Economic Development Minister
Draft Supply of Goods and Services (Jersey) Law 200-
Report
Introduction
1. The ‘Review of Consumer Protection in Jersey’ published in 2001 made a total of fourteen recommendations, three of which related to the introduction of specific legislation. The first piece of legislation involved controls on general product safety and this was implemented in 2006 with the introduction of the Consumer Safety (Jersey) Law. The second piece of legislation was needed to introduce consumer rights when buying goods on the internet and to protect the Island’s international reputation in a growing online retail industry. The States passed the Distance Selling (Jersey) Law in 2007 and it came into force in March 2008. The draft Supply of Goods and Services (Jersey) Law 200- will implement the last of the recommendations on legislation and is probably the most significant advancement in providing clarity of consumer contractual rights in Jersey’s history.
Background
2. It is appropriate to look back some 15 years or so when the chairman of the National Consumer Council at the time, Lady Judith Wilcox, was invited to Jersey along with the legal adviser, Guy Dehn, to assess consumer protection needs in the Island. The forward to the review was provided by Lady Wilcox who stated:-
“What Jersey wants and needs is a law that ensures that consumers do not have to put up with business practices that were ruled out of court decades ago in the United Kingdom and Europe. The Islanders deserve – and its tourists expect – no less”.
3. As a result of the subsequent review, a Fair Trading Law was drafted and re-drafted by Mr Dehn. However, it eventually became clear that the proposals to combine contractual rights, business malpractices and a trading malpractices tribunal in one Law was not feasible under Jersey’s legal system and the draft was shelved and never lodged by the relevant Committee at the time.
4. When the Industries Committee (which subsequently became the Economic Development Committee) was formed in late 1999, it decided to wipe the slate clean as it were and commissioned Mark Boleat, a UK based Jerseyman and recognised expert on consumer affairs, to carry out a new review of consumer protection in Jersey. The legislation strategy formulated from the recommendations in the review has indeed proved very successful and found strong support from the States Assembly as mentioned in the introduction.
The Draft Law
5. Jersey customary law – notably, where the law of contract is concerned - is different in certain fundamental respects from the common law of England and Wales. It can at times be rather obscure to the average consumer. The intention behind the draft Law is to achieve the policy objectives described above and to clarify the respective rights of buyers and sellers in a way that is consistent with the underlying concepts of the Jersey Law of contract.
6. The draft Law is the culmination of extensive development work drawing on expertise within the local legal profession in providing comprehensive drafting instructions. A lengthy consultation carried out in 2007 produced relatively few responses; but those which originated from legal firms, perhaps not surprisingly, focussed on the wording and detail of the Articles. Also, in developing the draft law, specialist expertise and advice was provided by the Law Officers.
7. Inevitably, in seeking to clarify contractual rights and responsibilities in statutory form, attention has been given to sale of goods legislation in force in the United Kingdom (i.e. in England and Wales – and the sometimes varying provisions that apply in Scotland). The vast majority of imported goods originate from United Kingdom suppliers. Many high street retail outlets are branches of United Kingdom stores which follow trading practices based on sale of goods Laws in England and Wales or, alternatively, in Scotland, even referring in some instances to consumer ‘statutory rights’. In reality, whilst the consumer in Jersey does enjoy a number of rights at customary law – not all of which were enjoyed by the consumer at English common law – the Jersey consumer still does not have ‘statutory rights’ in the strict sense in which the consumer now does in the United Kingdom. This Law, if passed by the States, will set out the full extent of such statutory rights and provide a clear framework for the benefit of both consumers and traders.
8. In producing the draft law, regard has been had to the following Acts of the United Kingdom Parliament:
Supply of Goods (Implied Terms) Act 1973
Sale of Goods Act 1979
Supply of Goods and Services Act 1982
Sale and Supply of Goods Act 1994
Sale and Supply of Goods to Consumers Regulations 2002
9. The Explanatory Note provided by the Law Draftsman gives detailed information on the individual Articles. However, the following – which is not to be taken as an authoritative legal statement of the Law – is intended to give an indication, for the most part, in layman’s terms, of how the Law will apply to everyday contracts and, in particular, those concluded between consumers and traders. It should, of course, be remembered that numerous transactions take place daily where nothing ever goes wrong but, on occasions when disputes arise, this Law will make it much easier for consumers (as well as sellers) to identify their basic contractual rights and remedies.
10. It should also be noted that this Law will apply to all contracts for the sale of goods or supply of services (as defined in the Law) which includes, for example, business to business contracts. However, the Law provides extra protection in circumstances where, clearly, one party to the contract is a trader and the other is a consumer.
Forming a contract
11. As already mentioned, this Law is concerned with contracts for the sale of goods and/or services. Contracts of sale will always consist of various terms. Some of them will have been expressly agreed between the parties whilst others, although not negotiated or specifically agreed, will automatically be assumed to form part of the contract.
12. Express terms will usually include terms about the price, the description of the goods or an agreed delivery date (if possession is not immediate). Terms that are an automatic part of any contract of sale include guarantees on the part of the seller about quality or fitness for purpose (e.g. under existing Jersey law, the seller is normally taken to warrant that what he/she is selling is free from hidden defects).
13. Failure to comply with the terms of a contract is referred to as a breach of contract, and this normally results in the supplier having to remedy the breach in some way. In order for an express term to be binding, it must clearly be part of the contract and be legal. Terms given to a buyer after the contract is made are not part of the contract and therefore, they have no effect.
How is a contract concluded?
14. Very basically, a contract of sale consists of an offer by one party and an acceptance of that offer by the other. Take the display of goods at a supermarket. The customer’s selection of the goods, followed by presentation of them at the checkout, is an offer; the cashier’s action amounts to an acceptance.
15. Under the Jersey law of contract, when it comes to price, there is (unlike in English law) no formal requirement of ‘consideration’. However, the draft Law is concerned with contracts of sale – which automatically involve payment of some sort. Such contracts are referred to in Jersey law as ‘onerous’ (the technical term is contrat à titre onéreux) and this is reflected in the draft Law.
What happens when the buyer changes his/her mind?
16. Normally, a buyer has no automatic right to change his/her mind and cancel a contract, so, if this happens, the buyer is in breach of contract. There is, however, an automatic right to cancel in some special cases where contracts are made at a distance (mail order, internet etc) and these are specified in the Distance Selling (Jersey) Law 2007.
17. If a buyer withdraws from a contract when there is no right, the seller may not be able to recover the lost sale. If the seller has already accepted a part-payment (deposit) when the buyer changes his/her mind, the seller will need to consider whether it covers the losses he/she is entitled to claim. If it does not, the seller can claim the extra from the buyer. In practice, the seller usually just keeps the deposit paid by the buyer.
Guarantees given by the seller and remedies for breach
18. The draft Law provides that, in every transaction for the sale and supply of goods, including hire-purchase, the seller automatically warrants certain basic things as far as the item sold is concerned. The equivalent of such automatic warranties in English law, are known as “implied terms”.
19. The person transferring or selling the goods must have the right to do so and the goods must -
· Correspond with the description. Many transactions involve a description of some kind. When goods are supplied and the buyer relies on such a description, the goods must be ‘as described’.
· Be of satisfactory quality - if the goods are sold in the course of a business. Goods must be of a standard that a reasonable person would regard as satisfactory, having regard to any description applied to them, the price and all other relevant circumstances. Quality is a general term which covers a number of matters including:
§ appearance and finish
§ freedom from minor defects
§ safety
§ durability
In assessing quality, all relevant circumstances must be considered, including, as mentioned, price and description. In business to consumer contracts, the manufacturer’s claims for the product can also be taken into account. It should be noted here that the implied term of satisfactory quality does not apply to contracts between persons acting as private individuals.
Be fit for their intended purpose - if the goods are sold in the course of a business. When a buyer indicates that goods are required for a particular purpose or where it is obvious that goods are intended for a particular purpose, and a business seller supplies them to meet that requirement, the goods should be fit for that specified purpose. Again, this does not apply to contracts between private individuals.
Buyer’s remedy for breach
20. A buyer can reject the goods provided that he/she is not deemed to have accepted them, which will depend on individual circumstances. When a buyer rejects goods he/she can claim compensation for losses. In most circumstances, this will amount to a full refund by the seller unless the buyer has already had substantial use from the goods.
What is acceptance?
21. When acceptance takes place, the buyer loses the right to reject the goods, although he/she may still retain a right to compensation or some other remedy.
22. Acceptance applies only in contracts for the sale of goods and examples of acceptance are as follows:
The buyer telling the seller that he/she has accepted the goods. (this does not include merely signing a delivery note)
Altering the goods in some way
Keeping the goods for more than a reasonable time without notifying the seller of faults or defects (this time period will vary depending on the nature of the goods)
Using the goods after notification of defects.
23. A buyer is not considered to have accepted the goods just because he/she has let the seller attempt a repair. Also, a buyer must have a reasonable opportunity to examine the goods to check that they conform with the contract, before he/she is deemed to have accepted the goods.
Remedies where the buyer cannot reject the goods
24. When there is a breach of contract, but the buyer has lost his/her right to reject the goods, he/she will be entitled to claim compensation from the seller. The amount of compensation will be the sum required to put right the breach. Usually, this will be the cost of repair or replacement, or a part refund, and perhaps compensation for any other losses suffered. If a repair or replacement would put the breach right, and the seller offers this to the buyer, he/she would normally be expected to accept it.
Additional remedies for consumer buyers
25. There are additional remedies in the draft Law where the buyer is clearly acting as a consumer in contracts for the sale or supply of goods. In these circumstances, the consumer may be able to demand any of the following:
A repair or replacement
A price reduction to an appropriate amount taking the defect into account
Rescission of the contract (i.e. the return of the goods, part or full refund, and compensation, if appropriate).
26. If the consumer chooses one of these remedies, and if the defect is discovered within six months of delivery, it is automatically assumed that the fault was there at the time of delivery, unless the trader can prove otherwise. If more than six months have passed, the consumer has to prove that the defect was there at the time of delivery, even if it was not apparent at the time.
27. If the consumer chooses the option of a repair or replacement, the trader must do this within a reasonable time and also pay all the relevant costs, for example labour, postage etc.
28. Where a consumer demands a repair but that remedy would be disproportionate, then the trader would be entitled to offer one of the other remedies. For example, if a consumer demands a repair, but it would be cheaper to replace the item than repair it, then it would be reasonable for a trader to offer only a replacement. The consumer can only require a price reduction or rescission where the cost of repair or replacement is disproportionate.
Exceptions – When the buyer cannot claim
29. A buyer has no rights in respect of defects that are brought to his/her attention before a sale or if he/she examines the goods before purchase and any defects could easily have been identified. Also, a buyer cannot claim for damage he/she causes to the goods or if he/she simply has a change of mind about wanting the goods. A buyer cannot claim if he/she chooses the product for a purpose which is neither obvious nor made known to the seller, and then finds that the item is simply unsuitable for that purpose.
Supply of Services: automatic guarantees
30. The draft Law clarifies what a consumer can expect when he/she enters into a contract with a supplier to provide a service. The basic protection provided is that, if the supplier is acting in the course of a business, the service must be carried out with reasonable care and skill. In most instances, the timescale for that service will be agreed between the consumer and supplier but, where the time for the service to be carried out is not:
· fixed by the contract
· left to be fixed by agreement, or
· determined in the course of dealing between the parties
the service must be carried out within a reasonable time. Similarly, the price to be paid for a service is usually agreed before it is carried out. However, where the price is not –
· determined by the contract
· left to be determined in a manner agreed by the parties, or
· determined by the course of dealing between the parties
the service must be carried out for a reasonable charge.
Protection for innocent buyer of a motor vehicle still on finance
31. It is unfortunate but, occasionally, motor vehicles are sold that are still subject to either a hire-purchase or conditional sale agreement and innocent purchasers have suffered losses when the vehicle has been repossessed. The Law gives protection to consumers who, without knowledge, buy vehicles that are subject to such agreements. If the debt has not been fully discharged, the title of the goods, namely ownership of the vehicle will still pass to the unsuspecting buyer. This is a significant improvement to the current situation in Jersey. However it is open to the former owner to take action against the unauthorised seller to recover a debt or to seek compensation.
Guidance on the Law
32. It should be clearly understood that the draft deals only with civil contractual rights and remedies. It does not create any criminal offences and there are no enforcement powers or duties to be undertaken by any particular body. In the event of contractual disputes which are unable to be resolved through negotiations, redress will be sought through an action in the Courts. The Court will then base decisions on the facts presented which will be unique in every case.
33. The Trading Standards Service has provided a free, confidential consumer advice service for many years which assists not just consumers, but also traders, in resolving such disputes which arise over the sale of goods and services. The Citizens Advice Bureau also provides a level of consumer advice and indeed regularly passes more difficult cases on to Trading Standards. This Law will help to clarify the rights of consumers involved in disputes. It is intended that, if the Law is passed, Trading Standards will publish guidance booklets to ensure that consumers can be confident they know their rights and traders are aware of their responsibilities when supplying goods and services.
Financial and Manpower implications
There are no financial or manpower implications for the States arising from this proposition.
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