which we have already dealt. But this Act, and the common law associated with it, provide only a civil remedy. The Merchandise Marks Acts 1887–1953strengthened the common law mainly in respect of the tort of "passing off" as it applies to goods. We shall be examining this tort in the context of trade marks and trade names in a later study unit, but for present purposes it can briefly be described as the representation of goods etc. as those of another person. These Acts gave both a criminal and a civil remedy. They were superseded by the Trade Descriptions Act 1968.
The 1968 Act is the principal statute, and it provides comprehensive consumer protection over the whole range of goods sold in the course of a trade.
Section 1
Section 1 makes it an offence to apply, in the course of a trade or business, any false trade description to goods, or to supply, or offer for sale, goods to which a false trade description is applied.
(a)"... to apply ... or to supply, or offer for sale"
You will see from those phrases that the Act does not limit liability only to, for example, the seller of goods. The producer and wholesaler of goods can also be liable for a false trade description. Liability is strict, without proof and fault being necessary, unless an adequate disclaimer of liability has been given.
In Tarlton Engineering Co. Ltd v. Nattrass (1973) a dealer sold a car with a false odometer reading. He did not know it was false nor did he vouch for it. It was held that he had, nevertheless, applied a false description to the car.
Since Roberts v. Leonard (1995), this is deemed to include the professions as well (in this case, a vets’ practice). In Southwark London Borough Council v. Charlesworth (1983) a shoe repairer sold electric fires which came from his own home, the sale taking place in his shop. This was, however, a sale in the course of business, despite its not being a sale of the kind of thing which the shoe repairer normally dealt in.
Consider the following scenario:
Ms T Conalot, a private motorist, sells her car to a motor dealer, and falsely declares that the mileage reading is genuine. The motor dealer sells the car to another private motorist, Mr Vic Timm. Who would be liable for an offence under Section 1?
Only the motor dealer offered for sale in the course of a trade or business goods to which a false trade description had been applied, so only he is liable under S.1. However, Ms Conalot would be liable under S.23 of the Act, which provides that where someone commits an offence under the Act due to the act or default of some other person, that other person is guilty of the offence.
The case of Olgeirsson v. Kitching (1985), where the facts were very similar to those in the scenario, established that the "some other person" referred to in S.23 does not have to be acting in the course of trade or business.
Section 2
Section 2 of the Act defines a trade description. In short, it is an indication, direct or indirect, which relates to the quantity, size, method, place or date of manufacture, composition, fitness for purpose, strength, performance, behaviour, accuracy or past history of goods.
In British Gas Corporation v. Lubback (1973) a brochure advertising cookers stated with respect to one of them, "ignition is by hand-held battery torch supplied with the cooker". The cooker was supplied without the torch, which was no longer suitable for use following conversion to North Sea gas. This was an offence under S.1 of the Act as the statement constituted a (false) trade description – it related to the composition of the goods.
On the other hand the words "extra value" applied by Cadbury's to a product were held in Cadbury Ltd v. Halliday (1975) not to be a trade description. The court found that the term did not relate to any of the matters listed in S.2.
A mileage figure on an MOT certificate is not a trade description (Corfield v. Sevenways Garage Ltd (1984)). Although a statement about mileage would fall under S.2, as we have already seen in Olgeirsson v. Kitching, an MOT certificate is not a trade description.
An example of an indirect indication under S.2 is Queensway v. Burke (1985). Photographs of assembled furniture which could be bought only in kit form constituted a false trade description.
You should also note the following:
(a)Place of Origin
If goods look as if they were manufactured somewhere other than they were (i.e. if their presentation does not indicate their true origin, but suggests a different one) they must be marked with, or accompanied by, a clear statement as to their place of origin, under the Trade Descriptions (Place of Production) (Marking) Order 1988.
(b)Bogus Price Reductions
Bogus price reductions constitute an offence under Section 11 of the Act, as do false indications that the price at which goods are being offered is less than the
recommended retail price or than the price at which the same goods were previously being offered by the same supplier. This prevents the well-known trick of "sales", whereby immediately before the sale the prices of goods were increased then at the sale the goods were displayed at the old price with a large notice saying "10% reduction".
(c)Disclaimers
Only if a disclaimer is as prominent and precise as the description which it seeks to qualify will qualification of the description be effective (Norman v. Bennett (1974)). This case involved a very small notice disclaiming responsibility for odometer readings on cars offered for sale. If a notice is used to say that mileage recordings may not be accurate on cars sold, the notice must be "bold, precise and compelling" (Zawadski v. Sleigh (1975)).
(d)Advertisements
Where a trade description occurs in an advertisement, there is a presumption that it refers to all goods of the class described, whether those goods are in existence or not at the time when the advertising is done.
Section 3
Section 3 of the Act defines "false" as false "to a material degree". In other words, a description is false if it is untrue or misleading, and whether given orally or in writing, or in any other way.
(a)Falseness
Three cases from 1981 illustrate the element of "falseness" in false trade descriptions.
In London Borough of Southwark v. Elderson Industries Ltd (1981) the term "cold cast bronze" was applied to statuettes which were in fact made of fibreglass and oversprayed. This is a clear example of a deliberately misleading description.
The situation is somewhat less clear in the case of Ealing London Borough Council v. Warren (1981), where the falsity had to be determined by reference to intention. Jewellery items were variously marked "9 ct", "18 ct" and "PLAT". Taken together, at any rate, these descriptions could be regarded as implying that the jewellery was 9 carat gold, 18 carat gold or platinum, and since it was not, these were false trade descriptions.
A third case of 1981 shows that a dealer's estimate as to the goods can be taken as a false description if the effect is to mislead the customer (Holloway v. Cross (1981)). A car dealer bought a car with a recorded mileage of 716 miles. The true mileage was 70,000 miles. He told a customer that in his opinion the true mileage was about 45,000 miles, and he wrote this estimate on the invoice. It was held that the estimate given was a trade description, and the discrepancy between the estimated and the actual mileage made it false to a material degree.
(b)Examples of Individual Words
Many individual descriptive words have been examined, and the following have been held to be false trade descriptions:
"Beautiful" – applied to a car which looked good but was in fact unroadworthy (Robertson v. Dicicco (1972)).
"Immaculate condition", applied to a car which was not mechanically sound (Kensington and Chelsea Royal London Borough Council v. Riley (1972)).
"Waterproof ", applied to a watch that was not waterproof (Sherratt v. Geralds (1970)).
It is possible for a description to be regularly used in a trade, and to have achieved a significance which prevents it from constituting a false trade description within the Act. This applied to the description "rolled gold", which was used by Woolworths and was held to be incapable of being false or misleading because it was applied by trade custom and applied also only to very cheap items. Since they were so cheap, people could not have thought them to be other than they actually were (Kingston-upon-Thames Royal London Borough Council v. Woolworth (F W) & Co. (1968)).
Section 14
Section 14 of the Trade Descriptions Act makes it an offence in the course of trade or business:
(1)To make a statement which the person making it knows to be false; or
(2)Recklessly to make a statement which is false.
A statement made regardless of whether it is true or false shall be deemed to be made recklessly, whether or not the person making it had reasons for believing that it might be false.
This section of the Act applies to the provision of services and accommodation. Examples of offences under this section include:
A false oral statement that a bungalow was covered by the National Housebuilders Registration Council guarantee (Breed v. Cluett (1970)).
The description of accommodation as air-conditioned when it was not (Wings v. Ellis (1984)).
(a)Recklessness
Dishonest intent is not required for recklessness (M F I Warehouses v. Nattrass (1973)). In this case the appellants had not appreciated that their advertisement appeared to offer an item for purchase under special conditions separately from the main item they were advertising. When the purchaser ordered the item separately, they did not apply the special conditions of free carriage. Their appeal against conviction under S.14 was dismissed.
Sunair Holidays Ltd v. Dodd (1970) is an earlier case concerning "recklessness" under S.14 of the Act. Travel agents described all the twin-bedded rooms of a hotel as including a terrace. This was a true statement when it was made, but by the time Mr and Mrs Dodd arrived at the hotel, the twin-bedded rooms did not have terraces. Sunair Holidays successfully appealed against their conviction because the court held that the statement was accurate at the time it was made, and that later events could not affect the question of recklessness at the time of making the statement.
(b)Future Services
S.14 does not apply to promises of future services.
Failure to fulfil a promise to complete a building by a particular date was not an offence under S.14 (Beckett v. Cohen (1973)). Nor was failure to honour a ticket because airline seats had been overbooked (British Airways v. Taylor (1976)).
Note also that an untrue statement that a hotel already has certain facilities is a false statement (R v. Clarksons Holidays (1972)).
Liability for breach of Section 1 is strict, whereas the offence under Section 14 is committed only if the trader knows the statement to be false or makes it recklessly. However, Section 24 provides a general defence to all offences. The section provides that it shall be a defence for the supplier to prove:
That the offence was committed due to a mistake or to his reliance on information supplied or due to the act or default of another person, an accident or some other cause beyond his control; and
That he took all reasonable precautions and exercised "all due diligence to avoid the commission of such an offence by himself or any person under his control".
You should note that "Good intentions and mistakes do not by themselves constitute a defence" – per Lord Templeman in Wings v. Ellis (1984). Thus, the defendant must prove that he comes within the scope of one of the matters mentioned and that he took all reasonable precautions to avoid committing the offence himself.
An interesting application of the section occurred in the case of Tesco Supermarkets v. Nattrass (1972), where a store had sold washing powder at a price different from that advertised. The court held that Tesco as a company was not guilty because it had to rely on the individual store manager to ensure compliance with the Act; managers had full discretion in matters of pricing. (This case should be regarded as exceptional. It arose only because Tesco is a sufficiently large company to allow individual managers considerable discretion.)
Two defences connected with Section 24 deserve special mention:
(a)Suppliers' Defence (Section 24(3))
This provides that it shall be a defence for the supplier to prove that he/she did not know and could not reasonably have ascertained that the goods supplied did not conform to the description. Thus, for example, it might be considered to be unreasonable to expect a dealer to check a car's history back through all its owners.
(b)By-pass Provision (Section 23)
Although not strictly a defence it does link very closely to Section 24(1), which we looked at a little earlier. You will recall the section states that where the offence was committed due to the act or default of some other person, then that person can be charged with an offence, whether or not proceedings are taken against the supplier. It has already been seen that if A commits an offence but the real culprit is B, B may be prosecuted for the offence committed by A even if A is not prosecuted. However, if no offence is committed by A, B cannot be prosecuted.
C. FAIR TRADING ACT 1973
The legislation previously mentioned in this study unit primarily creates criminal liability for contravening the standards laid down. The Fair Trading Act 1973, on the other hand, is of an administrative nature; it set up a statutory body, the Office of Fair Trading (OFT), to monitor the behaviour and practices of traders and manufacturers.
The Enterprise Act 2002 abolished the post of Director-General of Fair Trading, and set the OFT up a corporate authority consisting of a chairperson, and a minimum of four other members.
The Act sets out the OFT's general functions:
Obtaining and reviewing material relating to its functions in relation to competition and consumer matters;
Promoting the benefits of competition to consumers;
Acting in a consultative role to Ministers or public bodies;
Promoting good consumer practice.
The Act provides a procedure whereby certain designated consumer bodies can make complaints to the OFT of practices which are deemed to be capable of causing significant harm to the interests of consumers. The Act further enables the OFT to institute Enforcement Orders against businesses in breach via the courts.
The OFT is also responsible for licensing consumer credit and hire businesses, and is also under a statutory duty to encourage trade associations to prepare and distribute to members Codes of Practice promoting consumers' interests.
Food Labelling
An EC Council Directive of 1979 was implemented in the Food Labelling Regulations 1984. There must be a name for the food – one required by law, or customary or sufficiently specific to indicate the true nature of the food. There must be a list of ingredients, a note of any special storage conditions and an indication of minimum durability.
Note that there are controls on labelling of:
Medicinal products
Animal feedstuffs.
Weights and measures are, of course, also very tightly regulated, imposing, for example, tight restrictions on the "averaging" of stated weights.
You will see that the fair trading legislation goes considerably further than the Sale of Goods Act. Like the Unfair Contract Terms Act 1977, it introduces an idea of fairness or reasonableness. The Sale of Goods Act provides civil remedies and the Trade Descriptions Act introduces penalties. The Fair Trading Act provides a public "watchdog"; it brought regulation in consumer matters as there had already been in restrictive trade practices for some years.
D. CONSUMER SAFETY
General Position in Civil Law and Criminal Law
(a)Civil Law
The principal civil law remedies, in the event that a purchaser suffers injury as a result of a defective or unsafe product, will be outlined later. Such remedies can arise in contract, i.e. because the supplier has been in breach of a term, express or implied, of the contract of sale; or they can arise in tort, as a result of a breach of a duty of care owed by the manufacturer and/or the supplier.
There is, however, an additional civil law remedy where consumer safety is in question. Numerous statutes are aimed at preventing unsafe trade practices, e.g. the Agriculture Act 1970 imposes a warranty of fitness for their purposes on the sale of fertilisers and feeding stuffs. If the statute merely imposes a criminal penalty then that is the only sanction and an injured purchaser has no right of action under the Act (although he/she may have in contract or in tort). If, however, the statute confers a right of action, as does the Agriculture Act, then an aggrieved purchaser can bring an action for breach of statutory duty. This is a civil law tort, and gives rise to a remedy in damages.
Perhaps the most effective controls on manufacturers and others in the field of consumer safety are contained in statutes imposing criminal liability. These involve a penalty – a fine or sometimes imprisonment – in the event of contravention. Some such statutes apply only to specific goods. For instance, the Road Traffic Act 1972 makes it an offence to sell a motor vehicle in an unroadworthy condition. Others apply generally, such as the Consumer Safety Act 1978.
Consumer Protection Acts 1961 and 1971
In the field of consumer safety, the Consumer Protection Act 1961 empowered the Secretary of State to make regulations in respect of the construction, design, composition, finish etc. of a wide range of classes of goods. The regulations are designed to prevent, or reduce, the risk of death or personal injury to persons using those goods. The Act made it an offence to sell, or to have in a person's possession for the purpose of sale, any goods which contravene the regulations. As well as providing a criminal penalty, the Act also created civil liability for breach of the obligations imposed by the regulations. The 1961 Act was amended by the Consumer Protection Act 1971.
However, these Acts were found to be inadequate for their purpose. A number of transactions which could potentially cause a risk to safety were outside the ambit of the Acts, e.g. promotional gifts, trading stamp transactions, and contracts for "work and materials". The result was the Consumer Safety Act 1978, which replaced the 1961 and 1971 Acts.
Consumer Safety Act 1978
The Consumer Safety Act 1978 gives the Secretary of State much wider powers to make regulations "for the purpose of securing that goods are safe or that appropriate information is provided and inappropriate information is not provided in respect of goods" (Section 1(1)). These include the power to prohibit the sale of dangerous products and to ensure that goods satisfy specified standards, and are tested or inspected in a specified manner.
Regulations made under the Act thus endeavour to ensure not only that goods are properly manufactured, tested and inspected to avoid or minimise the risk of danger to health and safety, but also that appropriate information about the goods, and how to use or handle them, is given to purchasers. Equally, irrelevant or misleading information must not be given.
To back up the Regulations, the Secretary of State is empowered to issue Prohibition Notices, forbidding either a particular person, or persons in general, from supplying specific goods which have been designated as unsafe. Notices may also be given requiring people to publish warnings in a specified way about potentially hazardous goods which they supply.
The recipient of a Prohibition Notice is entitled to make written representations within 28 days, on receipt of which the Secretary of State is required to appoint a person to consider them. No Notice can be enforced until the report of that person has been considered. Likewise, in the case of Notices to persons generally, the Notice must first be published to allow representations to be made.
The Consumer Safety Act provides for criminal sanctions for infringement, and also permits civil action in respect of obligations imposed by the Act.
