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Caveat Venditor:
The Sale and Supply of Goods to Consumers Regulations 2002

May 2003

From 31 March 2003 , UK consumers have enjoyed enhanced rights vis-à-vis goods retailers, under the Sale and Supply of Goods to Consumers Regulations 2002 [1] , which implement the European Consumer Goods and Guarantees Directive [2] .

Our April 2002 Short Lines [3] outlined the DTI's initial proposals. A year on, we clarify the key changes to consumers' rights, and to the regulators' powers of enforcement.

The significant changes

• Retailers can be liable for manufacturers' misleading advertising or labelling
• Consumers can require defective goods to be repaired or replaced
• There are now minimum criteria for contractual guarantees

When do the Regulations bite?

The Regulations' key changes only apply to sales of goods to consumers.  A "consumer" is "any natural person acting outside his or her trade, business or profession".  "Goods" are "all personal chattels other than things in action and money", including, for example, packaged software [4] .

Prior to the Regulations, the Sale of Goods Act required retailers to provide consumer goods of "satisfactory quality", being "the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if any) and all other relevant circumstances" [5] . Whether manufacturer advertising or labelling should also be considered was until now, unclear.

Public statements about the characteristics of consumer goods made by retailers, producers or their representatives (particularly in advertising or on labelling) must all now be considered in determining if the retailer has provided goods of satisfactory quality. However, such statements will not be relevant if:

• at the time the contract was made, the retailer was not and could not reasonably have been aware of the statements; or
• before the contract was made, the statements had been withdrawn or corrected; or
• the decision to buy the goods could not have been influenced by the statements

Retailers should be cautious. Whilst a manufacturer may owe an actionable duty of care to retailers not to make misleading public statements concerning its products [6] , subject to the Unfair Contract Terms Act, any liability for those statements could be contractually excluded [7] .

Repair or replacement

The Regulations give consumers new rights to require retailers to repair or replace defective goods, in addition to the pre-existing rights of compensation or (provided the goods are returned within a reasonable period of time) a refund.

Consumers may require retailers to repair or replace defective goods, unless this is impossible or disproportionately costly for the retailer compared to any alternative remedies.  If repair or replacement is impossible or disproportionately costly, or if repair or replacement is not completed within a reasonable time and without significantly inconveniencing the consumer, the consumer may obtain an appropriate reduction in price or a refund, taking into account any benefit the consumer has already obtained from the goods.

Guarantees

The Regulations do not require retailers to give guarantees.  However if guarantees are given they:

• are legally binding on the guarantor
• must state that the consumer has statutory rights that are not affected by the guarantee [8]
• must set out the content and particulars for making claims "in plain intelligible language", as well as the guarantor's name and address
• must on request, be given to the consumer in a "durable medium" (e.g. writing)
• must be written in English,if the goods are sold in the UK

Enforcement

Consumers' rights under the Regulations continue for six years from sale of the goods. Importantly, if defects arise in the first six months they are presumed to have been defective on delivery, unless the retailer can prove otherwise.

Significantly, in addition to consumer actions before the courts, the UK Office of Fair Trading has been given specific powers to directly enforce the new rules relating to guarantees. As high street retailers Argos and Littlewoods, and online giants Amazon and BOL recently discovered, the OFT is not reluctant  to take action to protect UK consumers.

Useful URLs

http://www.legislation.hmso.gov.uk/si/si2002/20023045.htm
The Sale and Supply of Goods to Consumers Regulations 2002

http://europa.eu.int/comm/consumers/policy/developments/guar/guar01_en.pdf
EC Directive 1999/44/EC on Certain Aspects of the Sale of Consumer Goods and Associated Guarantees

http://www.dti.gov.uk/ccp/topics1/guide/saleslong.pdf
The UK DTI guide for businesses.

• confirming that goods must be accurately described in public statements
• granting a statutory right of repair or replacement
• requiring that guarantees are clearly set out in English, and available in a durable medium
• assuming defects that arise with in 6 months existed on delivery

Whilst these changes may at first appear onerous for retailers, certain points should be noted.  First, it was already at least arguable, that "satisfactory quality" should be considered in the context of manufacturers' advertising.  In this respect, the change offers useful clarification, albeit in favour of the consumer and not the retailer.  Secondly, the new obligation to repair or replace is removed if impossible or disproportionately costly.  Thirdly, the provision of guarantees remains discretionary, whilst the need to make clear any that are given, simply accords with other legislation such as the Distance Selling and the E-Commerce Regulations. Finally, the six months presumption that defects existed on delivery most likely only mirrors many retailers' good practice policies on returns.

So whilst in many respects the changes simply impose obligations that are generally already considered good practice in boosting customer confidence, all retailers will need to be aware of possible enforcement action by regulators, and the likely negative publicity that could result.

David Meredith / John Garcia

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