Avoid!

Photo by Eiliv-Sonas Aceron on Unsplash

The above photograph conveys everything that is pleasant about staying in a nice hotel or boutique guesthouse.

Sadly, this was not the case for one couple, Mr and Mrs Jenkinson, who had booked into accommodation (the Broadway Hotel) in the English seaside resort of Blackpool in 2014. The couple were so disappointed by the lack of basic hygiene standards and facilities that they were motivated to leave a review on Tripadvisor – a very bad review, in fact, which did the establishment absolutely no favours.

How did the hotel respond?

Not in the way that you would think the management should have responded i.e. by issuing the couple with a grovelling apology and, possibly, a refund?

No, the couple were checking their credit card statement some days after their review had been posted and noticed that £100 had been charged to their account by the Broadway Hotel. Surely, this must have been some oversight or mistake? Following further enquiries by the couple, they discovered that the hotel had levied the charge because they had the nerve to leave a bad review on Tripadvisor about the very poor standards they had experienced while staying there.

When the couple objected to this, the establishment told them to check the small print in its booking documents – which Mrs Jenkinson had admittedly signed. True enough, buried somewhere in the small print was a statement to the effect:

Despite the fact that repeat customers and couples love our hotel, your friends and family may not. … For every bad review left on any website, the group organiser will be charged a maximum £100 per review.

Now, the Broadway Hotel was by no means luxury accommodation (the Jenkinsons had paid £36 for an overnight stay), but even budget hotels must meet basic standards such as adequate hygiene. The hotel failed miserably to meet these standards. More and more often, we do rely on the experiences of other people to guide us in our choices as consumers and the Jenkinsons were posting a fair comment review on Tripadvisor. The ability of businesses and traders to prevent consumers doing this would clearly be a retrograde development.

At the time, the story went viral and Mr and Mrs Jenkinson were invited on to the BBC Television’s Breakfast show to talk about their experiences. Needless to say, the hotel got more than it bargained for with the adverse media publicity and Blackpool Council’s Trading Standards Department taking a keen interest in its business practices.

A link to the story on the BBC website about the Jenkinsons’ experiences at the Broadway Hotel, Blackpool in 2014 can be found below:

https://www.bbc.co.uk/news/technology-30100973

Was this clause enforceable?

At the time of the story breaking, I fortuitously happened to be teaching Unfair Terms in Contract Law to two of my classes. I had never seen a clause like this before and informed my students that it was very unlikely to be capable of enforcement by the hotel given its blatant unfairness – let alone the implications for freedom of speech in the UK.

I’ve long wanted to write about the Jenkinsons’ experience and I was reminded of their story some weeks ago when teaching a group of students about unfair terms in contracts.

Normally, when I discuss this area of the law, I make students aware that businesses used to be extremely trigger happy when using all sorts of unfair terms in contracts in order to avoid their responsibilities to customers.

Prior to the introduction of the Unfair Contract Terms Act 1977 (about more later), businesses and other organisations could exclude or limit their liability for causing death and personal injury so long as adequate notice of the existence of the term was brought to the attention of the other party to the contract.

So, for example, if a garage owner wished to exclude his liability to a customer who put a vehicle in for repairs or a service, he could simply alert the customer to the existence of an exclusion or limitation clause in the contract. The customer leaves the car to have the brakes fixed; picks the car up later; the mechanic has been negligent and not carried out the work properly; the customer later suffers a terrible accident because the brakes haven’t been fixed. Hey presto, no need to worry because the garage owner could point to his standard terms of business which contained an exclusion clause. In effect, the exclusion clause was a get out of jail card.

Another tactic often deployed was where the business could argue that the customer had constructive notice of the existence of the unfair term e.g. the customer should have read the documents presented to him or her. Mrs Jenkinson had signed the booking documents presented to her by the Broadway Hotel. She later admitted that she did not read the terms because she did not have her spectacles with her.

On occasion, the courts might intervene and side with a party objecting to the enforcement of an unfair term under a number of judicial doctrines:

  • the repugnancy rule
  • fundamental breach
  • the contra proferentum rule

Despite judicial intervention, the odds were still stacked against parties who wished to challenge the inherent unfairness and abusive nature of attempts by traders and businesses to exclude or limit their liability.

Sensibly, the UK Parliament decided to tackle what was becoming the Wild West of contractual terms and passed the Unfair Contract Terms Act 1977 which made such attempts to evade liability automatically void.

Generally speaking, the Act made it much harder (but not impossible) for businesses to impose other unfair terms on consumers. Businesses, on the other hand, were still, advised to read the small print of any agreements that they were contemplating entering, although courts would be more sympathetic if a larger business tried to use its unequal bargaining power to impose unfair terms on a smaller business.

The European Union also passed legislation (European Council Directive 93/13 on Unfair Terms in Consumer Contracts and, for a while, the Unfair Terms in Consumer Contracts Regulations of 1994 and 1999 respectively were in force. These were later repealed and replaced by the Consumer Rights Act 2015, although the terms of the Directive live on in this legislation (remember: EU Law is hardwired into UK national laws).

Along the way, the Enterprise Act 2002 and the Consumer Protection from Unfair Trading Regulations 2008 severely restricted the ability of businesses and traders to impose very unfavourable terms on consumers.

The net effect of all of this legislation was that consumers were really protected against the imposition of unfair terms by traders and businesses. Consumers were often deemed to be the weaker party in a relationship with traders and businesses and, therefore, needed to be protected.

Returning to the Jenkinsons’ experience at the a Broadway Hotel, it is worth emphasising that the couple were being provided with accommodation services as consumers and, therefore, would have been entitled to the benefit of existing UK consumer protection laws on the statute books in 2014.

Had this incident occurred in 2020, the Jenkinsons would, of course, have been able to challenge the legality of the penalty clause primarily in terms of the Consumer Protection from Unfair Trading Regulations 2008 and the Consumer Rights Act 2015.

Conclusion

Happily, we have come a long way in consumer law where businesses could previously impose all sorts of unfair, not to say downright abusive, terms on customers.

We are now in a position, where UK consumers will be protected by legislative safeguards which should ensure that these types of terms will not be permitted to stand i.e. they will be automatically void or simply unenforceable. The penalty clause which the Jenkinsons experienced would doubtless have fallen foul of consumer protection legislation had the issue got anywhere near a court room. Nonetheless, it was an interesting example of the inventiveness of businesses regarding the creation of new types of unfair terms in contracts.

It remains the case, however, that in business to business contracts (or in private transactions), it will be highly advisable for parties to remain wary about the potential unfairness of contractual terms. Only the most outrageous and downright abusive terms (such as excluding or limiting liability for death or personal injury) will be automatically void – no matter how much notice of their existence has been given by the party seeking to rely on them. If a business is seeking to have a clause declared void or unenforceable, the debate to be had in terms of the Unfair Contract Terms Act 1977 will often centre around the perceived reasonableness (or otherwise) of the clause.

Copyright Seán J Crossan, 1 March 2020

Foreign objects or I’ve got a bone to pick with you … (Part 2)

Photo by Owen Beard on Unsplash

One of the first articles which I wrote for this Blog concerned the liability of producers and suppliers for foreign or dangerous objects.

The article had been inspired by an incident at a Primark store where a member of the public had sensationally discovered part of a human finger bone in a pair of socks.

This gave me a very convenient opening to review the area of product liability. The leading case, of course, is Donoghue v Stevenson [1932] AC 562, [1932] SC (HL) 31, [1932] ScLT 317 or the ‘snail in the ginger beer bottle’. This decision of the House of Lords established the foundations of the modern law of negligence – in Scotland and in England.

Mrs Donoghue did not have a contract of sale with Mr Minchella, the seller of the lemonade bottle and, therefore, she could not bring a claim for damages in terms of the (then) Sale of Goods Act 1893. Even today, Mrs Donoghue would not have a remedy against the seller under the Consumer Rights Act 2015.

So, who could Mrs Donoghue bring a claim against? The manufacturer would seem to be the logical response to this question, but this is the application of hindsight in late 2019. Several years before the Donoghue case, a claim against a manufacturer for harm caused by a dangerous product had been comprehensively rejected by the Inner House of the Court of Session (see Mullen v A G Barr & Co Ltd [1929] SC 461). The House of Lords was, therefore, breaking new legal ground when it found in Mrs Donoghue’s favour against Stevenson, the manufacturer of the lemonade bottle. Stevenson owed a duty of care to the ultimate consumer of the product – irrespective of whether this individual had a contract of sale with the company.

Since Donoghue v Stevenson, this area of the law has developed considerably with the UK Parliament passing the Consumer Protection Act 1987. Part 1 of this Act established a regime of strict liability in relation to dangerous products. Previously, the claimant would be required to prove fault on the part of the manufacturer.

Theoretically, it’s now much easier for a consumer to win a claim against a manufacturer (or someone in the chain of supply) if s/he have suffered injury or damage to property as a result of exposure to dangerous products.

Returning to Primark, the company and the Police have conducted an investigation into the incident and they have not been able to establish responsibility, anywhere in the chain of supply, for the bone’s inclusion in the pair of socks.

It looks as if the affair will go down as one of life’s unsolved mysteries.

A link to the latest developments in the Primark case can be found below:

https://edition.independent.co.uk/editions/uk.co.independent.issue.281219/data/9261571/index.html

Related Blog article:

https://seancrossansscotslaw.com/2019/01/25/foreign-objects-or-ive-got-a-bone-to-pick-with-you/

Copyright – Seán J Crossan, 30 December 2019

No smoke without fire …

Photo by Patrick Hendry on Unsplash

It would seem that Whirlpool, the domestic appliance manufacturer of Creda, Hotpoint, Indesit and Proline tumble dryers does not have its sorrows to seek as product defects (which could endanger the safety of the public) continue to plague the brand. The appliances have been nicknamed the ‘killer dryers’ because they may represent a fire risk.

Manufacturers of products have a duty of care to ensure that their products are free from defects which could cause damage to property or death or personal injury.

Related Blog article:

Help! The tumble dryer’s on fire!

https://seancrossansscotslaw.com/2019/06/14/help-the-tumble-dryers-on-fire/

Last week, the company admitted that nearly half a million of its appliances could have a serious manufacturing defect which could cause property damage and, more seriously, death or personal injury.

Whirlpool’s (civil) liability to victims is said to be strict in terms of a number of Acts of Parliament:

  • Sale of Goods Act 1979
  • Consumer Protection Act 1987
  • Consumer Rights Act 2015

There is also the issue of possible criminal liability for dangerous and defective products in terms of the Consumer Protection Act 1987.

Potentially, Whirlpool could be liable to a large group of people:

  • Business customers (retailers and traders) who purchased products from Whirlpool directly in terms of the Sale of Goods Act 1979; and
  • The ultimate consumer of the products i.e. any one who does not have a contract of sale with the retailer or manufacturer, but who may suffer property damage, injury or death as a result of exposure to the dangerous product (see Donoghue v Stevenson [1932] UKHL 100) in terms of the Consumer Protection Act 1987.

Those consumers who purchased dangerous item(s) directly from a retailer will, of course, have a contract of sale in terms of the Consumer Rights Act 2015 and they can take legal action against the retailer. The retailer can then pursue a claim against the manufacturer or supplier from whom they obtained the goods.

An excellent link to an article about the problems facing Whirlpool appliances can be found below by clicking on the link to the Which? website:

https://www.which.co.uk/news/2019/12/whirlpool-announces-recall-of-up-to-519000-indesit-and-hotpoint-fire-risk-washing-machines-in-the-uk/?utm_source=whichcouk&utm_medium=email&utm_campaign=whirlpoolrecall171219

A link to the story on the Sky News website can be found below:

http://news.sky.com/story/half-a-million-whirlpool-washing-machines-recalled-over-fire-risk-11889023

Copyright Seán J Crossan, 23 December 2019

Better together?

Photo by Mohammad Sanaei on Unsplash

Better together? Not if you’re Asda and Sainsbury’s supermarket chains.

As of today (25 April 2019), the statutory regulator, the UK Competition and Markets Authority (CMA) has decided that the proposed merger between the two businesses should not take place.

As the above scenario demonstrates, the CMA has been given the power by the UK Parliament to make legally binding decisions of this nature. Theoretically, statutory regulators exist (in the main) to ensure that large business organisations do not acquire an overwhelmingly, dominant market position where they can ‘kill off’ competitors and substantially reduce consumer choice.

Stuart McIntosh, chair of the CMA inquiry group, said:

It is our responsibility to protect the millions of people who shop at Sainsbury’s and Asda every week. Following our in-depth investigation, we have found that this deal would lead to increased prices, reduced quality and choice of products, or a poorer shopping experience for all of their UK shoppers. We have concluded that there is no effective way of addressing our concerns, other than to block the merger.”

The CMA press release can be read using the link below:


https://www.gov.uk/government/news/cma-blocks-merger-between-sainsburys-and-asda

Sainsbury’s-Asda merger ‘would have harmed competition’.

A link to how the story was reported by Sky News can be found below:

Sainsbury’s/Asda mega merger is formally blocked by CMA
http://news.sky.com/story/sainsburysasda-mega-merger-is-formally-blocked-by-cma-11702941

Copyright Seán J Crossan, 25 April 2019

The Consumer’s right to reject defective goods


Photo by Mitchell Gaiser on Unsplash

In Chapter 2 of Introductory Scots Law, I discussed the remedies for breach of contract. In Chapter 4, I look specifically at the remedy of rescission in relation to a consumer contract for the sale of goods. We have now had the Consumer Rights Act 2015 in place for several years. An interesting case in terms of the legislation has just been heard by the Sheriff Appeal Court in Edinburgh. 

In Christina Tenant Johnston & Peter Johnston v R & J Leather (Scotland) Ltd  [2019] SAC (Civ) 1 LIV-SG781-17, Sheriff Andrew Cubie decided that Mr and Mrs Johnston (the consumers) had every right to dispose of defective furniture after they had clearly communicated their desire to the trader (R & J Leather Ltd) to reject the defective goods with which they had been supplied under the contract of sale. The consumers were seeking to obtain a refund of the purchase price for the goods in terms of Section 20 of the Consumer Rights Act 2015 i.e. they had clearly expressed their desire to rescind or cancel their contract with the trader. The consumers sent letters to the trader via recorded delivery on a number of occasions in which they stated that they wished to cancel the contract. They even involved their local Member of Parliament in the dispute, but this did nothing to resolve the dispute either. In the letters, the Johnstons asked the trader to arrange uplift of the furniture. The trader failed to retrieve the furniture.

Mrs Johnston raised an action under simple procedure at Livingstone Sheriff Court in order to recover the purchase price of the contract goods. The trader did not defend the action and the Sheriff made a decree in favour of Mrs Johnston for payment of the purchase price of the goods. Mrs Johnston had asked the Sheriff to include in the decree the stipulation that traders should make arrangements to have the goods uplifted from her home. The Sheriff choose not to issue an Order in this regard. At no point after this, did the trader seek to have the goods uplifted from the Johnston family home. The Johnstons then made the decision to give the furniture away to a third party. This was quite an understandable on their part because they honestly believed that the court action had settled the matter conclusively in their favour. 

They had something of shock coming because R & J Leather Ltd decided to have the Sheriff’s decree recalled on the grounds that it had been wrongly designed [designated] in Mrs Johnston’s original summons. A new hearing was arranged, this time with the trader correctly designed in the summons and, additionally, Mr Johnston was permitted to join his wife’s action as a co-claimant. After a two day hearing, the Sheriff made a decision in favour of the Johnstons: they had the right to an Order for payment of the purchase price of the goods and they were justified in disposing of the goods by giving them away to a third party because of the trader’s many failures to uplift them. 

The trader then appealed to the Sheriff Appeal Court. 

Finding in favour of the consumers and rejecting the trader’s appeal, Sheriff Cubie stated that:

“The rejection [by the consumers] was made immediately and unequivocally. The Johnstons made repeated attempts directly and through their MP to make contact. R&J deliberately avoided engagement with them. The suite could not be stored indefinitely. The Johnstons legitimately considered that the court order had brought matters to an end. By their attitude, R&J effectively abandoned their right to seek recovery; there is a limit to the occasions which a party can be expected to remind sellers of the rejection. In ordinary course, the buyer should retain the goods for return; but in this case I consider that the seller’s actions or inactions were in such terms as to entitle the buyer to do as they wished with the goods.”

A link to Sheriff Cubie’s opinion can be found below:

https://www.scotcourts.gov.uk/docs/default-source/cos-general-docs/pdf-docs-for-opinions/2019-sac-(civ)-001.pdf?sfvrsn=0

Conclusion

The lesson to be learned for traders from this case is that they will be under a duty in terms of Section 20 of the Consumer Rights Act 2015 to act quickly in order to uplift goods which have been rightly rejected by consumers. The duty on consumers to make the defective goods available for uplift by traders following rejection is not an open ended or indefinite obligation on their part. Traders which take a cavalier or reckless approach by failing to uplift the goods in a timely fashion may well live to regret this.

In his judgement (at paragraphs 28 & 29), Sheriff Cubie clearly lays out the respective duties of the parties following rejection of the goods:

[28] “It is clear that when a consumer exercises a right to reject faulty goods, there is no duty to return the goods to the seller. All the consumer needs to do is make the goods available to the seller. That imposes an onus on the seller to come and collect the goods if they wish to.


[29] “The duty to make the goods available cannot be without limit of time or unqualified. In considering the nature and extent of the duty to retain goods which have been rejected, the court is entitled to take into account a number of factors, including but not restricted to –

1. the timescale within which rejection was intimated;
2. the nature of the goods;
3. the practicality of providing storage;
4. the nature, extent and frequency of communications sent by the consumers to the
seller;
5. any response, or lack of response, from the sellers;
6. the length of time for which goods were retained; and
7. whether proceedings have been raised.”

Copyright Seán J Crossan, January 2019