Internet retailers and supply chains affected by changes to consumer rights in the UK

/ /
Publié le 18 juin 2003
Par .

New rules giving protection to consumers who buy faulty goods came into force on 31st March 2003 when the Sale and the Supply of Goods to Consumers Regulations 2002 were implemented in response to EU Directive 1999/44/EC.  These new rules will affect retailers (online and offline) as well as manufacturers of goods but will also…

New rules giving protection to consumers who buy faulty goods came into force on 31st March 2003 when the Sale and the Supply of Goods to Consumers Regulations 2002 were implemented in response to EU Directive 1999/44/EC.  These new rules will affect retailers (online and offline) as well as manufacturers of goods but will also have financial repercussions at all levels of the supply chain.

The New Rights

The Sale of Goods Act 1979 gives consumers rights to a refund, or compensation, in respect of goods are not of satisfactory quality or fit for the purpose for which they were intended.  This right lasts for six years following the purchase of the goods, provided that the defect was in existence at the time that the goods were supplied. In practice many retailers will provide a repair or replacement of the faulty goods, as an alternative practical way of remedying the situation.  The Unfair Contract Terms Act 1977 prevents retailers from using terms and conditions to deny consumers these rights. However, in a business to business sale, businesses can agree that these rights will not apply to the business buyer.  As a result it is standard to find these rights excluded in a business to business deal.  Business purchasers have to rely on standard contractual rights to reject and gain recompense for faulty goods supplied to them.  These standard contractual rights are not as far-reaching as the rights in the Sale of Goods Act 1979.
 
The new Regulations extend the rights of consumers in the following ways:

  • For the first six months, any fault that arises will be presumed to have existed at the time of delivery and it will be for the retailer to prove otherwise should he dispute any claim. This means that the burden of proof when faulty goods are reported will be in favour of the consumer. This is particularly helpful for goods bought on the Internet where a full inspection may not have been possible.
  • Any guarantees that are offered by a retailer or manufacturer will be legally binding. The guarantee must be written in simple language and must provide details on how to make a claim.
  • The right to request that the goods be repaired or replaced if faulty now has the status of law, although in the UK these have always been common practical remedies.
  • Consumers in the UK can be confident that there is similar protection in other European countries. Previously, the type of consumer protection provided would have depended on the consumer laws of the country concerned.  Whilst the changes to English law have been relatively minor, the implementation of the Directive has caused great changes in many EU countries.

The Effect on the Supply Chain

The Directive gave member states the option to legislate to allow businesses at all levels of the supply chain to force their suppliers to take back goods that were returned to them on the same terms that the consumer would be able to demand.  As mentioned above, the situation prior to the Regulations coming into force was that if the supplier of the retailer did not agree to take back the goods, then there was nothing the retailer could do except take its business to a more willing supplier, or invoke standard contractual remedies.  Unfortunately for those further down the supply chain, the UK government chose not to change this position.

However, we are aware that some businesses are using the changes in the law as a good way to renegotiate their arrangements with their suppliers, to give them better rights to return faulty goods.  The position at law is however, that the supplier does not have to agree to any change, unless it wishes to do so.  However, market forces will always be a strong factor.  We have had reports of foreign purchasers of goods under English law contracts, based in countries where the changes have been particularly major, threatening to terminate their contracts with suppliers that will not agree to take back faulty products under the same terms as consumers may return them. For many of these foreign purchasers their local law will give them these rights of return if they use local suppliers.

No doubt the changes implemented by the Sale and the Supply of Goods to Consumers Regulations 2002 will have a critical impact on Internet retail as well as offline retail.

Tamzin Matthew, Senior Solicitor
Morgan Cole
Tamzin.Matthew@morgan-cole.com