United Kingdom’s Consumer Law: Advice for Consumer Essay

Introduction

Consumer law generally covers a wide scope of issues related to consumer protection and security in business transactions. To this end, the law is put in place to ensure that the consumer is protected. It is a legal branch that regulates the relationships between consumers and businesses selling products to these individuals.¹ It establishes the rights of these consumers and puts in place mechanisms to ensure that they are upheld. As a result, consumer law is vital in ensuring that consumers are not exploited during business transactions. The law ensures that businesses do not take advantage of consumers as they purchase goods and services. When engaging in business transactions, the seller and the consumer are bound by various obligations to each other. Consumer law highlights the obligations and rights of consumers as they engage in business transactions.

In this paper, advice is provided to Fiona, a consumer, from the perspective of consumer law in the United Kingdom. As a consumer, Fiona is subject to the rights and obligations set out in consumer law. The consumer has entered into a contract with two sellers. She is engaged in a hire purchase contract with Easy Finance Ltd., a contract binding her for three years. In addition, Fiona has entered into another agreement with Creative Computing following her purchase of a laptop from this firm. Creative Computing claims to make customized computers.

A critical analysis of the issues surrounding this case reveals that Fiona has been exploited or unfairly treated by the firms. As a consumer, she first got herself into a hire purchase contract that is unfavorable to her. In addition, the laptop acquired from Creative Computing lacks the specifications stated by the supplier before its purchase. The shortcomings constitute some of the issues that consumers contend with daily. They highlight the critical role played by consumer law in any economy.

Advice for Fiona

A Review of Fiona’s Hire Purchase Contract

The hire purchase contract Fiona entered into with Easy Finance Ltd. falls under the regulations of Consumer Credits Acts. Consumer Credits Acts 1976 and 2006 outline the components, obligations, and rights resulting from an agreement between a consumer and a seller or a supplier. The act further outlines the actions that need to be taken in addressing issues arising from such transactions.

By seeking financing from Easy Finance Ltd., Fiona bound herself to a regulated agreement that qualifies as a Consumer Credit Agreement. Such an agreement describes a consensus between the debtor and the creditor. In this agreement, the creditor provides the debtor with a specified amount of credit.² Under the hire purchase agreement, Fiona is not obliged in any way to purchase the television set from Superhouse. The owner of goods (in this case, Superhouse) allows the product hirer (in this case, Fiona) to use the product over the specified duration of time while paying for it in installments. In addition, the product hirer has the option of buying the product or not.³ The problem, however, is that Fiona has not yet completed her payments for the item. In addition, Fiona felt cheated after realizing that she could have acquired the same financing services from Easy Finance Ltd. at a lower annual percentage rate (APR). However, this realization comes in the wake of arrears and persistent threats from Superhouse of repossessing the television set. The arrears and threats notwithstanding, Fiona has enough grounds to argue for unfair treatment in the contract.

There are formalities associated with regulated agreements. Chief among them is the preliminary or pre-contract disclosure. The disclosure determines whether the contract was properly executed or not. One of the requirements of pre-contract disclosure is the fact that the creditor must disclose to the debtor the contents of the agreement.⁴ The content of the agreement includes, among others, the amounts, rates, and total charges for the credit.

Pre-contract disclosure also requires the seller to inform the buyer about the contents of the pre-contract credit agreement using a specified form.⁵ To this end, the information disclosed is supposed to be clear and easily legible. In addition, it should be provided in a format that the consumer can carry around for further analysis before committing to the contract.⁶ On her part, Fiona does not even recall having discussed the agreement with the sales assistant at Superhouse. It is the sales assistant who arranged for Fiona’s hire purchase funding.

The hire purchase agreement between Fiona and the company amounts to a regulated contract that was executed irregularly.⁷ Most probably, Fiona would have opted for a hire purchase financing with a lower APR than the one offered by this company. In addition, it is probable that she might have rejected the offer of hire purchase financing. The sales assistant at Superhouse influenced Fiona’s decision of accepting the financial arrangement without giving her the full information regarding the same.

Fiona can sue for nullification of the hire purchase agreement based on misrepresentation. Misrepresentation occurs when the consumer is induced to agree with an untrue statement or statement.⁸ The sales assistant at Superhouse deliberately misled Fiona into making a contract that favored the company at her expense.

The sales assistant convinced Fiona that she could not get a better deal due to her poor creditworthiness. To this end, the sales assistant was misrepresenting the contract terms. In addition, the agent acting on behalf of Superhouse did not fully discuss the contract terms with Fiona. She did not even get a copy of the agreement she signed. As a result, based on misrepresentation, Fiona can sue Superhouse and claim compensation for damages since the sales assistant misled her into signing the contract.⁹

Fiona might likely lose the television set if the arrears she owes Easy Finance Ltd. are not cleared on time. Claiming compensation for damages from the financing company will, however, not be possible. The reason is that the sales assistant cannot be regarded as an agent acting on behalf of Superhouse.¹⁰ Easy Finance Ltd. can argue that Superhouse’s sales assistant did not engage Fiona on their behalf.

The requirements stated above constitute the obligations of the creditor and the trader in relation to the consumer. In addition, the creditor is obliged to fully provide the consumer with explanations regarding the product, its suitability, as well as debtor’s affordability of the same. Failure on the part of the trader and the financier gives Fiona the opportunity to argue out her case under unfair agreement terms and misrepresentation.

There are several alternatives under the consumer law that Fiona can pursue in relation to this case. One of them is the rescission of the agreement.¹¹ Since she entered into the contract through misrepresentation, Fiona can pursue rescission through legal means or by mutual consent. Such a measure would make the transacting parties regain their positions prior to the agreement.

Fiona can also opt to terminate the contract based on her dissatisfaction with the terms. Termination of the hire purchase arrangement would amount to halting the contract before her final payment.¹² Pursuing this option might require her to pay at least half the price of the television. In other terms, the court might decide to have her pay less than half the price since she is the consumer and she was duped into buying the set.

It is important to note that even if the creditor or the seller fails to comply with the regulatory requirements, the court cannot automatically rule that there was an unfair relationship in the agreement. As such, Fiona should not rush in her pursuit of damages. She should not rush unless the company repossesses the item despite her prior payments.

A classic example of this scenario is the Murray versus (1) Black Horse Ltd. (2) Brownhills Motorhomes (Newark) Ltd. EW Misc. 10(cc) case.¹³ In this case, direct or agency dealings between creditor and debtor could not be determined in relation to the purchase of a motor home. The consumer was forced to make additional payments for protection insurance without prior communication from the trader. As a result, the case was ruled in favor of the claimant.

In a similar manner, Fiona can claim damages based on her inducement into buying through the hire purchase financing mode. The financing company did not provide Fiona with any statements. However, the agent acting for Superhouse did provide the statements. In addition, the agency relationship between Superhouse’s sales assistant and Easy Finance Ltd. is not apparent. Therefore, it is only Superhouse that can pay Fiona for damages. As a consumer, Fiona had the responsibility of requesting and gathering all the information she needed in relation to the agreement.

The Laptop Computer Deal with Creative Computing

The laptop Fiona purchased from Creative Computing lacks some of the specifications that the seller claimed it has. Fiona would not have purchased the product if she had known about its hardware shortcomings. The main reason why she bought the laptop was the specified graphics capabilities.

The agreement between Fiona and Creative Computing is regulated in nature. Considering the formalities of regulated agreements, it appears that the company had duped Fiona into buying its product. In most cases, consumers make purchases based on the statements made by the dealer. In this case, Fiona purchased a faulty product. She paid for the laptop using a Floyds Credit Card. Although Creative Computing had offered to arrange for alternative payments for her, Fiona seems to have opted for the card. Under consumer law, this case falls under the purchase of faulty goods with unconnected lender liability.

By arranging for her own payment methods, Fiona creates a scenario of the unconnected lender in the transaction. Such a situation occurs when a buyer borrows from their bank under a debtor-creditor agreement.¹⁴ The buyer then uses the borrowed money to purchase the goods or services they need. In Fiona’s case, the arrangement with Floyd makes the two parties be unconnected lenders.

It is apparent that Creative Computing misrepresented the product when selling it to Fiona. The misrepresentation was in relation to the quality of the product. The reason is that the laptop exhibited hardware shortcomings. Therefore, Fiona can sue Creative Computing for selling her a laptop whose qualities failed to meet the specified standards. The product had failed to satisfy the consumer’s needs.

Creative Computing would bear the losses incurred by Fiona in total. Floyds, who financed the purchase, will be excluded from such damages. By bringing her own creditor to the purchase, Fiona excludes Floyds from any liabilities.¹⁵ Therefore, Fiona can sue Creative Computing for damages or losses related to the purchase of the laptop. The Sale of Goods Act 1979 directs all liabilities resulting from such a transaction to the seller of the product.¹⁶ However, if Fiona had allowed Creative Computing to arrange for the financing of the product, both the creditor and the seller would bear the liabilities arising from the transaction. The creditor can contest the liability with Creative Computing, but not with Fiona.

Conclusion

Consumer law is very essential in regulating transactions between sellers, buyers, creditors, and debtors. In the contemporary world, credit facilities have become a major source of finance for purchases. Incidences of consumers being duped into buying malfunctioning products have increased. More and more consumers are going through experiences that are similar to those of Fiona.

Knowledge of consumer law is very important to both consumers and sellers. Fiona would suffer double losses as a consumer if she does not understand consumer law. However, such cases are minimized if the consumer knows how to get value for their money. When one takes into consideration all the facts related to Fiona’s cases, it appears that she has a high chance of being compensated for her losses under consumer law.

Reference List

Ali, P, C McRae, I Ramsey & TT Saw, ‘Consumer leases and consumer protection: regulatory arbitrage and consumer harm’, Australian Business Law Review. vol. 41, no. 5, 2013, pp. 240-269.

Atiyah, P, J Adams & H Macqueen, Atiyah’s sale of goods, 12th edn, Pearson, New York, 2010.

Dobson, P & R Stokes, Commercial law textbook, 8th edn, Sweet & Maxwell Ltd., London, 2012.

Furmston, M & J Chuah, Commercial law, 2nd edn, Pearson Education, New York, 2013.

Henry, PC, ‘How mainstream consumers think about consumer rights and responsibilities’, Journal of Consumer Research. vol. 37, no. 4, 2010, pp. 670-687.

Oren, BG & BS Omri, ‘Regulatory techniques in consumer protection: a critique of European consumer contract law’, Common Market Law Review. vol. 50, no. 1, 2013, pp. 109-125.

Rose, F, Blackstone’s statutes on commercial and consumer law 2012-2013, OUP, Oxford, 2012.

Sealyham, L & R Hooley, Commercial law: text, cases and materials, 4th edn, OUP, Oxford, 2008.

Steennot, R, ‘The right of withdrawal under the consumer rights directive as a tool to protect consumers concluding a distance contract’, Computer Law & Security Review. vol. 29, no. 2, 2013, pp. 105-119.

Tillson, J, Law express: consumer+commercial law, Pearson, London, 2012.

Walker, J, C Orville & RF Sauter, ‘Consumer preferences for alternative retail credit terms: a concept test of the effects of consumer legislation’, Journal of Marketing Research. vol. 11, no. 1, 1974, pp. 70-78.

Woodroffe, G & R Lowe, Consumer law and practice, 9th edn, Sweet & Maxwell, New York, 2013.

Footnotes

1. F Rose, Blackstone’s statutes on commercial and consumer law 2012-2013, OUP, Oxford, 2012, p. 23.
2. P Dobson & R Stokes, Commercial law textbook, 8th edn, Sweet & Maxwell Ltd., New York, 2012, p. 34.
3. ibid.
4. J Walker, C Orville & RF Sauter, ‘Consumer preferences for alternative retail credit terms: a concept test of the effects of consumer legislation’, Journal of Marketing Research, vol. 11, no. 1, 1974, pp. 70-78.
5. ibid.
6. PC Henry, ‘How mainstream consumers think about consumer rights and responsibilities’, Journal of Consumer Research, vol. 37, no. 4, 2010, pp. 670-687.
7. J Tillson, Law express: consumer+commercial law, Pearson, London, 2012, p. 18.
8. L Sealyham & R Hooley, Commercial law: text, cases and materials, 4th edn, OUP, Oxford, 2008, p. 46.
9. P Atiyah, J Adams & H Macqueen, Atiyah’s sale of goods, 12th edn, Pearson, New York, 2010, p. 78.
10. G Woodroffe & R Lowe, Consumer law and practice, 9th edn, Sweet & Maxwell, New York, 2013, p. 57.
11. M Furmston & J Chuah, Commercial law, 2nd edn, Pearson Education, New York, 2013, p. 49.
12. R Steennot, ‘The right of withdrawal under the consumer rights directive as a tool to protect consumers concluding a distance contract’, Computer Law & Security Review, vol. 29, no. 2, 2013, pp. 105-119.
13. Dobson & Stokes, p. 71.
14. P Ali, C McRae, I Ramsey & TT Saw, ‘Consumer leases and consumer protection: regulatory arbitrage and consumer harm’, Australian Business Law Review, vol. 41, no. 5, 2013, pp. 240-269.
15. BG Oren & BS Omri, ‘Regulatory techniques in consumer protection: a critique of European consumer contract law’, Common Market Law Review, vol. 50, no. 1, 2013, pp. 109-125.
16. Dobson & Stokes, p. 51.