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Saturday, 30 November 2013

BBC One - Watchdog - My Consumer Victory: Sale of Goods Act 1979

We all know that the Sale of Goods Act implies a condition that the quality of goods supplied will be “satisfactory”, and that this includes, in appropriate cases, that the goods will be durable. The standard the goods must meet is what “a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances”. Of course, there's nothing there that would give you a cast-iron answer to every problem with a defective car, but since satisfactory quality replaced merchantable quality as the touchstone back in 1995 we haven't had the sort of tricky problems that used to trouble the courts. But what damages is the customer entitled to if a car doesn't meet the standard?In a case featured on BBC TV’s Watchdog recently (although dating back to 2009), a dealer was ordered to pay £1,175 in compensation and interest, plus £170 costs, to a customer whose 16 month old ex-demonstrator C4 Picasso broke down on a family holiday in France. The repair that would take weeks, and although Citroën agreed to pay for it, they would not meet the cost of a hire car to continue the holiday, the flights home, or the cost of returning to pick up the car when it had been repaired – what lawyers call consequential or indirect losses.
The customer sued in the county court, claiming that there was a breach of the warranty of satisfactory quality and seeking damages for the consequential losses. He argued that the gear linkage failure meant that the car was not durable enough to be of satisfactory quality, and the court agreed that it should have lasted longer than 16 months. The fact that the manufacturer had repaired the defect at its expense would not have amounted to an admission that there was a defect, although it might have been pretty strong evidence: in any case the claim under the Sale of Goods Act lay against the dealer who had sold the car to the customer, not the manufacturer with whom the customer did not have a contract.
It is well-established that where someone suffers consequential losses they can claim them from the person at fault, provided the losses are not too remote. This means that the court has to be satisfied that there was a strong possibility of the losses arising from the breach. In non-consumer contracts liability for these losses is commonly excluded, and in business-to-business transactions this makes a lot of sense – if a computer fails and brings a business to a grinding halt the consequential losses could be much more than the price of the computer. It is also generally reasonable to expect businesses to take precautions against equipment failures like that, and “reasonable” is exactly what the Unfair Contract Terms Act 1977 says it must be. But in a consumer contract, any attempt to limit or exclude liability would be prohibited by the 1977 Act, and void.
There have been several cases in which car-buyers have been awarded consequential damages, going back to the 1978 case Jackson v Chrysler Acceptances where the customer had specifically said the car was needed to go on holiday and the court awarded £75 when the holiday was spoilt, although the more important aspect of that case was the finding that if the camshaft, exhaust, radiator and clutch assembly all needed replacing within a few months the car, which was new, was not merchantable, and that continuing to pay HP instalments did not amount to acceptance. Consequential losses also featured in another great merchantable quality case, Bernstein v Pamsons Motors, in which Mr Bernstein was awarded £150 for a spoilt day out, “comprising nothing but vexation”.
A dealer who faces a claim from a consumer for something like a ruined holiday has little room for manoeuvre. The contract cannot limit or exclude the liability, and if the manufacturer has agreed to fix the problem free of charge it would be hard to argue that the car was of satisfactory quality. In the Picasso case, the consequential losses arose because the car could not be repaired quickly, and if you find yourself in that position it could be a lot cheaper to get hold of the part needed and get it to where the car is. The customer is also more likely to be happy if you've saved his family holiday.

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