Amtrak CONDITIONS OF CARRIAGE - DOMESTIC. P1

Contracts (Rights Of Third Parties) Act 1999 Chapter 31 P10

Unfair Contract Terms Act 1977 (UCTA) P21

The Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR) P41

Misrepresentation Act 1967 P52

Concerning the privity rule P53

The Consumer Protection (Distance Selling) Regulations 2000 P56

Consumer Protection (Cancellation of Contracts Concluded P83

away from Business Premises) Regulations 1987

SALE OF GOODS ACT 1979 as amended to 2003 P91

Enterprise act 2002, Chapter 40 incl Part 8. P106

The Competition Act 1998. P177

Miscellaneous P179

end



The defendant's contract. 2003 (Italics by claimant)



CONDITIONS OF CARRIAGE - DOMESTIC

IMPORTANT NOTICE


THIS NOTICE APPLIES TO CONSUMER CUSTOMERS ONLY

1 .You are a Consumer Customer if you are an individual (not a firm or company) and you are acting for

purposes not related to your trade, business or profession.

2.It is important that you read this notice and these conditions carefully as they contain imitations on the

Carrier's liability to you (see Clauses 16 and 17) and set out what you must do if you need to make a claim

against the Carrier (see Clause 18).

3-These conditions shall apply to all contracts and if there are any qualifications or variations to these

conditions agreed between you and the Carrier it is important for the avoidance of doubt that such variations

should be in writing and a form is available from the Carrier for this purpose.

4.If you consider that the limit on the Carrier's liability under Clause 17.1 is too low (due to the value of your

goods or any loss you may incur as a result of delay or non-delivery), you should consider requesting

additional cover from the Carrier under Clause 17.2 or taking out other insurance cover.

5. If you are unsure whether your goods are Dangerous Goods (as defined in Clause 1), you should ask the

Carrier's staff or representative, as special conditions will apply under Clause 8(iv) and (v).

6.The money back guarantee does not apply where delivery is delayed by factors beyond the Carrier's

control.

CONDITIONS OF CARRIAGE

AMTRAK EXPRESS PARCELS LIMITED (hereinafter referred to as "the Carrier") accepts goods for

carriage upon the terms and subject to the conditions set out below (hereinafter referred to as "these

conditions").

For Business Customers only, unless previously agreed in writing by an officer of the Carrier who has

express authority to do so:

(1)no verbal, written or other addition, amendment, variation hereto or hereof, shall be effective;

(2)these conditions supersede any other terms and conditions appearing elsewhere and shall prevail over

and exclude any terms or conditions stipulated or incorporated or referred to by the Customer or his agents

or any third party; and

(3)it shall be a pre-condition of the Carrier's acceptance of goods for carriage that the same is subject to

these conditions in all respects.

1.DEFINITIONS

In these conditions the following expressions shall have the meaning hereby respectively assigned to them,

that is to say:

"Business Customer" shall mean customers other than Consumer Customers

"Consumer Customer" shall mean a customer who is an individual (not a firm or company) and who is acting

for purposes not related to his/her trade, business or profession

"Customer" shall mean a Business Customer or a Consumer Customer

"Consignment" shall mean goods in bulk or contained in one parcel or package or in any number of separate

parcels or packages, in all cases sent at one time in one load from one address to one address

"Dangerous Goods" shall mean goods which are specified in the Carriage of Dangerous Goods by Road or

Rail (Classification, Packaging and Labeling) Regulations 1994 or the Technical Instructions for the Safe

Transport of Dangerous Goods by Air of the International Civil Aviation Organisation or which although not

specified therein are of a similar nature.

"Contract" shall mean the contract of carriage between the Customer and the Carrier

"Carrier" shall, where the context so admits, include the Carrier's officers, servants or agents and also any

other carrier or sub-contracting party whom the Carrier is authorised and permitted to use or engage under

these conditions

2.CARRIER IS NOT A COMMON CARRIER

The Carrier is not a common carrier and will only accept goods for carriage on these conditions.

3.PARTIES AND SUBCONTRACTING


3.1 Where the Customer is not the owner of some or all of the goods in any particular Consignment, the

Customer hereby warrants that it is for all purposes the lawful and duly authorised agent of the owner or

owners thereof and that it hereby accepts these conditions for itself and for and on behalf of any other

person having any interest in the Consignment.

3.2 The Carrier may employ and engage the services of any carrier for the purposes of fulfilling the contract

(including any of the Carrier's own franchisees) and any such other carrier shall have the like power to sub-

contract under these conditions.

3.3 The Carrier enters into the contract for and on behalf of itself and its officers, servants, agents and sub-

contractors all of whom shall be fully entitled to the benefits of the contract (including any limitation or

exclusion of liability) and shall be under no liability whatsoever to the Customer or anyone claiming through it

in respect of a Consignment in addition to or separately from that of the Carrier under the contract (except

for death or injury caused by their negligence).

4-CARRIER'S CHARGES

4.1 The Carrier shall not accept any Consignment under a contract of carriage unless either the Customer

has opened an account with the Carrier and is not in breach of any of the conditions or credit limits

applicable thereto or the Consignment is a cash transaction. For cash transactions, payment will be required

by the Carrier on collection or acceptance of the Consignment unless otherwise agreed in writing. If the

Customer has opened an account with the Carrier, the Carrier shall submit invoices to the Customer weekly

or as otherwise agreed and the Customer shall be obliged to settle such invoices not later than the

(fourteenth day of the calendar month following that in which the invoice was first issued).

4.2 The Carrier reserves the right to charge interest at the rate of 2% per month on invoices not paid within

the payment terms. Interest will continue to accrue until the Customer's liability is discharged in full.

4.3 The Carrier's charges for carriage (and services incidental thereto) shall be payable by the Customer

without prejudice to the Carrier's rights against the consignee or any other person. The Carrier shall only

accept Consignments chargeable to the consignee by prior written arrangement in which event the

Customer shall not be required to pay such charges unless the consignee fails to pay after a reasonable

demand has been made by the Carrier for payment thereof.

4.4 Unless otherwise agreed in writing by the Carrier, all Consignments are charged at their actual gross

weight unless a Consignment exceeds 6 cubic metres per tonne (6,000 cubic centimetres per kilo) in which

case the Carrier may calculate the charge on the basis of 6 cubic metres per tonne (6,000 cubic centimetres

per kilo).

4.5 No Business Customer shall be entitled to defer or withhold payment of any money due or liabilities

incurred to the Carrier by reason- of having any claim or counterclaim or any alleged claim or counterclaim

and the Customer shall not under any circumstances be entitled to any rights of set-off in relation thereto.

4.6 A Consumer Customer may set off against any amounts due to the Carrier such amount as fairly reflects

any genuine claim against the Carrier for breach of this contract.

4.7 The absence of, or any discrepancy in, a signed delivery note shall not entitle a Business Customer to

defer or withhold payment of monies due or liabilities incurred to the Carrier.

4.8 The Carrier shall have a first specific lien on the Consignment for all the Carrier's charges referred to

hereunder and shall have the same rights of sale in relation thereto as are set out under Condition 19 below.

4.9 Charges are based on existing costs of materials, rates, wages and other expenses payable by the

Carrier. If such costs vary as a result of changes in legislation or economic factors outside the Carrier's

control, the Carrier reserves the right to vary the charge for Business Customers immediately in accordance

with such change. In all other cases, the Carrier may vary the charge by giving at least one month's notice

in writing to the Customer at any time.

5.VALUE ADDED TAX

All charges exclude Value Added Tax. The Customer will indemnify the Carrier against any liability arising

under section 16 (9) of the Value Added Tax Act 1983 or any statutory modification or re-enactment thereof

in respect of a failure to export zero rated goods or to comply with any condition in relation to zero rated

goods intended to be exported.

6.VARIATION OF TERMS

The price at which the Carrier has agreed to deliver or procure the delivery of the Consignment is based on:-

6.1 the warranties and indemnities given and accepted on the part of the Customer herein;


6.2 the Carrier's cost of maintaining insurance cover against the liabilities of its part assumed hereunder:

and

6.3 the exclusions, limitations and restrictions of and on the Carrier's liability hereunder.

The Carrier is prepared to negotiate a difference price if the Customer requires any variation or amendment

to these conditions.

7.MONEY BACK GUARANTEE

7.1 Where the Customer has paid a surcharge for Saturday delivery or for overnight timed delivery and the Carrier fails to deliver on Saturday or by the specified time, as the case may be, then the Customer shall be entitled to a refund of the difference between the total paid and the greater of the Carrier's standard delivery charge or the delivery charge for the service actually achieved. (Misrepresented term, contrary to good faith does not get practiced, and is willfully disputed unreasonably with fallacious and spurious arguments)

7.2 The money back guarantee provided for hereunder shall not apply where the Carrier's failure to deliver

on Saturday or by the specified time period, as the case may be, is caused by factors beyond its control as

the same are specified in Condition 16 below, or by exercise of its right of lien and/or sale as specified in

Condition 19 below.

8.PACKAGING, LABELLING, SIZE AND DANGEROUS GOODS

8.1 The Customer warrants that each article comprised in the Consignment has been properly described to

the Carrier and that the Consignment itself has been properly marked, addressed and packaged so as to

ensure at all times safe storage and transportation with ordinary care and handling.

8.2 Every Consignment shall be addressed and labeled using the Carrier's labels in accordance with the

Carrier's requirements and shall be accompanied by the Carrier's Consignment note containing such

particulars as the Carrier may reasonably request.

8.3 Unless otherwise agreed in writing by the Carrier no individual parcel or package may exceed 35kgs (77

pounds) in weight and/or 1.5 metres (60 inches) in length and/or 2 metres (78 inches) combined length plus

width plus depth.

8.4 The Customer shall not offer Dangerous Goods for carriage except with the express prior written

consent of the Carrier. If the Carrier agrees to accept Dangerous Goods for carriage such goods must be

accompanied by a full declaration of their nature and contents and be properly and safely packed in

accordance with any statutory regulations for the time being in force in relation to all such goods and/or their

transportation.

8.5 The Customer shall indemnify the Carrier against all costs, losses, damages, expenses or other liability

whatsoever arising out of the carriage of any Dangerous Goods (whether declared as such or not) save

insofar as the same arise out of the Carrier's own negligence.

9.RECEIPTS FOR CONSIGNMENTS

The Carrier shall, if so required by a Business Customer, sign a document prepared by the Customer

acknowledging receipt of the Consignment but no such document shall be evidence of the condition or of the

correctness of the declared nature, quantity or weight of the Consignment at the time it is received by the

Carrier.

10.LOADING AND UNLOADING

10.1 When collection or delivery does not take place at the Carrier's own premises, the Carrier shall not be

under any obligation whatsoever to provide plant, power or labour which, in addition to the Carrier's own

driver, is required for loading and unloading. Any such plant, power or labour shall be provided at the sole

risk and cost of the Customer who shall indemnify and keep the Carrier fully indemnified against all losses,

liabilities, costs, damages, expenses, claims or actions suffered or incurred by the Carrier in respect of the

provision or use of the same or any other matters relating thereto.

10.2 Goods requiring special appliances for unloading are accepted for carriage only on condition that the

Customer has duly ascertained from the consignee that such appliances are available at the specified place

of delivery.

11.UNREASONABLE DETENTION

The Customer shall be liable to the Carrier for all costs, damages or expenses suffered by the Carrier in

respect of unreasonable, abnormal or unusual detention of the Carrier's vehicles, containers and other

things which arise as a result of the nature, state, or packaging of the Consignment or any part thereof. In

addition, time spent at either the point of collection or point of delivery of the Consignment in excess of one

quarter of an hour shall, at the discretion of the Carrier, be subject to additional charge calculated at the

Carrier's hourly rate levied for the operation of the particular vehicle, container, or other thing involved.



12.ROUTE

Unless otherwise agreed in writing, the method and route of transit shall be at the absolute and sole

discretion of the Carrier.

13.TRANSIT

13.1 Transit shall commence when the Consignment is handed to the Carrier whether at the point of

collection or (as the case may be) at the Carrier's premises.

13.2 Transit shall (unless otherwise previously terminated) end when the Consignment is tendered at the

specified place of delivery within the customer delivery hours in the district concerned or at such other times

as may be agreed between the Carrier and the Customer provided that:

13.2.1 if no safe and adequate access or no adequate unloading facilities there exist, then transit shall be

deemed to end at the expiry of one clear day after notice in writing (or by telephone if so previously agreed

in writing) of the arrival of the Consignment at the Carrier's premises in the relevant district has been sent to

the consignee: and

13.2.2 where for any other reason whatsoever a Consignment cannot be delivered when a Consignment is

held by the Carrier to await order or "to be kept till called for" or upon any like instructions and such

instructions are not given or the Consignment is not called for then transit shall be deemed to end at the

expiry of one clear day after notice in writing (or by telephone if so previously agreed in writing) of such fact

has been sent to the consignee.

14.UNDELIVERED OR UNCLAIMED ITEMS

After termination of transit, unless otherwise agreed in writing, the Carrier will hold the Consignment as

warehousemen subject to it normal warehousing charges and conditions prevailing at the time and subject

always to the Carrier's right of sale and lien provided for in Condition 4 and Condition 19 hereof.

15.COMPUTATION OF TIME

Where any period of seven days or less provided by these conditions is computed, there shall be ignored

any Sunday or Bank, or Public or other statutory holiday.

16.LIABIUTY OF CARRIER

The Carrier shall be liable for any loss or damage to goods occasioned during transit unless and to the

extent that the same has been caused by, is due to, or has arisen from:

16.1 An act of God, force majeure or any other occurrence or cause beyond the control of the Carrier,

including war, civil commotion, invasion, hostilities, riots and other like occurrences;

16.2 Seizure, damage, confiscation, requisition or destruction under legal process or by or under the order of

any governmental, local authority, or other public body;

16.3 Any act of omission of the Customer or the owner or owners of the goods comprised in a Consignment

(or part thereof), including their respective servants or agents and anything done by the Carrier at the

express request or direction of them;

16.4 Inherent liability to wastage, either in bulk, weight or quality, any latent or inherent defects or natural

deterioration of the goods;

16.5 Insufficient or improper packaging, labeling or addressing;

16.6 Industrial disputes, lock-outs and general or partial stoppages or restraints of labour of whatsoever

nature beyond the control of the Carrier;

16.7 Electrical, magnetic or x-ray erasure or damage or other similar damage to electronic or photographic

images or recording in any form.

Under no circumstances shall the Carrier be liable to any Business Customer in any event for consequential

loss, special damages or other indirect loss, howsoever arising, whether or not the Carrier knew or ought to

have known that such losses or damages might be incurred, including without limitation loss of income,

profits, interest or toss of market. (Unfair term) should include carriage costs)

17.LIMITATION OF LIABILITY

17.1 The Carrier's liability for any loss or damage whether in contract, tort (including, without limitation, negligence or breach of statutory duty) or howsoever arising shall be limited to the lower of the following amounts: (liability extends to tort, and especially negligence (WILFUL, unfair term conflicts with Cl 7))

17.1.1 Where the loss or damage is in respect of the whole Consignment and no enhanced goods in transit

cover has been requested, a maximum of £12 per kilo of gross weight of the Consignment;



17.1.2 Where the loss or damage is in respect of part of the Consignment and no enhanced goods in transit

cover has been requested, a maximum of £12 per kilo of gross weight of that part of the Consignment that

has been lost or damaged;

17.1.3 Where the loss or damage is in respect of the whole Consignment and enhanced goods in transit

cover has been requested, a maximum up to the amount covered by that enhanced goods in transit cover;

17.1.4 Where the loss or damage is in respect of part of the Consignment and enhanced goods in transit

has been requested, the proportion of the amount covered by the enhanced goods in transit cover for the

whole Consignment which the actual value of the part lost or damaged bears to the actual value of the whole

Consignment;

17.1.5 In all instances the Carrier's liability shall not exceed the actual value of the Consignment or part

thereof which has been lost or damaged.

17.2 Full enhanced goods in transit cover up to a maximum of £6,000 per Consignment can be provided by

the Carrier on Consignments with a gross weight of less than 500 kilos where such cover is specifically

requested by the account holding Customer on the Consignment note. The Customer will be liable to pay a

supplementary charge for such cover per Consignment as detailed on the Carrier's rate schedule from time

to time. Enhanced Goods in transit cover is not available to non-account holding customers.

17.3 exceptions to 17.1 and 17.2 are as follows:

Restricted Goods not accepted under any circumstances:

Agricultural spares or exposed metal. Antiques, Aquariums, Bathroom Accessories: Bath panels, Shower

units, Sanitary ware. Car parts from scrap yards, Currency, Complete guns/dangerous goods,

Cornice/Mouldings, Engines/Engine frames and gearboxes. Fabric rolls over 1.5m, Fire surrounds (complete

items), Furs, Furniture: Cupboards/cabinets/chest of drawers, Garage doors, Gas bottles without capped

ends, Hazardous goods. Jewellery, Joinery: Staircases/fencing/sheds, Livestock (excluding pigeons), Made-

up furniture, Marble items, Mattresses, Mirrors, Neon signs, Office furniture, Paint, Pharmaceuticals,

Prams/pushchairs, Precious stones/jewellery, Sofas/chairs/tables, Windscreens, Window frames or Works

of art or Unpacked items.

Owners Risk, Goods which can be accepted provided an 'Owners Risk' declaration is obtained. Not to be

carried if over 35 kilos or 1.5 metres in length and/or 2 metres combined length plus width plus depth. N.B.

Goods in Transit liability either at the basic level of £12 per kilo or enhanced goods in transit cover is not

available on damage to goods traveling at 'Owners Risk':

Bottles/glassware (excluding Winetrak), Boxed Plants, Ceramics: figures/figurines/sinks/tiles, Clocks,

Crockery, Display Units/Stands, doors, Flatpack Furniture, Glass/Stained Glass, Joinery: Polished

Wood/Laminates/Veneered Panels, Light shades, Lighting Fitments/Bulbs, Musical instruments in case,

Pictures/Paintings/Pottery/Craftwork, Perishables, Gramophone records.

17.3.1 ON Service (Unattended Delivery) - This service will not provide a signed proof of delivery but wilt

state where the goods have been left. Consequently, the Carrier shall not be liable for any loss or damage

to goods on the 'Unattended Delivery' service after the consignment has been delivered and / or left in

accordance with the instructions. The liability of the Carrier for any loss or damage during transit is provided

for in Clause 17 above.

17.4 Packaging is intended for the protection of consignment contents. Damage to packing is excluded from

any claim.

17.4.1 it is not the Carrier's responsibility for the standard of packaging or to ensure packaging is sufficient.

Damage to consignments whereby packaging is deemed insufficient will be excluded from any claim.

17.4.2 where a claim for damage to a consignment has been made, and the said damage has not been

noted at the point of delivery, any such claim will not be accepted.

17.4.3 liability for damage will not be accepted for return consignments.

17.4.4 where a claim for damage has been made, not withstanding any damage to the contents of the

parcel, any such claim will not be accepted should the damage not be demonstrable on the outer packaging.

17.4.5 in respect for claims on damaged goods, the contents and the packaging must in all cases be

retained in order for Arntrak to inspect the said goods.

17.5 Under no circumstances shall the Carrier be liable to any Customer in any event for consequential loss, special damages or other direct loss, howsoever arising, whether or not the Carrier knew or ought to have known that such losses or damages might be incurred, including without limitation loss of income, profits, interest or loss of market

(an unfair term conflicts with Cl 7.)



17.6 Not withstanding clause 17.1 above, the Carrier reserves the right to apply the current replacement

value to that claimed and if lower, apply a deduction for the age and condition of the item concerned.

17.7 Where the Carrier fails to collect the return part of the service, the Carrier's liability shall be limited to

the difference between the price of the OR and the price of the standard 0 service.

17.8 No claim shall be entertained by the Carrier where there is not sufficient evidence to suggest that

goods have entered the system, e.g. production of an In Touch manifest.

17.9 The Carrier reserves the right to reverse a claim settlement where there is demonstrable evidence that

the claim was invalidly paid in the first instance.

18.TIME LIMIT FOR CLAIMS •

The Carrier shall not be liable for any loss, damage or other liability of whatsoever nature unless:

18.1 The Customer notifies the Carrier's Claims department at Arntrak Express Parcels, Northgate Way,

Aldridge, Walsall, WS9 8ST in writing (along with any information noted or paperwork from-the point of

delivery) of an impending claim within 21 days after commencement of transit; and

18.2 The Carrier receives a completed claim form from the Customer within ten days of sending it to the

Customer. The Carrier shall be entitled to receive written evidence to its reasonable satisfaction of the value

of any consignment lost or damaged, (e.g. purchase/sales invoice with mark-up stated and photographic

evidence).

18.3 No claim by any Customer shall be entertained by the Carrier nor shall any liability attach to it unless all

payments due to the Carrier from the Customer in respect of the delivery of the Consignment have been

fully made.

18.4 Where a Consignment in whole or in part has been damaged beyond repair or lost, the ownership of

the Consignment in whole or in part as the case may be, will transfer to the Carrier upon payment by the

Carrier of any claim by the Customer.

18.5 All correspondence relating to a claim must be carried out in writing.

18.6 In the case of invalid claims, the Carrier reserves the right to apply a charge of £10.00 where in its

opinion there has been excessive or inappropriate work involved in dealing with the claim.

19. GENERAL LIEN

19.1 The Carrier may keep hold of all or some of your goods until the Customer has paid all the charges

owing to the Carrier, even if the unpaid charges do not relate to those goods.

19.2 For Business Customers only, if any such monies or liabilities are not paid or satisfied within a

reasonable time, the Carrier shall be at liberty in its absolute discretion to sell any or all such goods as agent

for the owner or owners thereof and to apply the proceeds towards- payment or satisfaction of all such

monies or liabilities and all the expenses of any such sale and the Carrier shall, upon accounting to the

Customer for the balance remaining (if any) of such proceeds after such application, be discharged from all

liability whatsoever in respect of the Consignment.

19.3 Failure to deliver within the specified time period due to exercise of the Carrier's lien shall not entitle the

Customer or such owner or owners to withhold payment of any of the Carrier's charges.

20.SEVERANCE

If any of these conditions becomes invalid, illegal or unenforceable, the rest of the conditions shall remain

valid and unaffected.

21.GOVERNING LAW

Relevant United Kingdom law will apply to these conditions and any contract with the Carrier and the

relevant courts of the United Kingdom will have exclusive jurisdiction in relation to them.

DATA PROTECTION NOTICE

Arntrak Express Parcels Limited and the carriers who will be providing you with distribution services (this will

usually be the sending and receiving depots), will use your information for the purposes of providing

distribution and associated services including parcel tracking, administration, marketing, credit scoring and

credit insurance. For more information on the individual depots who are involved with the provision of

services to you, please contact us on 08705 456 456. We will disclose your information to our service

providers and agents for these purposes. We may keep your information for a reasonable period to contact

you about our service.

To help us to make credit decisions about you, to prevent fraud and to check your identity we may search

the files of credit reference agencies who will record any credit searches on your file. We may also disclose


details of how you conduct your account to such agencies. The information will be used by other credit

grantors for making credit decisions about you and the people with whom you are financially associated, for

fraud prevention and occasionally for tracing debtors.

We may share your information with organisations who are our business partners. They may contact you by

mail, telephone or fax to let you know about any goods, services or promotions which may be of interest to

you.

Please tick this box if you do not wish to receive such information from us but remember that this will

preclude you from receiving any of our special offers or promotions 8.

Please tick this box if you do not wish to receive information from our business partners 8.

If you would like to receive information from us by email or SMS about goods, services or promotions which

may be of interest to you, please tick this box 0.

If you would like to receive information from our business partners, please tick this box 8.

You also consent, if necessary for the above purposes, to our transferring your information to countries

which do not provide the same level of data protection as the UK.

You have a right to ask for a copy of your information (for which we charge a small fee) and to correct any

inaccuracies.

Please return to: Marketing Department, Arntrak Express Parcels Ltd, Company House, Tower Hill, Bristol,

BS2 OAZ.

Last Updated December 2003





Contracts (Rights Of Third Parties) Act 1999 Chapter 31


© Crown Copyright 1999

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Contracts (Rights of Third Parties) Act 1999

1999 Chapter c.31


An Act to make provision for the enforcement of contractual terms by third parties.

[11th November 1999]

BE IT ENACTED by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:-

Right of third party to enforce contractual term. 1. - (1) Subject to the provisions of this Act, a person who is not a party to a contract (a "third party") may in his own right enforce a term of the contract if-

(a) the contract expressly provides that he may, or

(b) subject to subsection (2), the term purports to confer a benefit on him.

(2) Subsection (1)(b) does not apply if on a proper construction of the contract it appears that the parties did not intend the term to be enforceable by the third party.
(3) The third party must be expressly identified in the contract by name, as a member of a class or as answering a particular description but need not be in existence when the contract is entered into.
(4) This section does not confer a right on a third party to enforce a term of a contract otherwise than subject to and in accordance with any other relevant terms of the contract.
(5) For the purpose of exercising his right to enforce a term of the contract, there shall be available to the third party any remedy that would have been available to him in an action for breach of contract if he had been a party to the contract (and the rules relating to damages, injunctions, specific performance and other relief shall apply accordingly).
(6) Where a term of a contract excludes or limits liability in relation to any matter references in this Act to the third party enforcing the term shall be construed as references to his availing himself of the exclusion or limitation.
(7) In this Act, in relation to a term of a contract which is enforceable by a third party-

"the promisor" means the party to the contract against whom the term is enforceable by the third party, and

"the promisee" means the party to the contract by whom the term is enforceable against the promisor.

Variation and rescission of contract. 2. - (1) Subject to the provisions of this section, where a third party has a right under section 1 to enforce a term of the contract, the parties to the contract may not, by agreement, rescind the contract, or vary it in such a way as to extinguish or alter his entitlement under that right, without his consent if-

(a) the third party has communicated his assent to the term to the promisor,

(b) the promisor is aware that the third party has relied on the term, or

(c) the promisor can reasonably be expected to have foreseen that the third party would rely on the term and the third party has in fact relied on it.

(2) The assent referred to in subsection (1)(a)-

(a) may be by words or conduct, and

(b) if sent to the promisor by post or other means, shall not be regarded as communicated to the promisor until received by him.

(3) Subsection (1) is subject to any express term of the contract under which-

(a) the parties to the contract may by agreement rescind or vary the contract without the consent of the third party, or

(b) the consent of the third party is required in circumstances specified in the contract instead of those set out in subsection (1)(a) to (c).

(4) Where the consent of a third party is required under subsection (1) or (3), the court or arbitral tribunal may, on the application of the parties to the contract, dispense with his consent if satisfied-

(a) that his consent cannot be obtained because his whereabouts cannot reasonably be ascertained, or

(b) that he is mentally incapable of giving his consent.

(5) The court or arbitral tribunal may, on the application of the parties to a contract, dispense with any consent that may be required under subsection (1)(c) if satisfied that it cannot reasonably be ascertained whether or not the third party has in fact relied on the term.
(6) If the court or arbitral tribunal dispenses with a third party's consent, it may impose such conditions as it thinks fit, including a condition requiring the payment of compensation to the third party.
(7) The jurisdiction conferred on the court by subsections (4) to (6) is exercisable by both the High Court and a county court.
Defences etc. available to promisor. 3. - (1) Subsections (2) to (5) apply where, in reliance on section 1, proceedings for the enforcement of a term of a contract are brought by a third party.
(2) The promisor shall have available to him by way of defence or set-off any matter that-

(a) arises from or in connection with the contract and is relevant to the term, and

(b) would have been available to him by way of defence or set-off if the proceedings had been brought by the promisee.

(3) The promisor shall also have available to him by way of defence or set-off any matter if-

(a) an express term of the contract provides for it to be available to him in proceedings brought by the third party, and

(b) it would have been available to him by way of defence or set-off if the proceedings had been brought by the promisee.

(4) The promisor shall also have available to him-

(a) by way of defence or set-off any matter, and

(b) by way of counterclaim any matter not arising from the contract,

that would have been available to him by way of defence or set-off or, as the case may be, by way of counterclaim against the third party if the third party had been a party to the contract.
(5) Subsections (2) and (4) are subject to any express term of the contract as to the matters that are not to be available to the promisor by way of defence, set-off or counterclaim.
(6) Where in any proceedings brought against him a third party seeks in reliance on section 1 to enforce a term of a contract (including, in particular, a term purporting to exclude or limit liability), he may not do so if he could not have done so (whether by reason of any particular circumstances relating to him or otherwise) had he been a party to the contract.
Enforcement of contract by promisee. 4. Section 1 does not affect any right of the promisee to enforce any term of the contract.
Protection of promisor from double liability. 5. Where under section 1 a term of a contract is enforceable by a third party, and the promisee has recovered from the promisor a sum in respect of-

(a) the third party's loss in respect of the term, or

(b) the expense to the promisee of making good to the third party the default of the promisor,

then, in any proceedings brought in reliance on that section by the third party, the court or arbitral tribunal shall reduce any award to the third party to such extent as it thinks appropriate to take account of the sum recovered by the promisee.
Exceptions. 6. - (1) Section 1 confers no rights on a third party in the case of a contract on a bill of exchange, promissory note or other negotiable instrument.
(2) Section 1 confers no rights on a third party in the case of any contract binding on a company and its members under section 14 of the Companies Act 1985.
(3) Section 1 confers no right on a third party to enforce-

(a) any term of a contract of employment against an employee,

(b) any term of a worker's contract against a worker (including a home worker), or

(c) any term of a relevant contract against an agency worker.

(4) In subsection (3)-

(a) "contract of employment", "employee", "worker's contract", and "worker" have the meaning given by section 54 of the National Minimum Wage Act 1998,

(b) "home worker" has the meaning given by section 35(2) of that Act,

(c) "agency worker" has the same meaning as in section 34(1) of that Act, and

(d) "relevant contract" means a contract entered into, in a case where section 34 of that Act applies, by the agency worker as respects work falling within subsection (1)(a) of that section.

(5) Section 1 confers no rights on a third party in the case of-

(a) a contract for the carriage of goods by sea, or

(b) a contract for the carriage of goods by rail or road, or for the carriage of cargo by air, which is subject to the rules of the appropriate international transport convention,

except that a third party may in reliance on that section avail himself of an exclusion or limitation of liability in such a contract.
(6) In subsection (5) "contract for the carriage of goods by sea" means a contract of carriage-

(a) contained in or evidenced by a bill of lading, sea waybill or a corresponding electronic transaction, or

(b) under or for the purposes of which there is given an undertaking which is contained in a ship's delivery order or a corresponding electronic transaction.

(7) For the purposes of subsection (6)-

(a) "bill of lading", "sea waybill" and "ship's delivery order" have the same meaning as in the Carriage of Goods by Sea Act 1992, and

(b) a corresponding electronic transaction is a transaction within section 1(5) of that Act which corresponds to the issue, indorsement, delivery or transfer of a bill of lading, sea waybill or ship's delivery order.

(8) In subsection (5) "the appropriate international transport convention" means-

(a) in relation to a contract for the carriage of goods by rail, the Convention which has the force of law in the United Kingdom under section 1 of the International Transport Conventions Act 1983,

(b) in relation to a contract for the carriage of goods by road, the Convention which has the force of law in the United Kingdom under section 1 of the Carriage of Goods by Road Act 1965, and

(c) in relation to a contract for the carriage of cargo by air-

(i) the Convention which has the force of law in the United Kingdom under section 1 of the Carriage by Air Act 1961, or

(ii) the Convention which has the force of law under section 1 of the Carriage by Air (Supplementary Provisions) Act 1962, or

(iii) either of the amended Conventions set out in Part B of Schedule 2 or 3 to the Carriage by Air Acts (Application of Provisions) Order 1967.

Supplementary provisions relating to third party. 7. - (1) Section 1 does not affect any right or remedy of a third party that exists or is available apart from this Act.
(2) Section 2(2) of the Unfair Contract Terms Act 1977 (restriction on exclusion etc. of liability for negligence) shall not apply where the negligence consists of the breach of an obligation arising from a term of a contract and the person seeking to enforce it is a third party acting in reliance on section 1.
(3) In sections 5 and 8 of the Limitation Act 1980 the references to an action founded on a simple contract and an action upon a specialty shall respectively include references to an action brought in reliance on section 1 relating to a simple contract and an action brought in reliance on that section relating to a specialty.
(4) A third party shall not, by virtue of section 1(5) or 3(4) or (6), be treated as a party to the contract for the purposes of any other Act (or any instrument made under any other Act).
Arbitration provisions. 8. - (1) Where-

(a) a right under section 1 to enforce a term ("the substantive term") is subject to a term providing for the submission of disputes to arbitration ("the arbitration agreement"), and

(b) the arbitration agreement is an agreement in writing for the purposes of Part I of the Arbitration Act 1996,

the third party shall be treated for the purposes of that Act as a party to the arbitration agreement as regards disputes between himself and the promisor relating to the enforcement of the substantive term by the third party.
(2) Where-

(a) a third party has a right under section 1 to enforce a term providing for one or more descriptions of dispute between the third party and the promisor to be submitted to arbitration ("the arbitration agreement"),

(b) the arbitration agreement is an agreement in writing for the purposes of Part I of the Arbitration Act 1996, and

(c) the third party does not fall to be treated under subsection (1) as a party to the arbitration agreement,

the third party shall, if he exercises the right, be treated for the purposes of that Act as a party to the arbitration agreement in relation to the matter with respect to which the right is exercised, and be treated as having been so immediately before the exercise of the right.
Northern Ireland. 9. - (1) In its application to Northern Ireland, this Act has effect with the modifications specified in subsections (2) and (3).
(2) In section 6(2), for "section 14 of the Companies Act 1985" there is substituted "Article 25 of the Companies (Northern Ireland) Order 1986".
(3) In section 7, for subsection (3) there is substituted-



"(3) In Articles 4(a) and 15 of the Limitation (Northern Ireland) Order 1989, the references to an action founded on a simple contract and an action upon an instrument under seal shall respectively include references to an action brought in reliance on section 1 relating to a simple contract and an action brought in reliance on that section relating to a contract under seal.".

(4) In the Law Reform (Husband and Wife) (Northern Ireland) Act 1964, the following provisions are hereby repealed-

(a) section 5, and

(b) in section 6, in subsection (1)(a), the words "in the case of section 4" and "and in the case of section 5 the contracting party" and, in subsection (3), the words "or section 5".

Short title, commencement and extent. 10. - (1) This Act may be cited as the Contracts (Rights of Third Parties) Act 1999.
(2) This Act comes into force on the day on which it is passed but, subject to subsection (3), does not apply in relation to a contract entered into before the end of the period of six months beginning with that day.
(3) The restriction in subsection (2) does not apply in relation to a contract which-

(a) is entered into on or after the day on which this Act is passed, and

(b) expressly provides for the application of this Act.

(4) This Act extends as follows-

(a) section 9 extends to Northern Ireland only;

(b) the remaining provisions extend to England and Wales and Northern Ireland only.




Explanatory Notes to Contracts (Rights Of Third Parties) Act 1999

1999 Chapter 31


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These notes refer to the Contracts (Rights of Third Parties) Act 1999
which received Royal Assent on 11 November 1999 (c.31)

Contracts (Rights Of Third Parties) Act 1999

EXPLANATORY NOTES

INTRODUCTION

1. These explanatory notes relate to the Contracts (Rights of Third Parties) Act 1999 which received Royal Assent on 11 November 1999. They have been prepared by the Lord Chancellor's Department in order to assist the reader in understanding the Act. They do not form part of the Act and have not been endorsed by Parliament.

2. The notes need to be read in conjunction with the Act. They are not, and are not meant to be, a comprehensive description of the Act. So where a section or part of a section does not seem to require any explanation or comment, none is given.

SUMMARY

(from Asif Tufal below) Section 1 provides that a third party may in his own right enforce a term of a contract if:

(a) the contract expressly provides that he may, or

(b) the term purports to confer a benefit on him (except where on a proper construction of the contract it appears that the parties did not intend the term to be enforceable by the third party).

There shall be available to the third party any remedy that would have been available to him in an action for breach of contract if he had been a party to the contract: s1(5).


3. The Act reforms the rule of "privity of contract" under which a person can only enforce a contract if he is a party to it. The rule means that, even if a contract is made with the purpose of conferring a benefit on someone who is not a party to it, that person (a "third party") has no right to sue for breach of contract.

4. The Act sets out the circumstances in which a third party is to have a right to enforce a term of the contract (section 1), the situations in which such a term may be varied or rescinded (section 2) and the defences available to the promisor when the third party seeks to enforce the term (section 3). It makes it clear that section 1 does not affect the promisee's rights, or any rights that the third party may have which are independent of the Act (sections 4 and 7(1)). The Act does not apply to certain contracts (whether wholly or partially) (section 6).

BACKGROUND

5. The Act implements, with some amendments, the recommendations of the Law Commission in its Report on Privity of Contract: Contracts for the Benefit of Third Parties, Law Com No 242 (1996).

COMMENTARY

Section 1: Right of third party to enforce contractual term

6. Section 1 gives effect to the central purpose of the Act. It sets out the circumstances in which a third party would have the right to enforce a term of the contract.

7. Subsection (1) sets out a two-limbed test for the circumstances in which a third party may enforce a term of a contract. The first limb is where the contract itself expressly so provides. The second limb is where the term purports to confer a benefit on the third party unless it appears on a true construction of the contract that the contracting parties did not intend him to have the right to enforce it (subsection (2)).

8. Subsection (3) requires that, for subsection (1) to apply, the third party must be expressly identified in the contract by name, class or description, but establishes that the third party need not be in existence when the contract is made. This allows contracting parties to confer enforceable rights on, for example, an unborn child or a future spouse or a company that has not yet been incorporated.

9. Subsection (4) clarifies subsection (1). The third party's right of enforcement is subject to the contract's terms and conditions. It is open to the parties to limit or place conditions on the third party's right; for example, if he wishes to enforce the right he is to do so by way of arbitration and not litigation.

10. Subsection (5) makes it clear that the courts may award all the remedies which are available to a person bringing a claim for breach of contract to a third party seeking to enforce his rights under subsection (1). The normal rules of law applicable to those remedies, including the rules relating to causation, remoteness and the duty to mitigate one's loss, apply to the third party's claim.

11. Subsection (6) makes it clear that the Act is to apply so as to enable a third party to take advantage of an exclusion or limitation clause in the contract, as well as to enforce "positive" rights. The Act, for example, allows a term of a contract which excludes or limits the promisee's liability to the promisor for the tort of negligence and expressly states that the exclusion or limitation is for the benefit of the promisee's "agents or servants or subcontractors" to be enforceable by these groups.

Section 2: Variation and rescission of contract

12. Subsection (1) provides that, where a third party has a right under section 1, the contracting parties may not, by agreement, rescind or vary the contract in a way which affects the third party's right without his consent. This section uses the term variation in its legal sense to mean a variation of the terms of an agreement by further agreement between the parties to the original agreement. It does not, for example, affect the terms of a construction contract which allow one of the parties to that contract unilaterally to alter, or "vary", the details of the work; such a variation is not to the contract but only to the work.

13. Subsection (3) provides that subsection (1) is subject to an express term of the contract, that the contract can by agreement be rescinded or varied without the third party's consent or that the third party's consent is to be required in specified circumstances different to those which are set out in subsection (1).

14. Subsections (4) and (5) give the court or arbitral tribunal the power to dispense with the requirement for the third party's consent where it cannot be obtained because his whereabouts are unknown or he is mentally incapable of giving his consent or where it cannot reasonably be ascertained whether he has in fact relied on the contractual term.

Section 3: Defences etc. available to promisor

15. Section 3 enables the promisor, in a claim by the third party, to rely on any defence or set-off arising out of the contract and relevant to the term being enforced, which would have been available to him had the claim been by the promisee. He may also rely on any defence or set-off, or make any counterclaim, where this would have been possible had the third party been a party to the contract.

16. Subsection (2) can be illustrated as follows-

(I) a third party can no more enforce a void, discharged or unenforceable contract than a promisee could;

(II) P1 (the promisor) and P2 (the promisee) contract that P2 will sell goods to P1, who will pay the contract price to P3 (the third party). In breach of contract, P2 delivers goods that are not of the standard contracted for. In an action for the price by P3 (just as in an action for the price by P2) P1 is entitled to reduce or extinguish the price by reason of the damages for breach of contract.

17. Subsection (3) can be illustrated as follows-

P1 and P2 contract that P1 will pay P3 if P2 transfers his car to P1. P2 owes P1 money under a wholly unrelated contract. P1 and P2 agree to an express term in the contract which provides that P1 can raise against a claim by P3 any matter which would have given P1 a defence or set-off to a claim by P2.

18. Subsection (4) makes it clear that the promisor also has available any defence or set-off, and any counterclaim not arising from the contract, which is specific to the third party. It can be illustrated as follows.

(I) P1 contracts with P2 to pay P3 £1000. P3 already owes P1 £600. P1 has a set-off to P3's claim so that P1 is only bound to pay P3 £400.

(II) P3 induced P1 to enter into the contract with P2 by misrepresentation, but P2 has no actual or constructive notice of that misrepresentation. P1 may have a defence (or a counterclaim for damages) against P3 which would not have been available had the action been brought by P2.

19. Subsection (5) makes subsections (2) and (4) subject to any express term of the contract which narrows the defences or set-offs available under section 3(2) or narrows the defences, set-offs or counterclaims available under section 3(4). For example-

(I) in relation to subsection (2), P2 agrees with P1 to purchase a painting, the painting to be delivered to P3, who is expressly given a right to enforce the delivery obligation. P2 owes P1 considerable sums for other art works purchased. P2 wishes to ensure that P3's right is not affected. P1 and P2 expressly agree that P1 may not raise against P3 defences and set-offs that would have been available to P1 in an action by P2.

(II) in relation to subsection (4), P1 agrees with P2 to pay £5000 to P3 if P2 will transfer a number of cases of wine to P1. P3 is in dispute with P1 over a prior contract and P1 alleges that P3 owes P1 money. P2 is concerned that P1 may seek to withhold part of the £5000 payable to P3 by raising a set-off or counterclaim against P3 in relation to the prior contract. Consequently P1 and P2 include an express term that P1 may raise no defences, set-offs or counterclaims of any nature whatever against a claim by P3 to enforce P1's obligation to pay the £5000.

20. Subsection (6) ensures that an analogous approach to that set out in subsections (2) to (5) applies where the proceedings are brought against the third party and he seeks to avail himself of, for example, an exclusion section.

Section 4: Enforcement of Contract by Promisee

21. Section 4 provides that the right conferred by section 1 is additional to any right the promisee has in relation to the enforcement of a contract term which benefits a third party.

Section 5: Protection of Promisor from Double Liability

22. Section 5 provides that where the promisee has recovered damages (or an agreed sum) from the promisor in respect of either the third party's loss or the promisee's expense in making good that loss, the court or arbitral tribunal shall reduce any award to the third party enforcing a term under section 1 to take account of the sum already recovered.

Section 6: Exceptions

23. Subsection (1) ensures that the Act does not undermine the existing law on who can enforce negotiable instruments.

24. Subsection (2) excepts the contract under section 14(1) of the Companies Act 1985 which states-

"Subject to the provisions of this Act, the memorandum and articles, when registered, bind the company and its members to the same extent as if they respectively had been signed and sealed by each member, and contained covenants on the part of each member to observe all the provisions of the memorandum and of the articles".

25. Subsection (3), which prevents a third party (for example, a customer of an employer) acquiring a right under the Act to enforce a term of a contract of employment, or similar contract, against an employee or worker uses various expressions which are defined in the National Minimum Wage Act 1998 or are defined by reference to that Act. The definitions, which are referred to in subsection (4), are as follows.

(I) By section 54-

"contract of employment" means a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing;

"employee" means an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment;

"worker" (except in the phrase "agency worker" or "home worker") means an individual who has entered into or works under (or, where the employment has ceased, worked under)-

(a) a contract of employment, or

(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual;

"worker's contract" is to be read in accordance with the definition of a worker.

(II) By section 35(2)-

an individual is a "home worker" if he contracts with a person for the purpose of that person's business, for the execution of work to be done in a place not under the control or management of that person.

(III) By section 34(1)-

an individual is an "agency worker" if he-

(a) is supplied by a person ("the agent") to do work for another ("the principal") under a contract or other arrangements made between the agent and the principal; but

(b) is not, as respects that work, a worker, because of the absence of a worker's contract between the person and the agent or the principal; and

(c) is not a party to a contract under which he undertakes to do the work for another party to the contract whose status is, by virtue of the contract, that of a client or customer of any profession or business undertaking carried on by the individual.

(IV) As to the definition of "relevant contract", the reference to the case where section 34 applies is to the circumstances in which, under subsection (1) of that section, an individual is an agency worker. The work falling within paragraph (a) of that subsection is the work which the agency worker is supplied to do for the principal.

26. Subsection (5), which excludes certain contracts relating to the carriage of goods, nevertheless does not prevent a third party from taking advantage of a term excluding or limiting liability. In particular, this enables clauses which seek to extend an exclusion or limitation of liability of a carrier of goods by sea to servants, agents and independent contractors engaged in the loading and unloading process, to be enforced by those servants, agents or independent contractors (so called "Himalaya" clauses).

27. Subsections (6) and (7) set out the definition of a "contract for the carriage of goods by sea". The purpose of this definition is to exclude from this Act not only those contracts already covered by the Carriage of Goods by Sea Act 1992 but also those to which the 1992 Act could be applied under section 1(5) of that Act (e.g. a contract for the carriage of goods by sea evidenced by an electronic Act of lading). Section 1(5) of the 1992 Act states-

"The Secretary of State may by regulations make provision for the application of this Act to cases where a telecommunication system or any other information technology is used for effecting transactions corresponding to -

(a) the issue of a document to which this Act applies;

(b) the indorsement, delivery or other transfer of such a document; or

(c) the doing of anything else in relation to such a document."

No such regulations have yet been made.

Section 7: Supplementary provisions relating to third party

28. Subsection (1) ensures that the Act does not affect any existing right or remedy of the third party and allows for the judicial development of a third party's rights.

29. Subsection (2) prevents a third party from invoking section 2(2) of the Unfair Contract Terms Act 1977 to contest the validity of a term excluding or limiting the promisor's liability under the Act to the third party for negligently caused loss or damage (other than personal injury or death). Section 2(2) of the 1977 Act (in which "other loss or damage" means loss or damage other than death or personal injury), states-

"In the case of other loss or damage, a person cannot so exclude or restrict his liability for negligence except in so far as the term or notice satisfies the requirement of reasonableness".

30. Subsection (3), which applies the standard limitation periods for actions for breach of contract to actions by third parties under the Act, refers to sections 5 and 8(1) of the Limitation Act 1980. Section 5 states-

"An action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued".

Section 8(1) states-

"An action upon a specialty shall not be brought after the expiration of twelve years from the date on which the cause of action accrued".

31. Subsection (4) ensures that those references in the Act to the position "if the third party had been a party to the contract" are not to be interpreted as meaning that the third party should be treated as a party to the contract for the purposes of any other enactment. One example is section 3 of the Unfair Contract Terms Act 1977 which applies "as between contracting parties where one of them deals as a consumer or on the other's written standard terms of business". This subsection makes it clear that nothing in sections 1(5) or 3(4) or 3(6) means that "contracting parties" in section 3 of the 1977 Act includes a third party with a right under section 1 of this Act.

32. Nothing in subsection (4), nor anything in paragraphs 13.1-13.8 of the Law Commission's Report (Privity of Contract: Contracts for the Benefits of Third Parties, Law Com. Report No. 242), is intended to have any bearing on the interpretation of Article 17 of the Brussels Convention (on jurisdiction agreements). This is given effect to in the United Kingdom by the Civil Jurisdiction and Judgments Act 1982. The question of whether a third party given a procedural right to enforce a jurisdiction agreement under section 1 of this Act falls within Article 17, or whether a third party with a substantive right under section 1, subject to a jurisdiction clause, is "bound" by that clause under Article 17 (applying a conditional benefit analysis) is a matter for the European Court of Justice. Relevant decisions of the ECJ include Gerling v il Tesoro [1983] ECR 2503 and Tilly Russ [1984] ECR 2417.

Section 8: Arbitration provisions

33. Section 8 ensures that, where appropriate, the provisions of the Arbitration Act 1996 apply in relation to third party rights under this Act. Without this section, the main provisions of the Arbitration Act 1996 would not apply because a third party is not a party to the arbitration agreement between the promisor and the promisee.

34. Subsection (1) deals with what is likely to be the most common situation. The third party's substantive right (for example, to payment by the promisor) is conferred subject to disputes being referred to arbitration (see section 1(4)). This section is based on a "conditional benefit" approach. It ensures that a third party who wishes to take action to enforce his substantive right is not only able to enforce effectively his right to arbitrate, but is also "bound" to enforce his right by arbitration (so that, for example, a stay of proceedings can be ordered against him under section 9 of the Arbitration Act 1996). This approach is analogous to that applied to assignees who may be prevented from unconscionably taking a substantive benefit free of its procedural burden (see, for example, DVA v Voest Alpine, The Jaybola [1997] 2 Lloyd's Rep 279). "Disputes .... relating to the enforcement of the substantive term by the third party" is intended to have a wide ambit and to include disputes between the third party (who wishes to enforce the term) and the promisor as to the validity, interpretation, existence or performance of the term; the third party's entitlement to enforce the term; the jurisdiction of the arbitral tribunal; or the recognition and enforcement of an arbitration award. But to avoid imposing a "pure" burden on the third party, it does not cover, for example, a separate dispute in relation to a tort claim by the promisor against the third party for damages.

35. Subsection (2) is likely to be of rarer application. It deals with situations where the third party is given a right to arbitrate under section 1 but the "conditional benefit" approach underpinning subsection (1) is inapplicable. For example, where the contracting parties give the third party a unilateral right to arbitrate or a right to arbitrate a dispute other than one concerning a right conferred on the third party under section (1). To avoid imposing a pure burden on the third party (in a situation where, for example, the contracting parties give the third party a right to arbitrate a tort claim made by the promisor against the third party) the subsection requires the third party to have chosen to exercise the right. The timing point at the end of the subsection is designed to ensure that a third party who chooses to exercise his right to go to arbitration by, for example, applying for a stay of proceedings under section 9 of the Arbitration Act 1996, can do so. Under section 9 of the Arbitration Act 1996, the right to apply for a stay of proceedings can only be exercised by someone who is already a party to the arbitration agreement.

Section 9: Northern Ireland

36. Section 9 modifies the Act in its application to Northern Ireland and makes consequential repeals in existing Northern Ireland legislation.

37. Subsection (2) modifies section 6(2) so that, in Northern Ireland, it has effect with a reference to the Northern Ireland equivalent of section 14 of the Companies Act 1985. This is Article 25(1) of the Companies (Northern Ireland) Order 1986, which states-

"Subject to the provisions of this Order, the memorandum and articles, when registered, bind the company and its members to the same extent as if they respectively had been signed and sealed by each member, and contained covenants on the part of each member to observe all the provisions of the memorandum and of the articles."

38. Subsection (3) modifies section 7 so that, in Northern Ireland, subsection (3) refers in appropriate terms to the Northern Ireland equivalents of sections 5 and 8 of the Limitation Act 1980. These are Articles 4(a) and 15 of the Limitation (Northern Ireland) Order 1989. Article 4(a) provides that an action founded on simple contract may not be brought after the expiration of six years from the date on which the cause of action accrued. Article 15 provides that an action upon an instrument under seal may not be brought after the expiration of 12 years from the date on which the cause of action accrued.

39. Subsection (4) repeals section 5 of the Law Reform (Husband and Wife) (Northern Ireland) Act 1964. This section modifies the rule of privity of contract in respect of contracts which are expressed to be for the benefit of, or expressly purport to confer a right on, the spouse or child of one of the contracting parties. As this Act makes comprehensive provision for third party beneficiaries under a contract, there is no longer any need for this provision. Subsection (4) also makes repeals in section 6 of the Law Reform (Husband and Wife) (Northern Ireland) Act 1964 Act which are consequential on the repeal of section 5 of that Act.

APPLICATION TO THE CROWN

40. This Act does not impose any obligation or restraint on the Crown. It is simply an enabling measure which allows the parties to a contract, including the Crown, to confer enforceable rights on third parties. The Crown Proceedings Act 1947 enables proceedings in contract to be brought against the Crown, whether they are brought by the promisee or a third party.

COMMENCEMENT

41. The Act is to come into force on Royal Assent (section 10). It will only apply to contracts which are entered into during the six month period after Royal Assent if the contract expressly provides for it to do so. Where there is no such express provision it will not apply to contracts entered into before the end of that six month period.


HANSARD REFERENCES


42. The following table sets out the dates and Hansard references for each stage of this Act's passage through Parliament.

Stage

Date

Hansard Reference

House of Lords

Introduction

3 December 1998

Vol. 595 Col. 605

Second Reading

11 January 1999

Vol. 596 Cols. 20-33

Committee

2 February 1999

Vol. 596 Cols. 1423-35

Report

27 May 1999

Vol. 601 Cols. 1046-1061

Third Reading

14 June 1999

Vol. 602 Cols. 11-14

House of Commons

Introduction

14 June 1999

Second Reading Committee

29 June 1999

Second Reading Committee Hansard

Second Reading (formal)

5 July 1999

Vol. 334 Col. 791

Committee (SCF)

15 July 1999

Standing Committee D Hansard

Report/Third Reading

1 November 1999

Vol. 337 Cols. 23-30

House of Lords

Consideration of Commons Amendments

10 November 1999

Vol. 606 Cols. 1361-1366

Royal Assent - 11 November 1999

House of Lords

House of Commons

Hansard Vol. 606 Col 1469

Hansard Vol. 337 Col 1306


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Unfair Contract Terms Act 1977

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Part I



Amendment of Law for England and Wales and Northern Ireland


1 Scope of Part I



(1) For the purposes of this Part of this Act, “negligence” means the breach—



(a) of any obligation, arising from the express or implied terms of a contract, to take reasonable care or exercise reasonable skill in the performance of the contract;



(b) of any common law duty to take reasonable care or exercise reasonable skill (but not any stricter duty);



(c) of the common duty of care imposed by the Occupiers’ Liability Act 1957 or the Occupiers’ Liability Act (Northern Ireland) 1957.



(2) This Part of this Act is subject to Part III; and in relation to contracts, the operation of sections 2 to 4 and 7 is subject to the exceptions made by Schedule 1.



(3) In the case of both contract and tort, sections 2 to 7 apply (except where the contrary is stated in section 6(4)) only to business liability, that is liability for breach of obligations or duties arising—



(a) from things done or to be done by a person in the course of a business (whether his own business or another’s); or



(b) from the occupation of premises used for business purposes of the occupier;




and references to liability are to be read accordingly but liability of an occupier of premises for breach of an obligation or duty towards a person obtaining access to the premises for recreational or educational purposes, being liability for loss or damage suffered by reason of the dangerous state of the premises, is not a business liability of the occupier unless granting that person such access for the purposes concerned falls within the business purposes of the occupier.



(4) In relation to any breach of duty or obligation, it is immaterial for any purpose of this Part of this Act whether the breach was inadvertent or intentional, or whether liability for it arises directly or vicariously.



2 Negligence liability



(1) A person cannot by reference to any contract term or to a notice given to persons generally or to particular persons exclude or restrict his liability for death or personal injury resulting from negligence.



(2) In the case of other loss or damage, a person cannot so exclude or restrict his liability for negligence except in so far as the term or notice satisfies the requirement of reasonableness.



(3) Where a contract term or notice purports to exclude or restrict liability for negligence a person’s agreement to or awareness of it is not of itself to be taken as indicating his voluntary acceptance of any risk.



3 Liability arising in contract



(1) This section applies as between contracting parties where one of them deals as consumer or on the other’s written standard terms of business.



(2) As against that party, the other cannot by reference to any contract term—



(a) when himself in breach of contract, exclude or restrict any liability of his in respect of the breach; or



(b) claim to be entitled—



(i) to render a contractual performance substantially different from that which was reasonably expected of him, or



(ii) in respect of the whole or any part of his contractual obligation, to render no performance at all,



except in so far as (in any of the cases mentioned above in this subsection) the contract term satisfies the requirement of reasonableness.



4 Unreasonable indemnity clauses



(1) A person dealing as consumer cannot by reference to any contract term be made to indemnify another person (whether a party to the contract or not) in respect of liability that may be incurred by the other for negligence or breach of contract, except in so far as the contract term satisfies the requirement of reasonableness.



(2) This section applies whether the liability in question—



(a) is directly that of the person to be indemnified or is incurred by him vicariously;



(b) is to the person dealing as consumer or to someone else.




5 "Guarantee" of consumer goods



(1) In the case of goods of a type ordinarily supplied for private use or consumption, where


loss or damage—



(a) arises from the goods proving defective while in consumer use; and



(b) results from the negligence of a person concerned in the manufacture or


distribution of the goods,




liability for the loss or damage cannot be excluded or restricted by reference to any contract term or notice contained in or operating by reference to a guarantee of the goods.



(2) For these purposes—



(a) goods are to be regarded as “in consumer use” when a person is using them, or has them in his possession for use, otherwise than exclusively for the purposes of a business; and



(b) anything in writing is a guarantee if it contains or purports to contain some promise or assurance (however worded or presented) that defects will be made good by complete or partial replacement, or by repair, monetary compensation or otherwise.




(3) This section does not apply as between the parties to a contract under or in pursuance of which possession or ownership of the goods passed.




6 Sale and hire-purchase



(1) Liability for breach of the obligations arising from—



(a) section 12 of the Sale of Goods Act 1979 (seller’s implied undertakings as to title, etc);



(b) section 8 of the Supply of Goods (Implied Terms) Act 1973 (the corresponding thing in relation to hire-purchase),



cannot be excluded or restricted by reference to any contract term.



(2) As against a person dealing as consumer, liability for breach of the obligations arising from—



(a) section 13, 14 or 15 of the 1979 Act (seller’s implied undertakings as to conformity of goods with description or sample, or as to their quality or fitness for a particular purpose);



(b) section 9, 10 or 11 of the 1973 Act (the corresponding things in relation to hire-purchase),



cannot be excluded or restricted by reference to any contract term.



(3) As against a person dealing otherwise than as consumer, the liability specified in subsection (2) above can be excluded or restricted by reference to a contract term, but only in so far as the term satisfies the requirement of reasonableness.



(4) The liabilities referred to in this section are not only the business liabilities defined by section 1(3), but include those arising under any contract of sale of goods or hire-purchase agreement.




7 Miscellaneous contracts under which goods pass



(1) Where the possession or ownership of goods passes under or in pursuance of a contract not governed by the law of sale of goods or hire-purchase, subsections (2) to (4) below apply as regards the effect (if any) to be given to contract terms excluding or restricting liability for breach of obligation arising by implication of law from the nature of the contract.



(2) As against a person dealing as consumer, liability in respect of the goods’ correspondence with description or sample, or their quality or fitness for any particular purpose, cannot be excluded or restricted by reference to any such term.



(3) As against a person dealing otherwise than as consumer, that liability can be excluded or restricted by reference to such a term, but only in so far as the term satisfies the requirement of reasonableness.



(3A) Liability for breach of the obligations arising under section 2 of the Supply of Goods and Services Act 1982 (implied terms about title etc in certain contracts for the transfer of the property in goods) cannot be excluded or restricted by references to any such term.



(4) Liability in respect of—



(a) the right to transfer ownership of the goods, or give possession; or



(b) the assurance of quiet possession to a person taking goods in pursuance of the contract,



cannot (in a case to which subsection (3A) above does not apply) be excluded or restricted by reference to any such term except in so far as the term satisfies the requirement of reasonableness.



(5) This section does not apply in the case of goods passing on a redemption of trading stamps within the Trading Stamps Act 1964 or the Trading Stamps Act (Northern Ireland) 1965.




8 Misrepresentation



(This section substitutes the Misrepresentation Act 1967, s 3 and the Misrepresentation Act (Northern Ireland) 1967, s 3)




9 Effect of breach



(1) Where for reliance upon it a contract term has to satisfy the requirement of reasonableness, it may be found to do so and be given effect accordingly notwithstanding that the contract has been terminated either by breach or by a party electing to treat it as repudiated.



(2) Where on a breach the contract is nevertheless affirmed by a party entitled to treat it as repudiated, this does not of itself exclude the requirement of reasonableness in relation to any contract term.



10 Evasion by means of secondary contract



A person is not bound by any contract term prejudicing or taking away rights of his which arise under, or in connection with the performance of, another contract, so far as those rights extend to the enforcement of another’s liability which this Part of this Act prevents that other from excluding or restricting.



11 The "reasonableness" test



(1) In relation to a contract term, the requirement of reasonableness for the purposes of this Part of this Act, section 3 of the Misrepresentation Act 1967 and section 3 of the Misrepresentation Act (Northern Ireland) 1967 is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made.



(2) In determining for the purposes of section 6 or 7 above whether a contract term satisfies the requirement of reasonableness, regard shall be had in particular to the matters specified in Schedule 2 to this Act; but this subsection does not prevent the court or arbitrator from holding, in accordance with any rule of law, that a term which purports to exclude or restrict any relevant liability is not a term of the contract.



(3) In relation to a notice (not being a notice having contractual effect), the requirement of reasonableness under this Act is that it should be fair and reasonable to allow reliance on it, having regard to all the circumstances obtaining when the liability arose or (but for the notice) would have arisen.



(4) Where by reference to a contract term or notice a person seeks to restrict liability to a specified sum of money, and the question arises (under this or any other Act) whether the term or notice satisfies the requirement of reasonableness, regard shall be had in particular (but without prejudice to subsection (2) above in the case of contract terms) to—



(a) the resources which he could expect to be available to him for the purpose of meeting the liability should it arise; and



(b) how far it was open to him to cover himself by insurance.



(5) It is for those claiming that a contract term or notice satisfies the requirement of reasonableness to show that it does.




12 "Dealing as consumer"



(1) A party to a contract “deals as consumer” in relation to another party if—



(a) he neither makes the contract in the course of a business nor holds himself out as doing so; and



(b) the other party does make the contract in the course of a business; and



(c) in the case of a contract governed by the law of sale of goods or hire purchase, or by section 7 of this Act, the goods passing under or in pursuance of the contract are of a type ordinarily supplied for private use or consumption.



(1A) But if the first party mentioned in subsection (1) is an individual paragraph (c) of that subsection must be ignored.



(2) But the buyer is not in any circumstances to be regarded as dealing as consumer—



(a) if he is an individual and the goods are second hand goods sold at public auction at which individuals have the opportunity of attending the sale in person;



(b) if he is not an individual and the goods are sold by auction or by competitive tender.



(3) Subject to this, it is for those claiming that a party does not deal as consumer to show that he does not.




13 Varieties of exemption clause



(1) To the extent that this Part of this Act prevents the exclusion or restriction of any liability it also prevents—



(a) making the liability or its enforcement subject to restrictive or onerous conditions;



(b) excluding or restricting any right or remedy in respect of the liability, or subjecting a person to any prejudice in consequence of his pursuing any such right or remedy;



(c) excluding or restricting rules of evidence or procedure;



and (to that extent) sections 2 and 5 to 7 also prevent excluding or restricting liability by reference to terms and notices which exclude or restrict the relevant obligation or duty.



(2) But an agreement in writing to submit present or future differences to arbitration is not to be treated under this Part of this Act as excluding or restricting any liability.




14 Interpretation of Part I



In this Part of this Act—



business” includes a profession and the activities of any government department or local or public authority;



goods” has the same meaning as in the Sale of Goods Act 1979:



hire-purchase agreement” has the same meaning as in the Consumer Credit Act 1974;



negligence” has the meaning given by section 1(1);



notice” includes an announcement, whether or not in writing, and any other communication or pretended communication; and



personal injury” includes any disease and any impairment of physical or mental condition.





Part II



(applies to Scotland only)





Part III



Provisions applying to whole of United Kingdom




26 International supply contracts



(1) The limits imposed by this Act on the extent to which a person may exclude or restrict liability by reference to a contract term do not apply to liability arising under such a contract as is described in subsection (3) below.



(2) The terms of such a contract are not subject to any requirement of reasonableness under section 3 or 4: and nothing in Part II of this Act shall require the incorporation of the terms of such a contract to be fair and reasonable for them to have effect.



(3) Subject to subsection (4), that description of contract is one whose characteristics are the following—



(a) either it is a contract of sale of goods or it is one under or in pursuance of which the possession or ownership of goods passes; and



(b) it is made by parties whose places of business (or, if they have none, habitual residences) are in the territories of different States (the Channel Islands and the Isle of Man being treated for this purpose as different States from the United Kingdom).



(4) A contract falls within subsection (3) above only if either—



(a) the goods in question are, at the time of the conclusion of the contract, in the course of carriage, or will be carried, from the territory of one State to the territory of another; or



(b) the acts constituting the offer and acceptance have been done in the territories of different States; or



(c) the contract provides for the goods to be delivered to the territory of a State other than that within whose territory those acts were done.



27 Choice of law clauses



(1) Where the law applicable to a contract is the law of any part of the United Kingdom only by choice of the parties (and apart from that choice would be the law of some country outside the United Kingdom) sections 2 to 7 and 16 to 21 of this Act do not operate as part of the law applicable to the contract.



(2) This Act has effect notwithstanding any contract term which applies or purports to apply the law of some country outside the United Kingdom, where (either or both)—



(a) the term appears to the court, or arbitrator or arbiter to have been imposed wholly or mainly for the purpose of enabling the party imposing it to evade the operation of this Act; or



(b) in the making of the contract one of the parties dealt as consumer, and he was then habitually resident in the United Kingdom, and the essential steps necessary for the making of the contract were taken there, whether by him or by others on his behalf.




(3) In the application of subsection (2) above to Scotland, for paragraph (b) there shall be substituted—



(b) the contract is a consumer contract as defined in Part II of this Act, and the consumer at the date when the contract was made was habitually resident in the United Kingdom, and the essential steps necessary for the making of the contract were taken there, whether by him or by others on


his behalf.”.




28 Temporary provision for sea carriage of passengers



(1) This section applies to a contract for carriage by sea of a passenger or of a passenger and his luggage where the provisions of the Athens Convention (with or without modification) do not have, in relation to the contract, the force of law in the United Kingdom.



(2) In a case where—



(a) the contract is not made in the United Kingdom, and



(b) neither the place of departure nor the place of destination under it is in the United Kingdom,



a person is not precluded by this Act from excluding or restricting liability for loss or damage, being loss or damage for which the provisions of the Convention would, if they had the force of law in relation to the contract, impose liability on him.



(3) In any other case, a person is not precluded by this Act from excluding or restricting liability for that loss or damage—



(a) in so far as the exclusion or restriction would have been effective in that case had the provisions of the Convention had the force of law in relation to the contract; or



(b) in such circumstances and to such extent as may be prescribed, by reference to a prescribed term of the contract.



(4) For the purposes of subsection (3) (a), the values which shall be taken to be the official values in the United Kingdom of the amounts (expressed in gold francs) by reference to which liability under the provisions of the Convention is limited shall be such amounts in sterling as the Secretary of State may from time to time by order made by statutory instrument specify.



(5) In this section,—



(a) the references to excluding or restricting liability include doing any of those things in relation to the liability which are mentioned in section 13 or section 25 (3) and (5); and



(b) “the Athens Convention” means the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, 1974; and



(c) “prescribed” means prescribed by the Secretary of State by regulations made by statutory instrument;




and a statutory instrument containing the regulations shall be subject to annulment in pursuance of a resolution of either House of Parliament.



29 Saving for other relevant legislation



(1) Nothing in this Act removes or restricts the effect of, or prevents reliance upon, any contractual provision which—



(a) is authorised or required by the express terms or necessary implication of an enactment; or



(b) being made with a view to compliance with an international agreement to which the United Kingdom is a party, does not operate more restrictively than is contemplated by the agreement.




(2) A contract term is to be taken—



(a) for the purposes of Part I of this Act, as satisfying the requirement of reasonableness; and



(b) for those of Part II, to have been fair and reasonable to incorporate, if it is incorporated or approved by, or incorporated pursuant to a decision or ruling of, a competent authority acting in the exercise of any statutory jurisdiction or function and is not a term in a contract to which the competent authority is itself a party.



(3) In this section—



competent authority” means any court, arbitrator or arbiter, government department or public authority;



enactment” means any legislation (including subordinate legislation) of the United Kingdom or Northern Ireland and any instrument having effect by virtue of such legislation; and



statutory” means conferred by an enactment.




30 . . .


. . .


31 Commencement; amendments; repeals



(1) This Act comes into force on 1st February 1978.



(2) Nothing in this Act applies to contracts made before the date on which it comes into force; but subject to this, it applies to liability for any loss or damage which is suffered on or after that date.



(3) The enactments specified in Schedule 3 to this Act are amended as there shown.



(4) The enactments specified in Schedule 4 to this Act are repealed to the extent specified in column 3 of that Schedule.



32 Citation and extent



(1) This Act may be cited as the Unfair Contract Terms Act 1977.



(2) Part I of this Act extends to England and Wales and to Northern Ireland; but it does not extend to Scotland.



(3) Part II of this Act extends to Scotland only.



(4) This Part of this Act extends to the whole of the United Kingdom.





SCHEDULE 1



SCOPE OF SECTIONS 2 TO 4 AND 7


Section 1(2)



1 Sections 2 to 4 of this Act do not extend to—



(a) any contract of insurance (including a contract to pay an annuity on human life);



(b) any contract so far as it relates to the creation or transfer of an interest in land, or to the termination of such an interest, whether by extinction, merger, surrender, forfeiture or otherwise;



(c) any contract so far as it relates to the creation or transfer of a right or interest in any patent, trade mark, copyright [or design right], registered design, technical or commercial information or other intellectual property, or relates to the termination of any such right or interest;



(d) any contract so far as it relates—



(i) to the formation or dissolution of a company (which means any body corporate or unincorporated association and includes a partnership), or



(ii) to its constitution or the rights or obligations of its corporators or members;



(e) any contract so far as it relates to the creation or transfer of securities or of any right or interest in securities.



2 Section 2(1) extends to—



(a) any contract of marine salvage or towage;



(b) any charterparty of a ship or hovercraft; and



(c) any contract for the carriage of goods by ship or hovercraft;



but subject to this sections 2 to 4 and 7 do not extend to any such contract except in favour


of a person dealing as consumer.



3 Where goods are carried by ship or hovercraft in pursuance of a contract which either—



(a) specifies that as the means of carriage over part of the journey to be covered, or



(b) makes no provision as to the means of carriage and does not exclude that means,



then sections 2(2), 3 and 4 do not, except in favour of a person dealing as consumer, extend to the contract as it operates for and in relation to the carriage of the goods by that means.




4 Section 2(1) and (2) do not extend to a contract of employment, except in favour of the employee.



5 Section 2(1) does not affect the validity of any discharge and indemnity given by a person, on or in connection with an award to him of compensation for pneumoconiosis attributable to employment in the coal industry, in respect of any further claim arising from his contracting that disease.






SCHEDULE 2



"GUIDELINES" FOR APPLICATION OF REASONABLENESS TEST



Sections 11(2), 24(2)




The matters to which regard is to be had in particular for the purposes of sections 6(3), 7(3) and (4), 20 and 21 are any of the following which appear to be relevant—



(a) the strength of the bargaining positions of the parties relative to each other, taking into account (among other things) alternative means by which the customer’s requirements could have been met;



(b) whether the customer received an inducement to agree to the term, or in accepting it had an opportunity of entering into a similar contract with other persons, but without having to accept a similar term;



(c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard, among other things, to any custom of the trade and any previous course of dealing between the parties);



(d) where the term excludes or restricts any relevant liability if some condition is not complied with, whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable;



(e) whether the goods were manufactured, processed or adapted to the special order of the customer.


SCHEDULE 3

(AMENDMENT OF ENACTMENTS)

Section 31(3)

SCHEDULE 4

(REPEALS)

Section 31(4)

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Statutory Instrument 1999 No. 2083

The Unfair Terms in Consumer Contracts Regulations 1999

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The Unfair Terms in Consumer Contracts Regulations 1999

STATUTORY INSTRUMENTS


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1999 No. 2083



CONSUMER PROTECTION



The Unfair Terms in Consumer Contracts Regulations 1999


Made 22nd July 1999

Laid before Parliament 22nd July 1999

Coming into force 1st October 1999


Whereas the Secretary of State is a Minister designated[1] for the purposes of section 2(2) of the European Communities Act 1972[2] in relation to measures relating to consumer protection:


Now, the Secretary of State, in exercise of the powers conferred upon him by section 2(2) of that Act, hereby makes the following Regulations:-


Citation and commencement

1. These Regulations may be cited as the Unfair Terms in Consumer Contracts Regulations 1999 and shall come into force on 1st October 1999.


Revocation

2. The Unfair Terms in Consumer Contracts Regulations 1994[3] are hereby revoked.


Interpretation

3. - (1) {t2} In these Regulations-



"the Community" means the European Community;


"consumer" means any natural person who, in contracts covered by these Regulations, is acting for purposes which are outside his trade, business or profession;


"court" in relation to England and Wales and Northern Ireland means a county court or the High Court, and in relation to Scotland, the Sheriff or the Court of Session;


"Director" means the Director General of Fair Trading;


"EEA Agreement" means the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 as adjusted by the protocol signed at Brussels on 17th March 1993[4];


"Member State" means a State which is a contracting party to the EEA Agreement;


"notified" means notified in writing;


"qualifying body" means a person specified in Schedule 1;


"seller or supplier" means any natural or legal person who, in contracts covered by these Regulations, is acting for purposes relating to his trade, business or profession, whether publicly owned or privately owned;


"unfair terms" means the contractual terms referred to in regulation 5.

(2) In the application of these Regulations to Scotland for references to an "injunction" or an "interim injunction" there shall be substituted references to an "interdict" or "interim interdict" respectively.


Terms to which these Regulations apply

4. - (1) These Regulations apply in relation to unfair terms in contracts concluded between a seller or a supplier and a consumer.


(2) These Regulations do not apply to contractual terms which reflect-




(a) mandatory statutory or regulatory provisions (including such provisions under the law of any Member State or in Community legislation having effect in the United Kingdom without further enactment);


(b) the provisions or principles of international conventions to which the Member States or the Community are party.



Unfair Terms

5. - (1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.


(2) A term shall always be regarded as not having been individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term.


(3) Notwithstanding that a specific term or certain aspects of it in a contract has been individually negotiated, these Regulations shall apply to the rest of a contract if an overall assessment of it indicates that it is a pre-formulated standard contract.


(4) It shall be for any seller or supplier who claims that a term was individually negotiated to show that it was.


(5) Schedule 2 to these Regulations contains an indicative and non-exhaustive list of the terms which may be regarded as unfair.


Assessment of unfair terms

6. - (1) Without prejudice to regulation 12, the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent.


(2) In so far as it is in plain intelligible language, the assessment of fairness of a term shall not relate-




(a) to the definition of the main subject matter of the contract, or


(b) to the adequacy of the price or remuneration, as against the goods or services supplied in exchange.



Written contracts

7. - (1) A seller or supplier shall ensure that any written term of a contract is expressed in plain, intelligible language.


(2) If there is doubt about the meaning of a written term, the interpretation which is most favourable to the consumer shall prevail but this rule shall not apply in proceedings brought under regulation 12.


Effect of unfair term

8. - (1) An unfair term in a contract concluded with a consumer by a seller or supplier shall not be binding on the consumer.


(2) The contract shall continue to bind the parties if it is capable of continuing in existence without the unfair term.


Choice of law clauses

9. These Regulations shall apply notwithstanding any contract term which applies or purports to apply the law of a non-Member State, if the contract has a close connection with the territory of the Member States.


Complaints - consideration by Director

10. - (1) It shall be the duty of the Director to consider any complaint made to him that any contract term drawn up for general use is unfair, unless-




(a) the complaint appears to the Director to be frivolous or vexatious; or


(b) a qualifying body has notified the Director that it agrees to consider the complaint.



(2) The Director shall give reasons for his decision to apply or not to apply, as the case may be, for an injunction under regulation 12 in relation to any complaint which these Regulations require him to consider.


(3) In deciding whether or not to apply for an injunction in respect of a term which the Director considers to be unfair, he may, if he considers it appropriate to do so, have regard to any undertakings given to him by or on behalf of any person as to the continued use of such a term in contracts concluded with consumers.


Complaints - consideration by qualifying bodies

11. - (1) If a qualifying body specified in Part One of Schedule 1 notifies the Director that it agrees to consider a complaint that any contract term drawn up for general use is unfair, it shall be under a duty to consider that complaint.


(2) Regulation 10(2) and (3) shall apply to a qualifying body which is under a duty to consider a complaint as they apply to the Director.


Injunctions to prevent continued use of unfair terms

12. - (1) The Director or, subject to paragraph (2), any qualifying body may apply for an injunction (including an interim injunction) against any person appearing to the Director or that body to be using, or recommending use of, an unfair term drawn up for general use in contracts concluded with consumers.


(2) A qualifying body may apply for an injunction only where-




(a) it has notified the Director of its intention to apply at least fourteen days before the date on which the application is made, beginning with the date on which the notification was given; or


(b) the Director consents to the application being made within a shorter period.



(3) The court on an application under this regulation may grant an injunction on such terms as it thinks fit.


(4) An injunction may relate not only to use of a particular contract term drawn up for general use but to any similar term, or a term having like effect, used or recommended for use by any person.


Powers of the Director and qualifying bodies to obtain documents and information

13. - (1) The Director may exercise the power conferred by this regulation for the purpose of-




(a) facilitating his consideration of a complaint that a contract term drawn up for general use is unfair; or


(b) ascertaining whether a person has complied with an undertaking or court order as to the continued use, or recommendation for use, of a term in contracts concluded with consumers.



(2) A qualifying body specified in Part One of Schedule 1 may exercise the power conferred by this regulation for the purpose of-




(a) facilitating its consideration of a complaint that a contract term drawn up for general use is unfair; or


(b) ascertaining whether a person has complied with-



(i) an undertaking given to it or to the court following an application by that body, or


(ii) a court order made on an application by that body,



as to the continued use, or recommendation for use, of a term in contracts concluded with consumers.




(3) The Director may require any person to supply to him, and a qualifying body specified in Part One of Schedule 1 may require any person to supply to it-




(a) a copy of any document which that person has used or recommended for use, at the time the notice referred to in paragraph (4) below is given, as a pre-formulated standard contract in dealings with consumers;


(b) information about the use, or recommendation for use, by that person of that document or any other such document in dealings with consumers.



(4) The power conferred by this regulation is to be exercised by a notice in writing which may-




(a) specify the way in which and the time within which it is to be complied with; and


(b) be varied or revoked by a subsequent notice.



(5) Nothing in this regulation compels a person to supply any document or information which he would be entitled to refuse to produce or give in civil proceedings before the court.


(6) If a person makes default in complying with a notice under this regulation, the court may, on the application of the Director or of the qualifying body, make such order as the court thinks fit for requiring the default to be made good, and any such order may provide that all the costs or expenses of and incidental to the application shall be borne by the person in default or by any officers of a company or other association who are responsible for its default.


Notification of undertakings and orders to Director

14. A qualifying body shall notify the Director-




(a) of any undertaking given to it by or on behalf of any person as to the continued use of a term which that body considers to be unfair in contracts concluded with consumers;


(b) of the outcome of any application made by it under regulation 12, and of the terms of any undertaking given to, or order made by, the court;


(c) of the outcome of any application made by it to enforce a previous order of the court.



Publication, information and advice

15. - (1) The Director shall arrange for the publication in such form and manner as he considers appropriate, of-




(a) details of any undertaking or order notified to him under regulation 14;


(b) details of any undertaking given to him by or on behalf of any person as to the continued use of a term which the Director considers to be unfair in contracts concluded with consumers;


(c) details of any application made by him under regulation 12, and of the terms of any undertaking given to, or order made by, the court;


(d) details of any application made by the Director to enforce a previous order of the court.



(2) The Director shall inform any person on request whether a particular term to which these Regulations apply has been-




(a) the subject of an undertaking given to the Director or notified to him by a qualifying body; or


(b) the subject of an order of the court made upon application by him or notified to him by a qualifying body;



and shall give that person details of the undertaking or a copy of the order, as the case may be, together with a copy of any amendments which the person giving the undertaking has agreed to make to the term in question.


(3) The Director may arrange for the dissemination in such form and manner as he considers appropriate of such information and advice concerning the operation of these Regulations as may appear to him to be expedient to give to the public and to all persons likely to be affected by these Regulations.



Kim Howells

Parliamentary Under-Secretary of State for Competition and Consumer Affairs, Department of Trade and Industry.


22nd July 1999






SCHEDULE 1

Regulation 3




QUALIFYING BODIES






PART ONE


1. The Data Protection Registrar.


2. The Director General of Electricity Supply.


3. The Director General of Gas Supply.


4. The Director General of Electricity Supply for Northern Ireland.


5. The Director General of Gas for Northern Ireland.


6. The Director General of Telecommunications.


7. The Director General of Water Services.


8. The Rail Regulator.


9. Every weights and measures authority in Great Britain.


10. The Department of Economic Development in Northern Ireland.





PART TWO


11. Consumers' Association.





SCHEDULE 2

Regulation 5(5)




INDICATIVE AND NON-EXHAUSTIVE LIST OF TERMS WHICH MAY BE REGARDED AS UNFAIR



1. Terms which have the object or effect of-



(a) excluding or limiting the legal liability of a seller or supplier in the event of the death of a consumer or personal injury to the latter resulting from an act or omission of that seller or supplier;


(b) inappropriately excluding or limiting the legal rights of the consumer vis-à-vis the seller or supplier or another party in the event of total or partial non-performance or inadequate performance by the seller or supplier of any of the contractual obligations, including the option of offsetting a debt owed to the seller or supplier against any claim which the consumer may have against him;


(c) making an agreement binding on the consumer whereas provision of services by the seller or supplier is subject to a condition whose realisation depends on his own will alone;


(d) permitting the seller or supplier to retain sums paid by the consumer where the latter decides not to conclude or perform the contract, without providing for the consumer to receive compensation of an equivalent amount from the seller or supplier where the latter is the party cancelling the contract;


(e) requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation;


(f) authorising the seller or supplier to dissolve the contract on a discretionary basis where the same facility is not granted to the consumer, or permitting the seller or supplier to retain the sums paid for services not yet supplied by him where it is the seller or supplier himself who dissolves the contract;


(g) enabling the seller or supplier to terminate a contract of indeterminate duration without reasonable notice except where there are serious grounds for doing so;


(h) automatically extending a contract of fixed duration where the consumer does not indicate otherwise, when the deadline fixed for the consumer to express his desire not to extend the contract is unreasonably early;


(i) irrevocably binding the consumer to terms with which he had no real opportunity of becoming acquainted before the conclusion of the contract;


(j) enabling the seller or supplier to alter the terms of the contract unilaterally without a valid reason which is specified in the contract;


(k) enabling the seller or supplier to alter unilaterally without a valid reason any characteristics of the product or service to be provided;


(l) providing for the price of goods to be determined at the time of delivery or allowing a seller of goods or supplier of services to increase their price without in both cases giving the consumer the corresponding right to cancel the contract if the final price is too high in relation to the price agreed when the contract was concluded;


(m) giving the seller or supplier the right to determine whether the goods or services supplied are in conformity with the contract, or giving him the exclusive right to interpret any term of the contract;


(n) limiting the seller's or supplier's obligation to respect commitments undertaken by his agents or making his commitments subject to compliance with a particular formality;


(o) obliging the consumer to fulfil all his obligations where the seller or supplier does not perform his;


(p) giving the seller or supplier the possibility of transferring his rights and obligations under the contract, where this may serve to reduce the guarantees for the consumer, without the latter's agreement;


(q) excluding or hindering the consumer's right to take legal action or exercise any other legal remedy, particularly by requiring the consumer to take disputes exclusively to arbitration not covered by legal provisions, unduly restricting the evidence available to him or imposing on him a burden of proof which, according to the applicable law, should lie with another party to the contract.



2. Scope of paragraphs 1(g), (j) and (l)



(a) Paragraph 1(g) is without hindrance to terms by which a supplier of financial services reserves the right to terminate unilaterally a contract of indeterminate duration without notice where there is a valid reason, provided that the supplier is required to inform the other contracting party or parties thereof immediately.


(b) Paragraph 1(j) is without hindrance to terms under which a supplier of financial services reserves the right to alter the rate of interest payable by the consumer or due to the latter, or the amount of other charges for financial services without notice where there is a valid reason, provided that the supplier is required to inform the other contracting party or parties thereof at the earliest opportunity and that the latter are free to dissolve the contract immediately.


Paragraph 1(j) is also without hindrance to terms under which a seller or supplier reserves the right to alter unilaterally the conditions of a contract of indeterminate duration, provided that he is required to inform the consumer with reasonable notice and that the consumer is free to dissolve the contract.


(c) Paragraphs 1(g), (j) and (l) do not apply to:



- transactions in transferable securities, financial instruments and other products or services where the price is linked to fluctuations in a stock exchange quotation or index or a financial market rate that the seller or supplier does not control; - contracts for the purchase or sale of foreign currency, traveller's cheques or international money orders denominated in foreign currency;

(d) Paragraph 1(l) is without hindrance to price indexation clauses, where lawful, provided that the method by which prices vary is explicitly described.

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EXPLANATORY NOTE


(This note is not part of the Regulations)



These Regulations revoke and replace the Unfair Terms in Consumer Contracts Regulations 1994 (S.I. 1994/3159) which came into force on 1st July 1995.


Those Regulations implemented Council Directive 93/13/EEC on unfair terms in consumer contracts (O.J. No. L95, 21.4.93, p. 29). Regulations 3 to 9 of these Regulations re-enact regulations 2 to 7 of the 1994 Regulations with modifications to reflect more closely the wording of the Directive.


The Regulations apply, with certain exceptions, to unfair terms in contracts concluded between a consumer and a seller or supplier (regulation 4). The Regulations provide that an unfair term is one which has not been individually negotiated and which, contrary to the requirement of good faith, causes a significant imbalance in the parties' rights and obligations under the contract to the detriment of the consumer (regulation 5). Schedule 2 contains an indicative list of terms which may be regarded as unfair.


The assessment of unfairness will take into account all the circumstances attending the conclusion of the contract. However, the assessment is not to relate to the definition of the main subject matter of the contract or the adequacy of the price or remuneration as against the goods or services supplied in exchange as long as the terms concerned are in plain, intelligible language (regulation 6). Unfair contract terms are not binding on the consumer (regulation 8).


The Regulations maintain the obligation on the Director General of Fair Trading (contained in the 1994 Regulations) to consider any complaint made to him about the fairness of any contract term drawn up for general use. He may, if he considers it appropriate to do so, seek an injunction to prevent the continued use of that term or of a term having like effect (regulations 10 and 12).


The Regulations provide for the first time that a qualifying body named in Schedule 1 (statutory regulators, trading standards departments and Consumers' Association) may also apply for an injunction to prevent the continued use of an unfair contract term provided it has notified the Director General of its intention at least 14 days before the application is made (unless the Director General consents to a shorter period) (regulation 12). A qualifying body named in Part One of Schedule 1 (public bodies) shall be under a duty to consider a complaint if it has told the Director General that it will do so (regulation 11).


The Regulations provide a new power for the Director General and the public qualifying bodies to require traders to produce copies of their standard contracts, and give information about their use, in order to facilitate investigation of complaints and ensure compliance with undertakings or court orders (regulation 13).


Qualifying bodies must notify the Director General of undertakings given to them about the continued use of an unfair term and of the outcome of any court proceedings (regulation 14). The Director General is given the power to arrange for the publication of this information in such form and manner as he considers appropriate and to offer information and advice about the operation of these Regulations (regulation 15). In addition the Director General will supply enquirers about particular standard terms with details of any relevant undertakings and court orders.


A Regulatory Impact Assessment of the costs and benefits which will result from these Regulations has been prepared by the Department of Trade and Industry and is available from Consumer Affairs Directorate, Department of Trade and Industry, Room 407, 1 Victoria Street, London SW1H 0ET (Telephone 0171 215 0341). Copies have been placed in the libraries of both Houses of Parliament.



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Notes:


[1] S.I. 1993/2661.back

[2] 1972 c. 68.back


[3] S.I. 1994/3159.back


[4] Protocol 47 and certain Annexes to the EEA Agreement were amended by Decision No. 7/94 of the EEA Joint Committee which came into force on 1st July 1994, (O.J. No. L160, 28.6.94, p. 1). Council Directive 93/13/EEC was added to Annex XIX to the Agreement by Annex 17 to the said Decision No. 7/94.back


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ISBN 0 11 082990 5

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We welcome your comments on this site © Crown copyright 1999 Prepared 30 July 1999

Misrepresentation Act 1967


Misrepresentation Act 1967



1967 CHAPTER 7



An Act to amend the law relating to innocent misrepresentations and to amend sections 11 and 35 of the Sale of Goods Act 1893



[22nd March 1967]



1. Removal of certain bars to rescission for innocent misrepresentation



Where a person has entered into a contract after a misrepresentation has been made to him, and—



(a) the misrepresentation has become a term of the contract; or


(b) the contract has been performed;



or both, then, if otherwise he would be entitled to rescind the contract without alleging fraud, he shall be so entitled, subject to the provisions of this Act, notwithstanding the matters mentioned in paragraphs (a) and (b) of this section.



2. Damages for misrepresentation



(1) Where a person has entered into a contract after a misrepresentation has been made to him by another party thereto and as a result thereof he has suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently, unless he proves that he had reasonable ground to believe and did believe up to the time the contract was made that the facts represented were true.



(2) Where a person has entered into a contract after a misrepresentation has been made to him


otherwise than fraudulently, and he would be entitled, by reason of the misrepresentation, to rescind the contract, then, if it is claimed, in any proceedings arising out of the contract, that the contract ought to be or has been rescinded the court or arbitrator may declare the contract subsisting and award damages in lieu of rescission, if of opinion that it would be equitable to do so, having regard to the nature of the misrepresentation and the loss that would be caused by it if the contract were upheld, as well as to the loss that rescission would cause to the other party.



(3) Damages may be awarded against a person under subsection (2) of this section whether or not he is liable to damages under subsection (1) thereof, but where he is so liable any award under the said subsection (2) shall be taken into account in assessing his liability under the said subsection (1).



3. Avoidance of provision excluding liability for misrepresentation



If a contract contains a term which would exclude or restrict—



(a) any liability to which a party to a contract may be subject by reason of any


misrepresentation made by him before the contract was made; or


(b) any remedy available to another party to the contract by reason of such a


misrepresentation,



that term shall be of no effect except in so far as it satisfies the requirement of reasonableness as stated in section 11(1) of the Unfair Contract Terms Act 1977; and it is for those claiming that the term satisfies that requirement to show that it does.

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Concerning the privity rule

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A) PRIVITY OF CONTRACT

1. THE DOCTRINE OF PRIVITY

"The doctrine of privity means that a contract cannot, as a general rule, confer rights or impose obligations arising under it on any person except the parties to it." (GH Treitel, The Law of Contract)

The common law reasoned that:

1. Only a promisee may enforce the promise meaning that if the third party is not a promisee he is not privy to the contract. See:

Dunlop Tyre Co v Selfridge [1915] AC 847 - The plaintiffs sold tyres to Dew & Co, wholesale distributors, on terms that Dew would obtain an undertaking from retailers that they should not sell below the plaintiffs' list price. Dew sold some of the tyres to the defendants, who retailed them below list price. The plaintiffs sought an injunction and damages. The action failed because although there was a contract between the defendants and Dew, the plaintiffs were not a party to it and "only a person who is a party to a contract can sue on it," (per Lord Haldane).

2. There is the principle that consideration must move from the promisee. See:

Tweddle v Atkinson (1861) 1 B&S 393 - The fathers of a husband and wife agreed in writing that both should pay money to the husband, adding that the husband should have the power to sue them for the respective sums. The husband's claim against his wife's fathers' estate was dismissed, the court justifying the decision largely because no consideration moved from the husband.

The two principles of privity and consideration have become entwined but are still distinct.

2. EXCEPTIONS

If the doctrine of privity was inflexibly applied it would cause considerable injustice and inconvenience. Many exceptions to it have therefore been developed.

A) COLLATERAL CONTRACTS

A contract between two parties may be accompanied by a collateral contract between one of them and a third person relating to the same subject-matter. For example:

Shanklin Pier v Detel Products [1951] 2 KB 854. The plaintiffs had employed contractors to paint a pier. They told them to buy paint made by the defendants. The defendants had told them that the paint would last for seven years. It only lasted for three months. The court decided that the plaintiffs could sue the defendants on a collateral contract. They had provided consideration for the defendants' promise by entering into an agreement with the contractors, which entailed the purchase of the defendants' paint.

There must, however, be an intention to create a collateral contract before that contract can be formed

B) AGENCY

The concept of agency is an exception to the doctrine of privity in that an agent may contract on behalf of his principal with a third party and form a binding contract between the principal and third party.

For example, a third party may be able to take the benefit of an exclusion clause by proving that the party imposing the clause was acting as the agent of the third party, thereby bringing the third party into a direct contractual relationship with the plaintiff:

In Scruttons Ltd v Midland Silicones Ltd [1962] AC 446, a bill of lading limited the liability of a shipping company to $500 per package. The defendant stevedores had contracted with the shipping company to unload the plaintiff's goods on the basis that they were to be covered by the exclusion clause in the bill of lading. The plaintiffs were ignorant of the contract between the shipping company and the stevedores. Owing to the stevedores negligence, the cargo was damaged and, when sued, they pleaded the limitation clause in the bill of lading. The House of Lords held that the stevedores could not rely on the clause as there was no privity of contract between the plaintiffs and defendants.
Lord Reid suggested that the stevedores could be brought into a contractual relationship with the owner of the goods through the agency of the carrier provided certain conditions were met: (1) that the bill of lading makes it clear that the stevedore is intended to be protected by the exclusion clauses therein. (2) that the bill of lading makes it clear that the carrier is contracting as agent for the stevedore. (3) the carrier must have authority from the stevedore to act as agent, or perhaps, later ratification by the stevedore would suffice. (4) consideration must move from the stevedore.

All of the above conditions were satisfied in New Zealand Shipping v Satterthwaite (The Eurymedon) [1975] AC 154.

C) TRUSTS

Equity developed a general exception to the doctrine of privity by use of the concept of trust. A trust is an equitable obligation to hold property on behalf of another.

The device was approved by the House of Lords in Les Affreteurs Reunis v Leopold Walford [1919] AC 801, where a broker (C) negotiated a charterparty by which the shipowner (A) promised the charterer (B) to pay the broker a commission. It was held that B was trustee of this promise for C, who could thus enforce it against A.

However, the trust device has fallen into disuse because of the strict requirements of constituting a trust and most particularly that there should be a specific intention on the part of the person declaring the trust that it should be a trust.

D) RESTRICTIVE COVENANTS

Restrictive covenants may, if certain conditions are satisfied, run with the land and bind purchasers of it to observe the covenants for the benefit of adjoining owners.

For example, in Tulk v Moxhay (1848) 2 Ph 774, the plaintiff who owned several houses in Leicester Square sold the garden in the centre to Elms, who covenanted that he would keep the gardens and railings in their present condition and continue to allow individuals to use the gardens. The land was sold to the defendants who knew of the restriction contained in the contract between the plaintiff and Elms. The defendant announced that he was going to build on the land, and the plaintiff, who still owned several adjacent houses, sought an injunction to restrain him from doing so. It was held that the covenant would be enforced in equity against all subsequent purchasers with notice.

This device was carried over into the law of contract by the Privy Council in Lord Strathcona SS Co v Dominion Coal Co [1926] AC 108, but Diplock J refused to follow the decision in Port Line Ltd v Ben Line Steamers [1958] 2 QB 146. Most recently, in Law Debenture Trust Corp v Ural Caspian Oil Corp [1993] 2 All ER 355, it was emphasised that the principle permitted no more than the grant of a negative injunction to restrain the person acquiring the property from doing acts which would be inconsistent with the performance of the contract by his predecesser and had never been used to impose upon a purchaser a positive duty to perform the covenants of his predecessor.

E) STATUTES

Certain exceptions to the doctrine of privity have been created by statute, including price maintenance agreements; and certain contracts of insurance enforceable in favour of third parties. For example, under s148(4) of the Road Traffic Act 1972, an injured party may recover compensation from an insurance company once he has obtained judgment against the insured person.

F) REMEDIES OF THE CONTRACTING PARTY

The question of the extent to which a contracting party may recover for loss sustained by a third party who is intended to benefit from the contract was raised in:

Jackson v Horizon Holidays [1975] 1 WLR 1468. The plaintiff entered into a contract for himself and his family. The holiday provided failed to comply with the description given by the defendants in a number of respects. The plaintiff recovered damages and the defendants appealed against the amount. Lord Denning MR thought the amount awarded was excessive compensation for the plaintiff himself, but he upheld the award on the ground that the plaintiff had made a contract for the benefit of himself and his family, and that he could recover for their loss as well as for his own.

However, in Woodar Investment Development v Wimpey Construction [1980] 1 WLR 277, the House of Lords rejected the basis on which Lord Denning had arrived at his decision, and reaffirmed the view that a contracting party cannot recover damages for the loss sustained by the third party. Their Lordships did not dissent from the actual decision in Jackson, which they felt could be supported either because the damages were awarded for the plaintiff's own loss; or because booking family holidays or ordering meals in restaurants calls for special treatment.

3. ACADEMIC DEBATE ON THE DOCTRINE

GH Treitel, The Law of Contract, 9th ed, 1995, p588, states:

"The rule that no one except a party to a contract can be made liable under it is generally regarded as just and sensible. But the rule that no one except a party to a contract can enforce it may cause inconvenience where it prevents the person most interested in enforcing the contract from doing so. The many exceptions to the doctrine make it tolerable in practice, but they have provoked the question whether it would not be better further to modify the doctrine or to abolish it altogether."

4. REFORM

Proposals for legislative reform were made by the Law Revision Committee as long ago as 1937 (Cmnd. 5449) and further proposals were put forward for discussion by the Law Commission in 1991 (Paper No 121, 1991). In July 1996, the Law Commission published proposals in "Privity of Contract; Contracts for the Benefit of Third Parties" (Cmnd. 3329; Law Com No 242), which recommended that the law expressly provide for third parties to be able to enforce contracts (including taking advantage of exclusion/limitation clauses) in certain circumstances. These proposals for reform were acted upon.

The Contracts (Rights of Third Parties) Act 1999 received Royal Assent on 11 November 1999. It reforms the common law rule of privity of contract. Section 1 provides that a third party may in his own right enforce a term of a contract if:

(a) the contract expressly provides that he may, or
(b) the term purports to confer a benefit on him (except where on a proper construction of the contract it appears that the parties did not intend the term to be enforceable by the third party).

There shall be available to the third party any remedy that would have been available to him in an action for breach of contract if he had been a party to the contract: s1(5).


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Statutory Instrument 2000 No. 2334

The Consumer Protection (Distance Selling) Regulations 2000

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STATUTORY INSTRUMENTS


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2000 No. 2334



CONSUMER PROTECTION



The Consumer Protection (Distance Selling) Regulations 2000


Made 31st August 2000

Laid before Parliament 1st September 2000

Coming into force 31st October 2000


The Secretary of State, being a Minister designated[1] for the purposes of section 2(2) of the European Communities Act 1972[2] in relation to matters relating to consumer protection, in exercise of the powers conferred on him by section 2(2) of that Act, hereby makes the following Regulations: -


Title, commencement and extent

1. - (1) These Regulations may be cited as the Consumer Protection (Distance Selling) Regulations 2000 and shall come into force on 31st October 2000.


(2) These Regulations extend to Northern Ireland.


Revocation

2. The Mail Order Transactions (Information) Order 1976[3] is hereby revoked.


Interpretation

3. - (1) In these Regulations -



"breach" means contravention by a supplier of a prohibition in, or failure to comply with a requirement of, these Regulations;


"business" includes a trade or profession;


"consumer" means any natural person who, in contracts to which these Regulations apply, is acting for purposes which are outside his business;


"court" in relation to England and Wales and Northern Ireland means a county court or the High Court, and in relation to Scotland means the Sheriff Court or the Court of Session;


"credit" includes a cash loan and any other form of financial accommodation, and for this purpose "cash" includes money in any form;


"Director" means the Director General of Fair Trading;


"distance contract" means any contract concerning goods or services concluded between a supplier and a consumer under an organised distance sales or service provision scheme run by the supplier who, for the purpose of the contract, makes exclusive use of one or more means of distance communication up to and including the moment at which the contract is concluded;


"EEA Agreement" means the Agreement on the European Economic Area signed at Oporto on 2 May 1992 as adjusted by the Protocol signed at Brussels on 17 March 1993[4];


"enactment" includes an enactment comprised in, or in an instrument made under, an Act of the Scottish Parliament;


"enforcement authority" means the Director, every weights and measures authority in Great Britain, and the Department of Enterprise, Trade and Investment in Northern Ireland;


"excepted contract" means a contract such as is mentioned in regulation 5(1);


"means of distance communication" means any means which, without the simultaneous physical presence of the supplier and the consumer, may be used for the conclusion of a contract between those parties; and an indicative list of such means is contained in Schedule 1;


"Member State" means a State which is a contracting party to the EEA Agreement;


"operator of a means of communication" means any public or private person whose business involves making one or more means of distance communication available to suppliers;


"period for performance" has the meaning given by regulation 19(2);


"personal credit agreement" has the meaning given by regulation 14(8);


"related credit agreement" has the meaning given by regulation 15(5);


"supplier" means any person who, in contracts to which these Regulations apply, is acting in his commercial or professional capacity; and


"working days" means all days other than Saturdays, Sundays and public holidays.

(2) In the application of these Regulations to Scotland, for references to an "injunction" or an "interim injunction" there shall be substituted references to an "interdict" or an "interim interdict" respectively.


Contracts to which these Regulations apply

4. These Regulations apply, subject to regulation 6, to distance contracts other than excepted contracts.


Excepted contracts

5. - (1) The following are excepted contracts, namely any contract -




(a) for the sale or other disposition of an interest in land except for a rental agreement;


(b) for the construction of a building where the contract also provides for a sale or other disposition of an interest in land on which the building is constructed, except for a rental agreement;


(c) relating to financial services, a non-exhaustive list of which is contained in Schedule 2;


(d) concluded by means of an automated vending machine or automated commercial premises;


(e) concluded with a telecommunications operator through the use of a public pay-phone;


(f) concluded at an auction.



(2) References in paragraph (1) to a rental agreement -




(a) if the land is situated in England and Wales, are references to any agreement which does not have to be made in writing (whether or not in fact made in writing) because of section 2(5)(a) of the Law of Property (Miscellaneous Provisions) Act 1989[5];


(b) if the land is situated in Scotland, are references to any agreement for the creation, transfer, variation or extinction of an interest in land, which does not have to be made in writing (whether or not in fact made in writing) as provided for in section 1(2) and (7) of the Requirements of Writing (Scotland) Act 1995[6]; and


(c) if the land is situated in Northern Ireland, are references to any agreement which is not one to which section II of the Statute of Frauds, (Ireland) 1695[7] applies.



(3) Paragraph (2) shall not be taken to mean that a rental agreement in respect of land situated outside the United Kingdom is not capable of being a distance contract to which these Regulations apply.


Contracts to which only part of these Regulations apply

6. - (1) Regulations 7 to 20 shall not apply to a contract which is a "timeshare agreement" within the meaning of the Timeshare Act 1992[8] and to which that Act applies.


(2) Regulations 7 to 19(1) shall not apply to -




(a) contracts for the supply of food, beverages or other goods intended for everyday consumption supplied to the consumer's residence or to his workplace by regular roundsmen; or


(b) contracts for the provision of accommodation, transport, catering or leisure services, where the supplier undertakes, when the contract is concluded, to provide these services on a specific date or within a specific period.



(3) Regulations 19(2) to (8) and 20 do not apply to a contract for a "package" within the meaning of the Package Travel, Package Holidays and Package Tours Regulations 1992[9] which is sold or offered for sale in the territory of the Member States.


Information required prior to the conclusion of the contract

7. - (1) Subject to paragraph (4), in good time prior to the conclusion of the contract the supplier shall -




(a) provide to the consumer the following information -



(i) the identity of the supplier and, where the contract requires payment in advance, the supplier's address;


(ii) a description of the main characteristics of the goods or services;


(iii) the price of the goods or services including all taxes;


(iv) delivery costs where appropriate;


(v) the arrangements for payment, delivery or performance;


(vi) the existence of a right of cancellation except in the cases referred to in regulation 13;


(vii) the cost of using the means of distance communication where it is calculated other than at the basic rate;


(viii) the period for which the offer or the price remains valid; and


(ix) where appropriate, the minimum duration of the contract, in the case of contracts for the supply of goods or services to be performed permanently or recurrently;



(b) inform the consumer if he proposes, in the event of the goods or services ordered by the consumer being unavailable, to provide substitute goods or services (as the case may be) of equivalent quality and price; and


(c) inform the consumer that the cost of returning any such substitute goods to the supplier in the event of cancellation by the consumer would be met by the supplier.




(2) The supplier shall ensure that the information required by paragraph (1) is provided in a clear and comprehensible manner appropriate to the means of distance communication used, with due regard in particular to the principles of good faith in commercial transactions and the principles governing the protection of those who are unable to give their consent such as minors.


(3) Subject to paragraph (4), the supplier shall ensure that his commercial purpose is made clear when providing the information required by paragraph (1).


(4) In the case of a telephone communication, the identity of the supplier and the commercial purpose of the call shall be made clear at the beginning of the conversation with the consumer.


Written and additional information

8. - (1) Subject to regulation 9, the supplier shall provide to the consumer in writing, or in another durable medium which is available and accessible to the consumer, the information referred to in paragraph (2), either -




(a) prior to the conclusion of the contract, or


(b) thereafter, in good time and in any event -



(i) during the performance of the contract, in the case of services; and


(ii) at the latest at the time of delivery where goods not for delivery to third parties are concerned.




(2) The information required to be provided by paragraph (1) is -




(a) the information set out in paragraphs (i) to (vi) of Regulation 7(1)(a);


(b) information about the conditions and procedures for exercising the right to cancel under regulation 10, including -



(i) where a term of the contract requires (or the supplier intends that it will require) that the consumer shall return the goods to the supplier in the event of cancellation, notification of that requirement; and


(ii) information as to whether the consumer or the supplier would be responsible under these Regulations for the cost of returning any goods to the supplier, or the cost of his recovering them, if the consumer cancels the contract under regulation 10;



(c) the geographical address of the place of business of the supplier to which the consumer may address any complaints;


(d) information about any after-sales services and guarantees; and


(e) the conditions for exercising any contractual right to cancel the contract, where the contract is of an unspecified duration or a duration exceeding one year.




(3) Subject to regulation 9, prior to the conclusion of a contract for the supply of services, the supplier shall inform the consumer in writing or in another durable medium which is available and accessible to the consumer that, unless the parties agree otherwise, he will not be able to cancel the contract under regulation 10 once the performance of the services has begun with his agreement.


Services performed through the use of a means of distance communication

9. - (1) Regulation 8 shall not apply to a contract for the supply of services which are performed through the use of a means of distance communication, where those services are supplied on only one occasion and are invoiced by the operator of the means of distance communication.


(2) But the supplier shall take all necessary steps to ensure that a consumer who is a party to a contract to which paragraph (1) applies is able to obtain the supplier's geographical address and the place of business to which the consumer may address any complaints.


Right to cancel

10. - (1) Subject to regulation 13, if within the cancellation period set out in regulations 11 and 12, the consumer gives a notice of cancellation to the supplier, or any other person previously notified by the supplier to the consumer as a person to whom notice of cancellation may be given, the notice of cancellation shall operate to cancel the contract.


(2) Except as otherwise provided by these Regulations, the effect of a notice of cancellation is that the contract shall be treated as if it had not been made.


(3) For the purposes of these Regulations, a notice of cancellation is a notice in writing or in another durable medium available and accessible to the supplier (or to the other person to whom it is given) which, however expressed, indicates the intention of the consumer to cancel the contract.


(4) A notice of cancellation given under this regulation by a consumer to a supplier or other person is to be treated as having been properly given if the consumer -




(a) leaves it at the address last known to the consumer and addressed to the supplier or other person by name (in which case it is to be taken to have been given on the day on which it was left);


(b) sends it by post to the address last known to the consumer and addressed to the supplier or other person by name (in which case, it is to be taken to have been given on the day on which it was posted);


(c) sends it by facsimile to the business facsimile number last known to the consumer (in which case it is to be taken to have been given on the day on which it is sent); or


(d) sends it by electronic mail, to the business electronic mail address last known to the consumer (in which case it is to be taken to have been given on the day on which it is sent).



(5) Where a consumer gives a notice in accordance with paragraph (4)(a) or (b) to a supplier who is a body corporate or a partnership, the notice is to be treated as having been properly given if -




(a) in the case of a body corporate, it is left at the address of, or sent to, the secretary or clerk of that body; or


(b) in the case of a partnership, it is left with or sent to a partner or a person having control or management of the partnership business.



Cancellation period in the case of contracts for the supply of goods

11. - (1) For the purposes of regulation 10, the cancellation period in the case of contracts for the supply of goods begins with the day on which the contract is concluded and ends as provided in paragraphs (2) to (5).


(2) Where the supplier complies with regulation 8, the cancellation period ends on the expiry of the period of seven working days beginning with the day after the day on which the consumer receives the goods.


(3) Where a supplier who has not complied with regulation 8 provides to the consumer the information referred to in regulation 8(2), and does so in writing or in another durable medium available and accessible to the consumer, within the period of three months beginning with the day after the day on which the consumer receives the goods, the cancellation period ends on the expiry of the period of seven working days beginning with the day after the day on which the consumer receives the information.


(4) Where neither paragraph (2) nor (3) applies, the cancellation period ends on the expiry of the period of three months and seven working days beginning with the day after the day on which the consumer receives the goods.


(5) In the case of contracts for goods for delivery to third parties, paragraphs (2) to (4) shall apply as if the consumer had received the goods on the day on which they were received by the third party.


Cancellation period in the case of contracts for the supply of services

12. - (1) For the purposes of regulation 10, the cancellation period in the case of contracts for the supply of services begins with the day on which the contract is concluded and ends as provided in paragraphs (2) to (4).


(2) Where the supplier complies with regulation 8 on or before the day on which the contract is concluded, the cancellation period ends on the expiry of the period of seven working days beginning with the day after the day on which the contract is concluded.


(3) Where a supplier who has not complied with regulation 8 on or before the day on which the contract is concluded provides to the consumer the information referred to in regulation 8(2) and (3), and does so in writing or in another durable medium available and accessible to the consumer, within the period of three months beginning with the day after the day on which the contract is concluded, the cancellation period ends on the expiry of the period of seven working days beginning with the day after the day on which the consumer receives the information.


(4) Where neither paragraph (2) nor (3) applies, the cancellation period ends on the expiry of the period of three months and seven working days beginning with the day after the day on which the contract is concluded.


Exceptions to the right to cancel

13. - (1) Unless the parties have agreed otherwise, the consumer will not have the right to cancel the contract by giving notice of cancellation pursuant to regulation 10 in respect of contracts -




(a) for the supply of services if the supplier has complied with regulation 8(3) and performance of the contract has begun with the consumer's agreement before the end of the cancellation period applicable under regulation 12;


(b) for the supply of goods or services the price of which is dependent on fluctuations in the financial market which cannot be controlled by the supplier;


(c) for the supply of goods made to the consumer's specifications or clearly personalised or which by reason of their nature cannot be returned or are liable to deteriorate or expire rapidly;


(d) for the supply of audio or video recordings or computer software if they are unsealed by the consumer;


(e) for the supply of newspapers, periodicals or magazines; or


(f) for gaming, betting or lottery services.



Recovery of sums paid by or on behalf of the consumer on cancellation, and return of security

14. - (1) On the cancellation of a contract under regulation 10, the supplier shall reimburse any sum paid by or on behalf of the consumer under or in relation to the contract to the person by whom it was made free of any charge, less any charge made in accordance with paragraph (5).


(2) The reference in paragraph (1) to any sum paid on behalf of the consumer includes any sum paid by a creditor who is not the same person as the supplier under a personal credit agreement with the consumer.


(3) The supplier shall make the reimbursement referred to in paragraph (1) as soon as possible and in any case within a period not exceeding 30 days beginning with the day on which the notice of cancellation was given.


(4) Where any security has been provided in relation to the contract, the security (so far as it is so provided) shall, on cancellation under regulation 10, be treated as never having had effect and any property lodged with the supplier solely for the purposes of the security as so provided shall be returned by him forthwith.


(5) Subject to paragraphs (6) and (7), the supplier may make a charge, not exceeding the direct costs of recovering any goods supplied under the contract, where a term of the contract provides that the consumer must return any goods supplied if he cancels the contract under regulation 10 but the consumer does not comply with this provision or returns the goods at the expense of the supplier.


(6) Paragraph (5) shall not apply where -




(a) the consumer cancels in circumstances where he has the right to reject the goods under a term of the contract, including a term implied by virtue of any enactment, or


(b) the term requiring the consumer to return any goods supplied if he cancels the contract is an "unfair term" within the meaning of the Unfair Terms in Consumer Contracts Regulations 1999[10].



(7) Paragraph (5) shall not apply to the cost of recovering any goods which were supplied as substitutes for the goods ordered by the consumer.


(8) For the purposes of these Regulations, a personal credit agreement is an agreement between the consumer and any other person ("the creditor") by which the creditor provides the consumer with credit of any amount.


Automatic cancellation of a related credit agreement

15. - (1) Where a notice of cancellation is given under regulation 10 which has the effect of cancelling the contract, the giving of the notice shall also have the effect of cancelling any related credit agreement.


(2) Where a related credit agreement is cancelled by virtue of paragraph (1), the supplier shall, if he is not the same person as the creditor under that agreement, forthwith on receipt of the notice of cancellation inform the creditor that the notice has been given.


(3) Where a related credit agreement is cancelled by virtue of paragraph (1) -




(a) any sum paid by or on behalf of the consumer under, or in relation to, the credit agreement which the supplier is not obliged to reimburse under regulation 14(1) shall be reimbursed, except for any sum which, if it had not already been paid, would have to be paid under subparagraph (b);


(b) the agreement shall continue in force so far as it relates to repayment of the credit and payment of interest, subject to regulation 16; and


(c) subject to subparagraph (b), the agreement shall cease to be enforceable.



(4) Where any security has been provided under a related credit agreement, the security, so far as it is so provided, shall be treated as never having had effect and any property lodged with the creditor solely for the purposes of the security as so provided shall be returned by him forthwith.


(5) For the purposes of this regulation and regulation 16, a "related credit agreement" means an agreement under which fixed sum credit which fully or partly covers the price under a contract cancelled under regulation 10 is granted -




(a) by the supplier, or


(b) by another person, under an arrangement between that person and the supplier.



(6) For the purposes of this regulation and regulation 16 -




(a) "creditor" is a person who grants credit under a related credit agreement;


(b) "fixed sum credit" has the same meaning as in section 10 of the Consumer Credit Act 1974[11];


(c) "repayment" in relation to credit means repayment of money received by the consumer, and cognate expressions shall be construed accordingly; and


(d) "interest" means interest on money so received.



Repayment of credit and interest after cancellation of a related credit agreement

16. - (1) This regulation applies following the cancellation of a related credit agreement by virtue of regulation 15(1).


(2) If the consumer repays the whole or a portion of the credit -




(a) before the expiry of one month following the cancellation of the credit agreement, or


(b) in the case of a credit repayable by instalments, before the date on which the first instalment is due,



no interest shall be payable on the amount repaid.


(3) If the whole of a credit repayable by instalments is not repaid on or before the date referred to in paragraph (2)(b), the consumer shall not be liable to repay any of the credit except on receipt of a request in writing, signed by the creditor, stating the amounts of the remaining instalments (recalculated by the creditor as nearly as may be in accordance with the agreement and without extending the repayment period), but excluding any sum other than principal and interest.


(4) Where any security has been provided under a related credit agreement the duty imposed on the consumer to repay credit and to pay interest shall not be enforceable before the creditor has discharged any duty imposed on him by regulation 15(4) to return any property lodged with him as security on cancellation.


Restoration of goods by consumer after cancellation

17. - (1) This regulation applies where a contract is cancelled under regulation 10 after the consumer has acquired possession of any goods under the contract other than any goods mentioned in regulation 13(1)(b) to (e).


(2) The consumer shall be treated as having been under a duty throughout the period prior to cancellation -




(a) to retain possession of the goods, and


(b) to take reasonable care of them.



(3) On cancellation, the consumer shall be under a duty to restore the goods to the supplier in accordance with this regulation, and in the meanwhile to retain possession of the goods and take reasonable care of them.


(4) The consumer shall not be under any duty to deliver the goods except at his own premises and in pursuance of a request in writing, or in another durable medium available and accessible to the consumer, from the supplier and given to the consumer either before, or at the time when, the goods are collected from those premises.


(5) If the consumer -




(a) delivers the goods (whether at his own premises or elsewhere) to any person to whom, under regulation 10(1), a notice of cancellation could have been given; or


(b) sends the goods at his own expense to such a person,



he shall be discharged from any duty to retain possession of the goods or restore them to the supplier.


(6) Where the consumer delivers the goods in accordance with paragraph (5)(a), his obligation to take care of the goods shall cease; and if he sends the goods in accordance with paragraph (5)(b), he shall be under a duty to take reasonable care to see that they are received by the supplier and not damaged in transit, but in other respects his duty to take care of the goods shall cease when he sends them.


(7) Where, at any time during the period of 21 days beginning with the day notice of cancellation was given, the consumer receives such a request as is mentioned in paragraph (4), and unreasonably refuses or unreasonably fails to comply with it, his duty to retain possession and take reasonable care of the goods shall continue until he delivers or sends the goods as mentioned in paragraph (5), but if within that period he does not receive such a request his duty to take reasonable care of the goods shall cease at the end of that period.


(8) Where -




(a) a term of the contract provides that if the consumer cancels the contract, he must return the goods to the supplier, and


(b) the consumer is not otherwise entitled to reject the goods under the terms of the contract or by virtue of any enactment,



paragraph (7) shall apply as if for the period of 21 days there were substituted the period of 6 months.


(9) Where any security has been provided in relation to the cancelled contract, the duty to restore goods imposed on the consumer by this regulation shall not be enforceable before the supplier has discharged any duty imposed on him by regulation 14(4) to return any property lodged with him as security on cancellation.


(10) Breach of a duty imposed by this regulation on a consumer is actionable as a breach of statutory duty.


Goods given in part-exchange

18. - (1) This regulation applies on the cancellation of a contract under regulation 10 where the supplier agreed to take goods in part-exchange (the "part-exchange goods") and those goods have been delivered to him.


(2) Unless, before the end of the period of 10 days beginning with the date of cancellation, the part-exchange goods are returned to the consumer in a condition substantially as good as when they were delivered to the supplier, the consumer shall be entitled to recover from the supplier a sum equal to the part-exchange allowance.


(3) In this regulation the part-exchange allowance means the sum agreed as such in the cancelled contract, or if no such sum was agreed, such sum as it would have been reasonable to allow in respect of the part-exchange goods if no notice of cancellation had been served.


(4) Where the consumer recovers from the supplier a sum equal to the part-exchange allowance, the title of the consumer to the part-exchange goods shall vest in the supplier (if it has not already done so) on recovery of that sum.


Performance

19. - (1) Unless the parties agree otherwise, the supplier shall perform the contract within a maximum of 30 days beginning with the day after the day the consumer sent his order to the supplier.


(2) Subject to paragraphs (7) and (8), where the supplier is unable to perform the contract because the goods or services ordered are not available, within the period for performance referred to in paragraph (1) or such other period as the parties agree ("the period for performance"), he shall -




(a) inform the consumer; and


(b) reimburse any sum paid by or on behalf of the consumer under or in relation to the contract to the person by whom it was made.



(3) The reference in paragraph (2)(b) to any sum paid on behalf of the consumer includes any sum paid by a creditor who is not the same person as the supplier under a personal credit agreement with the consumer.


(4) The supplier shall make the reimbursement referred to in paragraph (2)(b) as soon as possible and in any event within a period of 30 days beginning with the day after the day on which the period for performance expired.


(5) A contract which has not been performed within the period for performance shall be treated as if it had not been made, save for any rights or remedies which the consumer has under it as a result of the non-performance.


(6) Where any security has been provided in relation to the contract, the security (so far as it is so provided) shall, where the supplier is unable to perform the contract within the period for performance, be treated as never having had any effect and any property lodged with the supplier solely for the purposes of the security as so provided shall be returned by him forthwith.


(7) Where the supplier is unable to supply the goods or services ordered by the consumer, the supplier may perform the contract for the purposes of these Regulations by providing substitute goods or services (as the case may be) of equivalent quality and price provided that -




(a) this possibility was provided for in the contract;


(b) prior to the conclusion of the contract the supplier gave the consumer the information required by regulation 7(1)(b) and (c) in the manner required by regulation 7(2).



(8) In the case of outdoor leisure events which by their nature cannot be rescheduled, paragraph 2(b) shall not apply where the consumer and the supplier so agree.


Effect of non-performance on related credit agreement

20. Where a supplier is unable to perform the contract within the period for performance -




(a) regulations 15 and 16 shall apply to any related credit agreement as if the consumer had given a valid notice of cancellation under regulation 10 on the expiry of the period for performance; and


(b) the reference in regulation 15(3)(a) to regulation 14(1) shall be read, for the purposes of this regulation, as a reference to regulation 19(2).



Payment by card

21. - (1) Subject to paragraph (4), the consumer shall be entitled to cancel a payment where fraudulent use has been made of his payment card in connection with a contract to which this regulation applies by another person not acting, or to be treated as acting, as his agent.


(2) Subject to paragraph (4), the consumer shall be entitled to be recredited, or to have all sums returned by the card issuer, in the event of fraudulent use of his payment card in connection with a contract to which this regulation applies by another person not acting, or to be treated as acting, as the consumer's agent.


(3) Where paragraphs (1) and (2) apply, in any proceedings if the consumer alleges that any use made of the payment card was not authorised by him it is for the card issuer to prove that the use was so authorised.


(4) Paragraphs (1) and (2) shall not apply to an agreement to which section 83(1) of the Consumer Credit Act 1974 applies.


(5) Section 84 of the Consumer Credit Act 1974 (misuse of credit-tokens) is amended by the insertion after subsection (3) of -




" (3A) Subsections (1) and (2) shall not apply to any use, in connection with a distance contract (other than an excepted contract), of a card which is a credit-token.


(3B) In subsection (3A), "distance contract" and "excepted contract" have the meanings given in the Consumer Protection (Distance Selling) Regulations 2000."



(6) For the purposes of this regulation -




"card issuer" means the owner of the card; and


"payment card" includes credit cards, charge cards, debit cards and store cards.

Amendments to the Unsolicited Goods and Services Act 1971

22. - (1) The Unsolicited Goods and Services Act 1971[12] is amended as follows.


(2) Omit section 1 (rights of recipient of unsolicited goods).


(3) In subsection (1) of section 2 (demands and threats regarding payment), after "them" insert "for the purposes of his trade or business".


(4) The amendments made by this regulation apply only in relation to goods sent after the date on which it comes into force.


Amendments to the Unsolicited Goods and Services (Northern Ireland) Order 1976

23. - (1) The Unsolicited Goods and Services (Northern Ireland) Order 1976[13] is amended as follows.


(2) Omit Article 3 (rights of recipient of unsolicited goods).


(3) In paragraph (1) of Article 4 (demands and threats regarding payment), after "them" insert "for the purposes of his trade or business".


(4) The amendments made by this regulation apply only in relation to goods sent after the date on which it comes into force.


Inertia Selling

24. - (1) Paragraphs (2) and (3) apply if -




(a) unsolicited goods are sent to a person ("the recipient") with a view to his acquiring them;


(b) the recipient has no reasonable cause to believe that they were sent with a view to their being acquired for the purposes of a business; and


(c) the recipient has neither agreed to acquire nor agreed to return them.



(2) The recipient may, as between himself and the sender, use, deal with or dispose of the goods as if they were an unconditional gift to him.


(3) The rights of the sender to the goods are extinguished.


(4) A person who, not having reasonable cause to believe there is a right to payment, in the course of any business makes a demand for payment, or asserts a present or prospective right to payment, for what he knows are -




(a) unsolicited goods sent to another person with a view to his acquiring them for purposes other than those of his business, or


(b) unsolicited services supplied to another person for purposes other than those of his business,



is guilty of an offence and liable, on summary conviction, to a fine not exceeding level 4 on the standard scale.


(5) A person who, not having reasonable cause to believe there is a right to payment, in the course of any business and with a view to obtaining payment for what he knows are unsolicited goods sent or services supplied as mentioned in paragraph (4) -





(a) threatens to bring any legal proceedings, or


(b) places or causes to be placed the name of any person on a list of defaulters or debtors or threatens to do so, or


(c) invokes or causes to be invoked any other collection procedure or threatens to do so,



is guilty of an offence and liable, on summary conviction, to a fine not exceeding level 5 on the standard scale.


(6) In this regulation -




"acquire" includes hire;


"send" includes deliver;


"sender", in relation to any goods, includes -


(a) any person on whose behalf or with whose consent the goods are sent;


(b) any other person claiming through or under the sender or any person mentioned in paragraph (a); and


(c) any person who delivers the goods; and




"unsolicited" means, in relation to goods sent or services supplied to any person, that they are sent or supplied without any prior request made by or on behalf of the recipient.

(7) For the purposes of this regulation, an invoice or similar document which -




(a) states the amount of a payment, and


(b) fails to comply with the requirements of regulations made under section 3A of the Unsolicited Goods and Services Act 1971 or, as the case may be, Article 6 of the Unsolicited Goods and Services (Northern Ireland) Order 1976 applicable to it,



is to be regarded as asserting a right to the payment.


(8) Section 3A of the Unsolicited Goods and Services Act 1971 applies for the purposes of this regulation in its application to England, Wales and Scotland as it applies for the purposes of that Act.


(9) Article 6 of the Unsolicited Goods and Services (Northern Ireland) Order 1976 applies for the purposes of this regulation in its application to Northern Ireland as it applies for the purposes of that Order.


(10) This regulation applies only to goods sent and services supplied after the date on which it comes into force.


No contracting-out

25. - (1) A term contained in any contract to which these Regulations apply is void if, and to the extent that, it is inconsistent with a provision for the protection of the consumer contained in these Regulations.


(2) Where a provision of these Regulations specifies a duty or liability of the consumer in certain circumstances, a term contained in a contract to which these Regulations apply, other than a term to which paragraph (3) applies, is inconsistent with that provision if it purports to impose, directly or indirectly, an additional duty or liability on him in those circumstances.


(3) This paragraph applies to a term which requires the consumer to return any goods supplied to him under the contract if he cancels it under regulation 10.


(4) A term to which paragraph (3) applies shall, in the event of cancellation by the consumer under regulation 10, have effect only for the purposes of regulation 14(5) and 17(8).


(5) These Regulations shall apply notwithstanding any contract term which applies or purports to apply the law of a non-Member State if the contract has a close connection with the territory of a Member State.


Consideration of complaints

26. - (1) It shall be the duty of an enforcement authority to consider any complaint made to it about a breach unless -




(a) the complaint appears to the authority to be frivolous or vexatious; or


(b) another enforcement authority has notified the Director that it agrees to consider the complaint.



(2) If an enforcement authority notifies the Director that it agrees to consider a complaint made to another enforcement authority, the first mentioned authority shall be under a duty to consider the complaint.


(3) An enforcement authority which is under a duty to consider a complaint shall give reasons for its decision to apply or not to apply, as the case may be, for an injunction under regulation 27.


(4) In deciding whether or not to apply for an injunction in respect of a breach an enforcement authority may, if it considers it appropriate to do so, have regard to any undertaking given to it or another enforcement authority by or on behalf of any person as to compliance with these Regulations.


Injunctions to secure compliance with these Regulations

27. - (1) The Director or, subject to paragraph (2), any other enforcement authority may apply for an injunction (including an interim injunction) against any person who appears to the Director or that authority to be responsible for a breach.


(2) An enforcement authority other than the Director may apply for an injunction only where -




(a) it has notified the Director of its intention to apply at least fourteen days before the date on which the application is to be made, beginning with the date on which the notification was given; or


(b) the Director consents to the application being made within a shorter period.



(3) The court on an application under this regulation may grant an injunction on such terms as it thinks fit to secure compliance with these Regulations.


Notification of undertakings and orders to the Director

28. An enforcement authority other than the Director shall notify the Director -




(a) of any undertaking given to it by or on behalf of any person who appears to it to be responsible for a breach;


(b) of the outcome of any application made by it under regulation 27 and of the terms of any undertaking given to or order made by the court;


(c) of the outcome of any application made by it to enforce a previous order of the court.



Publication, information and advice

29. - (1) The Director shall arrange for the publication in such form and manner as he considers appropriate of -




(a) details of any undertaking or order notified to him under regulation 28;


(b) details of any undertaking given to him by or on behalf of any person as to compliance with these Regulations;


(c) details of any application made by him under regulation 27, and of the terms of any undertaking given to, or order made by, the court;


(d) details of any application made by the Director to enforce a previous order of the court.



(2) The Director may arrange for the dissemination in such form and manner as he considers appropriate of such information and advice concerning the operation of these Regulations as it may appear to him to be expedient to give to the public and to all persons likely to be affected by these Regulations.



Helen Liddell

Minister of State, Department of Trade and Industry


31st August 2000






SCHEDULE 1

Regulation 3




Indicative list of means of distance communication



1. Unaddressed printed matter.


2. Addressed printed matter.


3. Letter.


4. Press advertising with order form.


5. Catalogue.


6. Telephone with human intervention.


7. Telephone without human intervention (automatic calling machine, audiotext).


8. Radio.


9. Videophone (telephone with screen).


10. Videotext (microcomputer and television screen) with keyboard or touch screen.


11. Electronic mail.


12. Facsimile machine (fax).


13. Television (teleshopping).





SCHEDULE 2

Regulation 5(1)(c)




Non-exhaustive list of financial services



1. Investment services.


2. Insurance and reinsurance operations.


3. Banking services.


4. Services relating to dealings in futures or options.


Such services include in particular:



- investment services referred to in the Annex to Directive 93/22/EEC[14]; services of collective investment undertakings;


- services covered by the activities subject to mutual recognition referred to in the Annex to Directive 89/846/EEC[15];


- operations covered by the insurance and reinsurance activities referred to in:


- Article 1 of Directive 73/239/EEC[16]; - the Annex to Directive 79/267/EEC[17]; - Directive 64/225/EEC[18]; - Directives 92/49/EEC[19] and 92/96/EEC[20].





--------------------------------------------------------------------------------


EXPLANATORY NOTE


(This note is not part of the Regulations)



These Regulations implement Directive 97/7/EC of the European Parliament and the Council of 20 May 1997 (O.J. No. L144, 4.6.97, p.19) on the protection of consumers in relation to distance contracts, with the exception of Article 10.


The Regulations apply to contracts for goods or services to be supplied to a consumer where the contract is made exclusively by means of distance communication, that is any means used without the simultaneous physical presence of the consumer and the supplier (regulations 3 and 4). Schedule 1 contains an indicative list of means of distance communication.


The Regulations do not apply to those distance contracts excluded by regulation 5(1), such as contracts relating to the supply of financial services.


The Regulations have limited application to contracts for the supply of groceries by regular delivery and contracts for the provision of accommodation, transport, catering or leisure services (regulation 6).


The Regulations require the supplier to provide the consumer with the information referred to in regulation 7 prior to the conclusion of the contract. This includes information on the right to cancel the distance contract, the main characteristics of the goods or services, and delivery costs where appropriate.


Regulation 8 requires the supplier to confirm in writing, or another durable medium which is available and accessible to the consumer, information already given and to give some additional information, including information on the conditions and procedures relating to the exercise of the right to cancel the contract. Regulation 8(3) requires the supplier to inform the consumer prior to conclusion of a contract for services that he will not be able to cancel once performance of the service has begun with his agreement.


Where the Regulations apply, they provide a "cooling off period" to enable the consumer to cancel the contract by giving notice of cancellation to the supplier. The effect of giving notice of cancellation under the Regulations is that the contract is treated as if it had not been made.


Where the supplier supplies the information to the consumer on time, the cooling-off period is 7 working days from the day after the date of the contract, in the case of services, or from the day after the date of delivery of the goods.


Where the supplier fails to comply with the information requirement at all, the cooling-off period is extended by 3 months.


Where the supplier complies with the information requirement later than he should have done but within 3 months the cooling-off begins from the date he provided the information (regulations 10-12).


Certain contracts are excluded from the right to cancel unless the parties agree otherwise, such as a contract for the supply of goods made to the consumer's specifications (regulation 13).


If the consumer cancels, the consumer must be reimbursed within a maximum period of 30 days (regulation 14). Where the consumer cancels the contract, any related credit agreement is automatically cancelled (regulation 15).


Regulation 17 provides that on cancellation of the contract the consumer is under a duty to restore goods to the supplier if he collects them and in the meantime to take reasonable care of them. The Regulations do not require the consumer to return goods but if he is required to under the contract and does not do so, he must pay the cost to the supplier of recovering them.


The Regulations provide that the contract must be performed within 30 days subject to agreement between the parties. However, where the supplier is not able to provide the goods or service ordered, substitutes may be offered if certain conditions are met (regulation 19).


The Regulations provide that where the consumer's payment card is used fraudulently in connection with a distance contract the consumer will be entitled to cancel the payment. If the payment has already been made the consumer will be entitled to a re-credit or to have all sums returned by the card issuer. The Regulations amend the Consumer Credit Act 1974 by removing the potential liability of the debtor under a regulated consumer credit agreement for the first £50 of loss to the creditor from misuse of a credit-token in connection with a distance contract.


The Regulations prohibit the supply of unsolicited goods and services to consumers. Regulation 24 replaces with amendments section 1 of the Unsolicited Goods and Services Act 1971 and Article 3 of the Unsolicited Goods and Services (Northern Ireland) Order 1976. It also creates an offence in similar terms to section 2 of the 1971 Act but extended to the supply of unsolicited services and limited to supply to consumers. The scope of section 2 of the 1971 Act and Article 4 of the 1976 Order (which apply only to goods) is amended to restrict their application to the unsolicited supply of goods to businesses.


The Director General of Fair Trading, Trading Standards Departments in Great Britain and the Department of Enterprise, Trade and Investment in Northern Ireland are enforcement authorities for the purposes of the Regulations. Regulation 26 provides that an enforcement authority must consider complaints about a breach of the requirements of the Regulations. Those bodies are given the power to take proceedings for an injunction against a business to prevent further breaches (regulation 27).


A Regulatory Impact Assessment is available, copies of which have been placed in the libraries of both Houses of Parliament. Copies are also available from the Consumer Affairs Directorate of the Department of Trade and Industry, Room 415, 1 Victoria Street, London SW1H 0ET.



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Notes:


[1] S.I. 1993/2661.back

[2] 1972 c. 68.back


[3] S.I. 1976/1812.back


[4] Directive 97/7/EC was added to Annex XIX to the EEA Agreement by Decision No. 15/98 of the EEA joint Committee which came into force on 1 July 2000 (O.J. No L272, 8.10.98, p.99).back


[5] 1989 c. 34.back


[6] 1995 c. 7.back


[7] 1695 c. 12(1).back


[8] 1992 c. 35.back


[9] S.I. 1992/3288.back


[10] S.I. 1999/2083.back


[11] 1974 c. 39.back


[12] 1971 c. 30.back


[13] S.I. 1976/57 (N.I.1).back


[14] O.J. No. L141, 11.06.1993, p.27.back


[15] O.J. No. L386, 30.12.1989, p.1, to which there are amendments not relevant to these Regulations.back


[16] O.J. No. L228, 16.08.1973, p.3. Relevant amending instruments are Council Directive 84/641/EEC (O.J. No. L339, 27.12.84, p.21); Council Directive 87/343/EEC (O.J. No. L185, 4.7.87, p.72); Council Directive 87/344/EEC (O.J. No. L185, 4.7.87, p.77); Council Directive 90/618/EEC (O.J. No. L330, 29.11.90, p.44); Council Directive 92/49/EC (O.J. No. L228, 11.8.92, p.1.).back


[17] O.J. No. L63, 13.03.1979, p.1, to which there are amendments not relevant to these Regulations.back


[18] O.J. No. L56, 04.04.1964, p.878/64 (O.J./S.E. 1st series 1963-64 p.131), to which there are amendments not relevant to these Regulations.back


[19] O.J. No. L228, 11.08.1992, p.1.back


[20] O.J. No. L360, 09.12.1992, p.1.back

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Statutory Instrument 1987 No. 2117

The Consumer Protection (Cancellation of Contracts Concluded away from Business Premises) Regulations 1987

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© Crown Copyright 1987


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STATUTORY INSTRUMENTS

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1987 No. 2117


CONSUMER PROTECTION


The Consumer Protection (Cancellation of Contracts Concluded away from Business Premises) Regulations 1987


Made 7th December 1987

Laid before Parliament 16th December 1987

Coming into force 1st July 1988



The Secretary of State, being a Minister designated[1] for the purposes of section 2(2) of the European Communities Act 1972[2] in relation to matters of consumer protection in respect of contracts negotiated away from business premises of the trader, in exercise of the powers conferred on him by that section and of all other powers enabling him in that behalf, hereby makes the following Regulations:

Citation and commencement

1. These Regulations may be cited as the Consumer Protection (Cancellation of Contracts Concluded away from Business Premises) Regulations 1987 and shall come into force on 1st July 1988.

Interpretation

2.—(1) In these Regulations-

"business" includes a trade or profession;

"consumer" means a person, other than a body corporate, who, in making a contract to which these Regulations apply, is acting for purposes which can be regarded as outside his business;

"goods" has the meaning given by section 61(1) of the Sale of Goods Act 1979[3];

"land mortgage" includes any security charged on land and in relation to Scotland includes any heritable security;

"notice of cancellation" has the meaning given by regulation 4(5) below;

"security" in relation to a contract means a mortgage, charge, pledge, bond, debenture, indemnity, guarantee, bill, note or other right provided by the consumer, or at his request (express or implied), to secure the carrying out of his obligations under the contract;

"signed" has the same meaning as in the Consumer Credit Act 1974[4]; and

"trader" means a person who, in making a contract to which these Regulations apply, is acting for the purposes of his business, and anyone acting in the name or on behalf of such a person.



(2) In Scotland any provision in these Regulations requiring a document to be signed shall be complied with by a body corporate if the document is properly executed in accordance with the law of Scotland.


Contracts to which the Regulations apply

3.—(1) These Regulations apply to a contract, other than an excepted contract, for the supply by a trader of goods or services to a consumer which is made—

(a) during an unsolicited visit by a trader-

(i) to the consumer's home or to the home of another person; or

(ii) to the consumer's place of work;

(b) during a visit by a trader as mentioned in paragraph (a)(i) or (ii) above at the express request of the consumer where the goods or services to which the contract relates are other than those concerning which the consumer requested the visit of the trader, provided that when the visit was requested the consumer did not know, or could not reasonably have known, that the supply of those other goods or services formed part of the trader's business activities;

(c) after an offer was made by the consumer in respect of the supply by a trader of the goods or services in the circumstances mentioned in paragraph (a) or (b) above or (d) below; or

(d) during an excursion organised by the trader away from premises on which he is carrying on any business (whether on a permanent or temporary basis).


(2) For the purposes of this regulation an excepted contract means

(a) any contract-

(i) for the sale or other disposition of land, or for a lease or land mortgage;

(ii) to finance the purchase of land;

(iii) for a bridging loan in connection with the purchase of land; or

(iv) for the construction or extension of a building or other erection on land:

Provided that these Regulations shall apply to a contract for the supply of goods and their incorporation in any land or a contract for the repair or improvement of a building or other erection on land, where the contract is not financed by a loan secured by a land mortgage;

(b) any contract for the supply of food, drink or other goods intended for current consumption by use in the household and supplied by regular roundsmen;

(c) any contract for the supply of goods or services which satisfies all the following conditions, namely-

(i) terms of the contract are contained in a trader's catalogue which is readily available to the consumer to read in the absence of the trader or his representative before the conclusion of the contract;

(ii) the parties to the contract intend that there shall be maintained continuity of contact between the trader or his representative and the consumer in relation to the transaction in question or any subsequent transaction; and

(iii) both the catalogue and the contract contain or are accompanied by a prominent notice indicating that the consumer has a right to return to the trader or his representative goods supplied to him within the period of not less than 7 days from the day on which the goods are received by the consumer and otherwise to cancel the contract within that period without the consumer incurring any liability, other than any liability which may arise from the failure of the consumer to take reasonable care of the goods while they are in his possession;

(d) contracts of insurance to which the Insurance Companies Act 1982[5] applies;

(e) investment agreements within the meaning of the Financial Services Act 1986[6], and agreements for the making of deposits within the meaning of the Banking Act 1987[7] in respect of which Regulations have been made for regulating the making of unsolicited calls under section 34 of that Act;

(f) any contract not falling within sub-paragraph (g) below under which the total payments to be made by the consumer do not exceed £35; and

(g) any contract under which credit within the meaning of the Consumer Credit Act 1974 is provided not exceeding £35 other than a hire-purchase or conditional sale agreement.


(3) In this regulation "unsolicited visit" means a visit by a trader, whether or not he is the trader who supplies the goods or services, which does not take place at the express request of the consumer and includes a visit which takes place after a trader telephones the consumer (otherwise than at his express request) indicating expressly or by implication that he is willing to visit the consumer.


Cancellation of Contract

4.—(1) No contract to which these Regulations apply shall be enforceable against the consumer unless the trader has delivered to the consumer notice in writing in accordance with paragraphs (3) and (4) below indicating the right of the consumer to cancel the contract within the period of 7 days mentioned in paragraph (5) below containing both the information set out in Part I of the Schedule to these Regulations and a Cancellation Form in the form set out in Part II of the Schedule and completed in accordance with the footnotes.


(2) Paragraph (1) above does not apply to a cancellable agreement within the meaning of the Consumer Credit Act 1974 or to an agreement which may be cancelled by the consumer in accordance with terms of the agreement conferring upon him similar rights as if the agreement were such a cancellable agreement.


(3) The information to be contained in the notice under paragraph (1) above shall be easily legible and if incorporated in the contract or other document shall be afforded no less prominence than that given to any other information in the document apart from the heading to the document and the names of the parties to the contract and any information inserted in handwriting.


(4) The notice shall be dated and delivered to the consumer-

(a) in the cases mentioned in regulation 3(1)(a), (b) and (d) above, at the time of the making of the contract; and

(b) in the case mentioned in regulation 3(1)(c) above, at the time of the making of the offer by the consumer.


(5) If within the period of 7 days following the making of the contract the consumer serves a notice in writing (a "notice of cancellation") on the trader or any other person specified in a notice referred to in paragraph (1) above as a person to whom notice of cancellation may be given which, however expressed and whether or not conforming to the cancellation form set out in Part II of the Schedule to these Regulations, indicates the intention of the consumer to cancel the contract, the notice of cancellation shall operate to cancel the contract.


(6) Except as otherwise provided under these Regulations, a contract cancelled under paragraph (5) above shall be treated as if it had never been entered into by the consumer.


(7) Notwithstanding anything in section 7 of the Interpretation Act 1978[8], a notice of cancellation sent by post by a consumer shall be deemed to have been served at the time of posting, whether or not it is actually received.


Recovery of money paid by consumer

5.—(1) Subject to regulation 7(2) below, on the cancellation of a contract under regulation 4 above, any sum paid by or on behalf of the consumer under or in contemplation of the contract shall become repayable.


(2) If under the terms of the cancelled contract the consumer or any person on his behalf is in possession of any goods, he shall have a lien on them for any sum repayable to him under paragraph (1) above.


(3) Where any security has been provided in relation to the cancelled contract, the security, so far as it is so provided, shall be treated as never having had effect and any property lodged with the trader solely for the purposes of the security as so provided shall be returned by him forthwith.


Repayment of credit

6.—(1) Notwithstanding the cancellation of a contract under regulation 4 above under which credit is provided, the contract shall continue in force so far as it relates to repayment of credit and payment of interest.


(2) If, following the cancellation of the contract, the consumer repays the whole or a portion of the credit-

(a) before the expiry of one month following service of the notice of cancellation, or

(b) in the case of a credit repayable by instalments, before the date on which the first instalment is due,

no interest shall be payable on the amount repaid.


(3) If the whole of a credit repayable by instalments is not repaid on or before the date specified in paragraph (2)(b) above, the consumer shall not be liable to repay any of the credit except on receipt of a request in writing signed by the trader stating the amounts of the remaining instalments (recalculated by the trader as nearly as may be in accordance with the contract and without extending the repayment period), but excluding any sum other than principal and interest.


(4) Repayment of a credit, or payment of interest, under a cancelled contract shall be treated as duly made if it is made to any person on whom, under regulation 4(5) above, a notice of cancellation could have been served.


(5) Where any security has been provided in relation to the contract, the duty imposed on the consumer by this regulation shall not be enforceable before the trader has discharged any duty imposed on him by regulation 5(3) above.


(6) In this regulation, the expression "credit" has the same meaning as in the Consumer Credit Act 1974.


Return of goods by consumer after cancellation

7.—(1) Subject to paragraph (2) below, a consumer who has before cancelling a contract under regulation 4 above acquired possession of any goods by virtue of the contract shall be under a duty, subject to any lien, on the cancellation to restore the goods to the trader in accordance with this regulation, and meanwhile to retain possession of the goods and take reasonable care of them.


(2) The consumer shall not be under a duty to restore-

(i) perishable goods;

(ii) goods which by their nature are consumed by use and which, before the cancellation, were so consumed;

(iii) goods supplied to meet an emergency; or

(iv) goods which, before the cancellation, had become incorporated in any land or thing not comprised in the cancelled contract,

but he shall be under a duty to pay in accordance with the cancelled contract for the supply of the goods and for the provision of any services in connection with the supply of the goods before the cancellation.

(3) The consumer shall not be under any duty to deliver the goods except at his own premises and in pursuance of a request in writing signed by the trader and served on the consumer either before, or at the time when, the goods are collected from those premises.


(4) If the consumer-

(i) delivers the goods (whether at his own premises or elsewhere) to any person on whom, under regulation 4(5) above, a notice of cancellation could have been served; or

(ii) sends the goods at his own expense to such a person,

he shall be discharged from any duty to retain possession of the goods or restore them to the trader.

(5) Where the consumer delivers the goods as mentioned in paragraph (4)(i) above, his obligation to take care of the goods shall cease; and if he send the goods as mentioned in paragraph (4)(ii) above, he shall be under a duty to take reasonable care to see that they are received by the trader and not damaged in transit, but in other respects his duty to take care of the goods shall cease.


(6) Where, at any time during the period of 21 days following the cancellation, the consumer receives such a request as is mentioned in paragraph (3) above and unreasonably refuses or unreasonably fails to comply with it, his duty to retain possession and take reasonable care of the goods shall continue until he delivers or sends the goods as mentioned in paragraph (4) above, but if within that period he does not receive such a request his duty to take reasonable care of the goods shall cease at the end of that period.


(7) Where any security has been provided in relation to the cancelled contract, the duty imposed on the consumer to restore goods by this regulation shall not be enforceable before the trader has discharged any duty imposed on him by regulation 5(3) above.


(8) Breach of a duty imposed by this regulation on a consumer is actionable as a breach of statutory duty.


Goods given in part-exchange

8.—(1) This regulation applies on the cancellation of a contract under regulation 4 above where the trader agreed to take goods in part-exchange (the "part-exchange goods") and those goods have been delivered to him.


(2) Unless, before the end of the period of ten days beginning with the date of cancellation, the part-exchange goods are returned to the consumer in a condition substantially as good as when they were delivered to the trader, the consumer shall be entitled to recover from the trader a sum equal to the part-exchange allowance.


(3) During the period of ten days beginning with the date of cancellation, the consumer, if he is in possession of goods to which the cancelled contract relates, shall have a lien on them for-

(a) delivery of the part-exchange goods in a condition substantially as good as when they were delivered to the trader; or

(b) a sum equal to the part-exchange allowance;

and if the lien continues to the end of that period it shall thereafter subsist only as a lien for a sum equal to the part-exchange allowance.


(4) In this regulation the part-exchange allowance means the sum agreed as such in the cancelled contract, or if no such sum was agreed, such sum as it would have been reasonable to allow in respect of the part-exchange goods if no notice of cancellation had been served.


Amendment of the Consumer Credit Act 1974

9. After section 74(2) there shall be added the following subsection:-

" (2A) In the case of an agreement to which the Consumer Protection (Cancellation of Contracts Concluded away from Business Premises) Regulations 1987 apply the reference in subsection (2) to a small agreement shall be construed as if in section 17(1) (a) and (b) "£35" were substituted for "£50"." .


No contracting-out

10.—(1) A term contained in a contract to which these Regulations apply is void if, and to the extent that, it is inconsistent with a provision for the protection of the consumer contained in these Regulations.


(2) Where a provision of these Regulations specifies the duty or liability of the consumer in certain circumstances a term contained in a contract to which these Regulations apply is inconsistent with that provision if it purports to impose, directly or indirectly, an additional duty or liability on him in those circumstances.


Service of documents

11.—(1) A document to be served under these Regulations on a person may be so served-

(a) by delivering it to him, or by sending it by post to him, or by leaving it with him, at his proper address addressed to him by name;

(b) if the person is a body corporate, by serving it in accordance with paragraph (a) above on the secretary or clerk of that body; or

(c) if the person is a partnership, by serving it in accordance with paragraph (a) above on a partner or on a person having the control or management of the partnership business.


(2) For the purposes of these Regulations, a document sent by post to, or left at, the address last known to the server of the document as the address of a person shall be treated as sent by post to, or left at, his proper address.




Francis Maude


Parliamentary Under-Secretary of State, Department of Trade and Industry


7th December 1987








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Notes:



[1] S.I. 1986/947. back


[2] 1972 c. 68. back


[3] 1979 c. 54. back


[4] 1974 c. 39; the sums mentioned in section 17 were amended by S.I. 1983/1878. back


[5] 1982 c. 50. back


[6] 1986 c. 60. back


[7] 1987 c. 22. back


[8] 1978 c. 30. back

Explanatory Note

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_________________________________________________________

SALE OF GOODS ACT 1979 as amended to 2003

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PART I CONTRACTS TO WHICH ACT APPLIES


1. Contracts to which Act applies

(1) This Act applies to contracts of sale of goods made on or after (but not to those made before) 1 January 1894.

(2) In relation to contracts made on certain dates, this Act applies subject to the modification of certain of its sections as mentioned in Schedule 1 below.

(3) Any such modification is indicated in the section concerned by a reference to Schedule 1 below.

(4) Accordingly, where a section does not contain such a reference, this Act applies in relation to the contract concerned without such modification of the section.

PART II FORMATION OF THE CONTRACT

Contract of sale

2. Contract of sale

(1) A contract of sale of goods is a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price.

(2) There may a contract of sale between one part owner and another.

(3) A contract of sale may be absolute or conditional.

(4) Where under a contract of sale the property in the goods is transferred from the seller to the buyer the contact is called a sale.

(5) Where under a contract of sale the transfer of the property in the goods is to take place at a future time or subject to some condition later to be fulfilled the contract is called an agreement to sell.

(6) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred.

3. Capacity to buy and sell

(1) Capacity to buy and sell is regulated by the general law concerning capacity to contract and to transfer and acquire property.

(2) Where necessaries are sold and delivered to a minor or to a person who by reason of mental incapacity or drunkenness is incompetent to contract, he must pay a reasonable price for them.

(3) In subsection (2) above 'necessaries' means goods suitable to the condition in life of the minor or other person concerned and to his actual requirements at the time of the sale and delivery.

Formalities of contract

4. How contract of sale is made

(1) Subject to this and any other Act, a contract of sale may be made in writing (either with or without seal), or by word of mouth, or partly in writing and partly by word of mouth, or may be implied from the conduct of the parties.

(2) Nothing in this section affects the law relating to corporations.

Subject matter of contract

5. Existing or future goods

(1) The goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the seller, or goods to be manufactured or acquired by him after the making of the contract of sale, in this Act called future goods.

(2) There may be a contract for the sale of goods the acquisition of which by the seller depends on a contingency which may or may not happen.

(3) Where by a contract of sale the seller purports to effect a present sale of future goods, the contract operates as an agreement to sell the goods.

6. Goods which have perished

Where there is a contract for the sale of specific goods, and the goods without the knowledge of the seller have perished at the time when a contract is made, the contract is void.

7. Goods perishing before sale but after agreement to sell

Where there is an agreement to sell specific goods and subsequently the goods, without any fault on the part of the seller or buyer, perish before the risk passes to the buyer, the agreement is avoided.

The price

8. Ascertainment of price

(1) The price in a contract of sale may be fixed by the contract, or may be left to be fixed in a manner agreed by the contract, or may be determined by the course of dealing between the parties.

(2) Where the price is not determined as mentioned in subsection (1) above the buyer must pay a reasonable price.

(3) What is a reasonable price is a question of fact dependent on the circumstances of each particular case.

9. Agreement to sell at valuation

(1) Where there is an agreement to sell goods on the terms that the price is to be fixed by the valuation of a third party, and he cannot or does not make the valuation, the agreement is avoided; but if the goods or any part of them have been delivered to and appropriated by the buyer he must pay a reasonable price for them.

(2) Where the third party is prevented from making the valuation by the fault of the seller or buyer, the party not at fault may maintain an action for damages against the party at fault.

Implied terms etc.

10. Stipulations about time

(1) Unless a different intention appears from the terms of the contract, stipulations as to time of payment are not of the essence of a contract of sale.

(2) Whether any other stipulation as to time is or is not of the essence of the contract depends on the terms of the contract.

(3) In a contract of sale 'month' prima facie means calendar month.

11. When condition to be treated as warranty

(1) This section does not apply to Scotland.

(2) Where a contract of sale is subject to a condition to be fulfilled by the seller, the buyer may waive the condition, or may elect to treat the breach of the condition as a breach of warranty and not as a ground for treating the contract as repudiated.

(3) Whether a stipulation in a contract of sale is a condition, the breach of which may give rise to a right to treat the contract as repudiated, or a warranty, the breach of which may give rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated, depends in each case on the construction of the contract; and a stipulation may be a condition, though called a warranty in the contract.

(4) Subject to section 35A below where a contract of sale is not severable and the buyer has accepted the goods or part of them, the breach of a condition to be fulfilled by the seller can only be treated as a breach of warranty, and not as a ground for rejecting the goods and treating the contract as repudiated, unless there is an express or implied term of the contract to that effect.

(6) Nothing in this section affects a condition or warranty whose fulfilment is excused by law by reason of impossibility or otherwise.

(7) Paragraph 2 of Schedule 1 below applies in relation to a contract made before 22 April 1967 or (in the application of this Act to Northern Ireland) 28 July 1967.

12. Implied terms about title, etc.

(1) In a contract of sale, other than one to which subsection (3) below applies, there is an implied term on the part of the seller that in the case of a sale he has a right to sell the goods, and in the case of an agreement to sell he will have such a right at the time when the property is to pass.

(2) In a contract of sale, other than one to which subsection (3) below applies, there is also an implied term that—

(a) the goods are free, and will remain free until the time when the property is to pass, from any charge or encumbrance not disclosed or known to the buyer before the contract is made, and

(b) the buyer will enjoy quiet possession of the goods except so far as it may be disturbed by the owner or other person entitled to the benefit of any charge or encumbrance so disclosed or known.

(3) This subsection applies to a contract of sale in the case of which there appears from the contract or is to be inferred from its circumstances an intention that the seller should transfer only such title as he or a third person may have.

(4) In a contract to which subsection (3) above applies there is an implied term that all charges or encumbrances known to the seller and not known to the buyer have been disclosed to the buyer before the contract is made.

(5) In a contract to which subsection (3) above applies there is also an implied term that none of the following will disturb the buyer's quiet possession of the goods, namely—

(a) the seller;

(b) in a case where the parties to the contract intend that the seller should transfer only such title as a third person may have, that person;

(c) anyone claiming through or under the seller or that third person otherwise than under a charge or encumbrance disclosed or known to the buyer before the contract is made.

(5A) As regards England and Wales and Northern Ireland, the term implied by subsection (1) above is a condition and the terms implied by subsections (2), (4) and (5) above are warranties.

(6) Paragraph 3 of Schedule 1 below applies in relation to a contract made before 18 May 1973.

13. Sale by description

(1) Where there is a contract for the sale of goods by description, there is an implied term that the goods will correspond with the description.

(1A) As regards England and Wales and Northern Ireland, the term implied by subsection (1) above is a condition.

(2) If the sale is by sample as well as by description it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description.

(3) A sale of goods is not prevented from being a sale by description by reason only that, being exposed for sale or hire, they are selected by the buyer.

(4) Paragraph 4 of Schedule 1 below applies in relation to a contract made before 18 May 1973.

14. Implied terms about quality or fitness

(1) Except as provided by this section and section 15 below and subject to any other enactment, there is no implied term about the quality or fitness for any particular purpose of goods supplied under a contract of sale.

(2) Where the seller sells goods in the course of a business, there is an implied term that the goods supplied under the contract are of satisfactory quality.

(2A) For the purposes of this Act, goods are of satisfactory quality if they meet the standard that 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.

(2B) For the purposes of this Act, the quality of goods includes their state and condition and the following (among others) are in appropriate cases aspects of the quality of goods—

(a) fitness for all the purposes for which goods of the kind in question are commonly supplied,

(b) appearance and finish,

(c) freedom from minor defects,

(d) safety, and

(e) durability.

(2C) The term implied by subsection (2) above does not extend to any matter making the quality of goods unsatisfactory—

(a) which is specifically drawn to the buyer's attention before the contract is made,

(b) where the buyer examines the goods before the contract is made, which that examination ought to reveal, or

(c) in the case of a contract for sale by sample, which would have been apparent on a reasonable examination of the sample.

(2D) If the buyer deals as consumer or, in Scotland, if a contract of sale is a consumer contract, the relevant circumstances mentioned in subsection (2A) above include any public statements on the specific characteristics of the goods made about them by the seller, the producer or his representative, particularly in advertising or on labelling.

(2E) A public statement is not by virtue of subsection (2D) above a relevant circumstance for the purposes of subsection (2A) above in the case of a contract of sale, if the seller shows that—

(a) at the time the contract was made, he was not, and could not reasonably have been, aware of the statement,

(b) before the contract was made, the statement had been withdrawn in public or, to the extent that it contained anything which was incorrect or misleading, it had been corrected in public, or

(c) the decision to buy the goods could not have been influenced by the statement.

(2F) Subsections (2D) and (2E) above do not prevent any public statement from being a relevant circumstance for the purposes of subsection (2A) above (whether or not the buyer deals as consumer or, in Scotland, whether or not the contract of sale is a consumer contract) if the statement would have been such a circumstance apart from those subsections.

(3) Where the seller sells goods in the course of a business and the buyer, expressly or by implication, makes known—

(a) to the seller, or

(b) where the purchase price of part of it is payable by instalments and the goods were previously sold by a credit-broker to the seller, to that credit-broker,

any particular purpose for which the goods are being bought, there is an implied term that the goods supplied under the contract are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, on the skill or judgment of the seller or credit-broker.

(4) An implied term about quality or fitness for a particular purpose may be annexed to a contract of sale by usage.

(5) The preceding provisions of this section apply to a sale by a person who in the course of a business is acting as agent for another as they apply to a sale by a principal in the course of a business, except where that other is not selling in the course of a business and either the buyer knows that fact or reasonable steps are taken to bring it to the notice of the buyer before the contract is made.

(6) As regards England and Wales and Northern Ireland, the terms implied by subsections (2) and (3) above are conditions.

(7) Paragraph 5 of Schedule 1 below applies in relation to a contract made on or after 18 May 1973 and before the appointed day, and paragraph 6 in relation to one made before 18 May 1973.

(8) In subsection (7) above and paragraph 5 of Schedule 1 below references to the appointed day are to the day appointed for the purposes of those provisions by an order of the Secretary of State made by statutory instrument.

Sale by sample

15. Sale by sample

(1) A contract of sale is a contract for sale by sample where there is an express or implied term to that effect in the contract.

(2) In the case of a contract for sale by sample there is an implied term—

(a) that the bulk will correspond with the sample in quality;

(c) that the goods will be free from any defect, making their quality unsatisfactory, which would not be apparent on reasonable examination of the sample.

(3) As regards England and Wales and Northern Ireland, the term implied by subsection (2) above is a condition.

(4) Paragraph 7 of Schedule 1 below applies in relation to a contract made before 18 May 1973.

Miscellaneous

15A. Modification of remedies for breach of condition in non-consumer cases

(1) Where in the case of a contract of sale—

(a) the buyer would, apart from this subsection, have the right to reject goods by reason of a breach on the part of the seller of a term implied by section 13, 14 or 15 above, but

(b) the breach is so slight that it would be unreasonable for him to reject them,

then, if the buyer does not deal as consumer, the breach is not to be treated as a breach of condition but may be treated as a breach of warranty.

(2) This section applies unless a contrary intention appears in, or is to be implied from, the contract.

(3) It is for the seller to show that a breach fell within subsection (1)(b) above.

(4) This section does not apply to Scotland.

PART III EFFECTS OF THE CONTRACT

Transfer of property as between seller and buyer

16. Goods must be ascertained

Subject to section 20A below where there is a contract for the sale of unascertained goods no property in the goods is transferred to the buyer unless and until the goods are ascertained.

17. Property passes when intended to pass

(1) Where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred.

(2) For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract, the conduct of the parties and the circumstances of the case.

18. Rules for ascertaining intention

Unless a different intention appears, the following are rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer.

Rule 1.—Where there is an unconditional contract for the sale of specific goods in a deliverable state the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment or the time of delivery, or both, be postponed.

Rule 2.—Where there is a contract for the sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them into a deliverable state, the property does not pass until the thing is done and the buyer has notice that it has been done.

Rule 3.—Where there is a contract for the sale of specific goods in a deliverable state but the seller is bound to weigh, measure, test, or do some other act or thing with reference to the goods for the purpose of ascertaining the price, the property does not pass until the act or thing is done and the buyer has notice that it has been done.

Rule 4.—When goods are delivered to the buyer on approval or on sale or return or other similar terms the property in the goods passes to the buyer:—

(a) when he signifies his approval or acceptance to the seller or does any other act adopting the transaction;

(b) if he does not signify his approval or acceptance to the seller but retains the goods without giving notice of rejection, then, if a time has been fixed for the return of the goods, on the expiration of that time, and, if no time has been fixed, on the expiration of a reasonable time.

Rule 5.—(1) Where there is a contract for the sale of unascertained or future goods by description, and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods then passes to the buyer; and the assent may be express or implied, and may be given either before of after the appropriation is made.

(2) Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee or custodier (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is to be taken to have unconditionally appropriated the goods to the contract.

(3) Where there is a contract for the sale of a specified quantity of unascertained goods in a deliverable state forming part of a bulk which is identified either in the contract or by subsequent agreement between the parties and the bulk is reduced to (or to less than) that quantity, then, if the buyer under that contract is the only buyer to whom goods are then due out of the bulk—

(a) the remaining goods are to be taken as appropriated to that contract at the time when the bulk is so reduced; and

(b) the property in those goods then passes to that buyer.

(4) Paragraph (3) above applies also (with the necessary modifications) where a bulk is reduced to (or to less than) the aggregate of the quantities due to a single buyer under separate contracts relating to that bulk and he is the only buyer to whom goods are then due out of that bulk.

19. Reservation of right of disposal

(1) Where there is a contract for the sale of specific goods or where goods are subsequently appropriated to the contract, the seller may, by the terms of the contract or appropriation, reserve the right of disposal of the goods until certain conditions are fulfilled; and in such a case, notwithstanding the delivery of the goods to the buyer, or to a carrier or other bailee or custodier for the purpose of transmission to the buyer, the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled.

(2) Where goods are shipped, and by the bill of lading the goods are deliverable to the order of the seller or his agent, the seller is prima facie to be taken to reserve the right of disposal.

(3) Where the seller of goods draws on the buyer for the price, and transmits the bill of exchange and bill of lading to the buyer together to secure acceptance or payment of the bill of exchange, the buyer is bound to return the bill of lading if he does not honour the bill of exchange, and if he wrongfully retains the bill of lading the property in the goods does not pass to him.

20. Passing of Risk

(1) Unless otherwise agreed, the goods remain at the seller's risk until the property in them is transferred to the buyer, but when the property in them is transferred to the buyer the goods are at the buyer's risk whether delivery has been made or not.

(2) But where delivery has been delayed through the fault of either buyer or seller the goods are at the risk of the party at fault as regards any loss which might not have occurred but for such fault.

(3) Nothing in this section affects the duties or liabilities of either seller or buyer as a bailee or custodier of the goods of the other party.

(4) In a case where the buyer deals as consumer or, in Scotland, where there is a consumer contract in which the buyer is a consumer, subsections (1) to (3) above must be ignored and the goods remain at the seller’s risk until they are delivered to the consumer.

20A Undivided shares in goods forming part of a bulk

(1) This section applies to a contract for the sale of a specified quantity of unascertained goods if the following conditions are met—

(a) the goods or some of them form part of a bulk which is identified either in the contract or by subsequent agreement between the parties; and

(b) the buyer has paid the price for some or all of the goods which are the subject of the contract and which form part of the bulk.

(2) Where this section applies, then (unless the parties agree otherwise), as soon as the conditions specified in paragraphs (a) and (b) of subsection (1) above are met or at such later time as the parties may agree—

(a) property in an undivided share in the bulk is transferred to the buyer, and

(b) the buyer becomes an owner in common of the bulk.

(3) Subject to subsection (4) below, for the purposes of this section, the undivided share of a buyer in a bulk at any time shall be such share as the quantity of goods paid for and due to the buyer out of the bulk bears to the quantity of goods in the bulk at that time.

(4) Where the aggregate of the undivided shares of buyers in a bulk determined under subsection (3) above would at any time exceed the whole of the bulk at that time, the undivided share in the bulk of each buyer shall be reduced proportionately so that the aggregate of the undivided shares is equal to the whole bulk.

(5) Where a buyer has paid the price for only some of the goods due to him out of a bulk, any delivery to the buyer out of the bulk shall, for the purposes of this section, be ascribed in the first place to the goods in respect of which payment has been made.

(6) For the purposes of this section payment of part of the price for any goods shall be treated as payment for a corresponding part of the goods.

20B Deemed consent by co-owner to dealings in bulk goods

(1) A person who has become an owner in common of a bulk by virtue of section 20A above shall be deemed to have consented to—

(a) any delivery of goods out of the bulk to any other owner in common of the bulk, being goods which are due to him under

his contract;

(b) any dealing with or removal, delivery or disposal of goods in the bulk by any other person who is an owner in common of the bulk in so far as the goods fall within that co-owner's undivided share in the bulk at the time of the dealing, removal, delivery or disposal.

(2) No cause of action shall accrue to anyone against a person by reason of that person having acted in accordance with paragraph (a) or (b) of subsection (1) above in reliance on any consent deemed to have been given under that subsection.

(3) Nothing in this section or section 20A above shall—

(a) impose an obligation on a buyer of goods out of a bulk to compensate any other buyer of goods out of that bulk for any shortfall in the goods received by that other buyer;

(b) affect any contractual arrangement between buyers of goods out of a bulk for adjustments between themselves; or

(c) affect the rights of any buyer under his contract.

Transfer of title

21. Sale by person not the owner

(1) Subject to this Act, where goods are sold by a person who is not their owner, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell.

(2) Nothing in this Act affects—

(a) the provisions of the Factors Acts or any enactment enabling the apparent owner of goods to dispose of them as if he were their true owner;

(b) the validity of any contract of sale under any special common law or statutory power of sale or under the order of a court of competent jurisdiction.

22. Market overt

(2) This section does not apply to Scotland.

(3) Paragraph 8 of Schedule 1 below applies in relation to a contract under which goods were sold before 1 January 1968 or (in the application of this Act to Northern Ireland) 29 August 1967.

23. Sale under voidable title

When the seller of goods has a voidable title to them, but his title has not been avoided at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith and without notice of the seller's defect of title.

24. Seller in possession after sale

Where a person having sold goods continues or is in possession of the goods, or of the documents of title to the goods, the delivery or transfer by that person, or by a mercantile agent acting for him, of the goods or documents of title under any sale, pledge, or other disposition thereof, to any person receiving the same in good faith and without notice of the previous sale, has the same effect as if the person making the delivery or transfer were expressly authorised by the owner of the goods to make the same.

25. Buyer in possession after sale

(1) Where a person having bought or agreed to buy goods obtains, with the consent of the seller, possession of the goods or the documents of title to the goods, the delivery or transfer by that person, or by a mercantile agent acting for him, of the goods or documents of title, under any sale, pledge, or other disposition thereof, to any person receiving the same in good faith and without notice of any lien or other right of the original seller in respect of the goods, has the same effect as if the person making the delivery or transfer were a mercantile agent in possession of the goods or documents of title with the consent of the owner.

(2) For the purposes of subsection (1) above—

(a) the buyer under a conditional sale agreement is to be taken not to be a person who has bought or agreed to buy goods, and

(b) 'conditional sale agreement' means an agreement for the sale of goods which is a consumer credit agreement within the meaning of the Consumer Credit Act 1974 under which the purchase price or part of it is payable by instalments, and the property in the goods is to remain in the seller (notwithstanding that the buyer is to be in possession of the goods) until such conditions as to the payment of instalments or otherwise as may be specified in the agreement are fulfilled.

(3) Paragraph 9 of Schedule 1 below applies in relation to a contract under which a person buys or agrees to buy goods and which is made before the appointed day.

(4) In subsection (3) above and paragraph 9 of Schedule 1 below references to the appointed day are to the day appointed for the purposes of those provisions by an order of the Secretary of State made by statutory instrument.

26. Supplementary to sections 24 and 25

In sections 24 and 25 above 'mercantile agent' means a mercantile agent having in the customary course of his business as such agent authority either—

(a) to sell goods, or

(b) to consign goods for the purpose of sale, or

(c) to buy goods, or

(d) to raise money on the security of goods.

PART IV PERFORMANCE OF THE CONTRACT

27. Duties of seller and buyer

It is the duty of the seller to deliver the goods, and of the buyer to accept and pay for them, in accordance with the terms of the contract of sale.

28. Payment and delivery are concurrent conditions

Unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions, that is to say, the seller must be ready and willing to give possession of the goods to the buyer in exchange for the price and the buyer must be ready and willing to pay the price in exchange for possession of the goods.

29. Rules about delivery

(1) Whether it is for the buyer to take possession of the goods or for the seller to send them to the buyer is a question depending in each case on the contract, express or implied, between the parties.

(2) Apart from any such contract, express or implied, the place of delivery is the seller's place of business if he has one, and if not, his residence; except that, if the contract is for the sale of specific goods, which to the knowledge of the parties when the contract is made are in some other place, then that place is the place of delivery.

(3) Where under the contract of sale the seller is bound to send the goods to the buyer, but no time for sending them is fixed, the seller is bound to send them within a reasonable time.

(4) Where the goods at the time of sale are in the possession of a third person, there is no delivery by seller to buyer unless and until the third person acknowledges to the buyer that he holds the goods on his behalf; but nothing in this section affects the operation of the issue or transfer of any document of title to goods.

(5) Demand or tender of delivery may be treated as ineffectual unless made at a reasonable hour; and what is a reasonable hour is a question of fact.

(6) Unless otherwise agreed, the expenses of and incidental to putting the goods into a deliverable state must be borne by the seller.

30. Delivery of wrong quantity

(1) Where the seller delivers to the buyer a quantity of goods less than he contracted to sell, the buyer may reject them, but if the buyer accepts the goods so delivered he must pay for them at the contract rate.

(2) Where the seller delivers to the buyer a quantity of goods larger than he contracted to sell, the buyer may accept the goods included in the contract and reject the rest, or he may reject the whole.

(2A) A buyer who does not deal as consumer may not—

(a) where the seller delivers a quantity of goods less than he contracted to sell, reject the goods under subsection (1) above, or

(b) where the seller delivers a quantity of goods larger than he contracted to sell, reject the whole under subsection (2) above, if the shortfall or, as the case may be, excess is so slight that it would be unreasonable for him to do so.

(2B) It is for the seller to show that a shortfall or excess fell within subsection (2A) above.

(2C) Subsections (2A) and (2B) above do not apply to Scotland.

(2D) Where the seller delivers a quantity of goods—

(a) less than he contracted to sell, the buyer shall not be entitled to reject the goods under subsection (1) above,

(b) larger than he contracted to sell, the buyer shall not be entitled to reject the whole under subsection (2) above,

unless the shortfall or excess is material.

(2E) Subsection (2D) above applies to Scotland only.

(3) Where the seller delivers to the buyer a quantity of goods larger than he contracted to sell and the buyer accepts the whole of the goods so delivered he must pay for them at the contract rate.

(5) This section is subject to any usage of trade, special agreement, or course of dealing between the parties.

31. Instalment deliveries

(1) Unless otherwise agreed, the buyer of goods is not bound to accept delivery of them by instalments.

(2) Where there is a contract for the sale of goods to be delivered by stated instalments, which are to be separately paid for, and the seller makes defective deliveries in respect of one or more instalments, or the buyer neglects or refuses to take delivery of or pay for one or more instalments, it is a question in each case depending on the terms of the contract and the circumstances of the case whether the breach of contract is a repudiation of the whole contract or whether it is a severable breach giving rise to a claim for compensation but not to a right to treat the whole contract as repudiated.

32. Delivery to carrier

(1) Where, in pursuance of a contract of sale, the seller is authorised or required to send the goods to the buyer, delivery of the goods to a carrier (whether named by the buyer or not) for the purpose of transmission to the buyer is prima facie deemed to be delivery of the goods to the buyer.

(2) Unless otherwise authorised by the buyer, the seller must make such contact with the carrier on behalf of the buyer as may be reasonable having regard to the nature of the goods and the other circumstances of the case; and if the seller omits to do so, and the goods are lost or damaged in course of transit, the buyer may decline to treat the delivery to the carrier as a delivery to himself or may hold the seller responsible in damages.

(3) Unless otherwise agreed, where goods are sent by the seller to the buyer by a route involving sea transit, under circumstances in which it is usual to insure, the seller must give such notice to the buyer as may enable him to insure them during their sea transit, and if the seller fails to do so, the goods are at his risk during such sea transit.

(4) In a case where the buyer deals as consumer or, in Scotland, where there is a consumer contract in which the buyer is a consumer, subsections (1) to (3) above must be ignored, but if in pursuance of a contract of sale the seller is authorised or required to send the goods to the buyer, delivery of the goods to the carrier is not delivery of the goods to the buyer.

33. Risk where goods are delivered at distant place

Where the seller of goods agrees to deliver them at his own risk at a place other than that where they are when sold, the buyer must nevertheless (unless otherwise agreed) take any risk of deterioration in the goods necessarily incident to the course of transit.

34. Buyer's right of examining the goods

Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is bound on request to afford the buyer a reasonable opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the contract and, in the case of a contract for sale by sample, of comparing the bulk with the sample.

35. Acceptance

(1) The buyer is deemed to have accepted the goods subject to subsection (2) below—

(a) when he intimates to the seller that he has accepted them, or

(b) when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller.

(2) Where goods are delivered to the buyer, and he has not previously examined them, he is not deemed to have accepted them under subsection (1) above until he has had a reasonable opportunity of examining them for the purpose—

(a) of ascertaining whether they are in conformity with the contract, and

(b) in the case of a contract for sale by sample, of comparing the bulk with the sample.

(3) Where the buyer deals as consumer or (in Scotland) the contract of sale is a consumer contract, the buyer cannot lose his right to rely on subsection (2) above by agreement, waiver or otherwise.

(4) The buyer is also deemed to have accepted the goods when after the lapse of a reasonable time he retains the goods without intimating to the seller that he has rejected them.

(5) The questions that are material in determining for the purposes of subsection (4) above whether a reasonable time has elapsed include whether the buyer has had a reasonable opportunity of examining the goods for the purpose mentioned in subsection (2) above.

(6) The buyer is not by virtue of this section deemed to have accepted the goods merely because—

(a) he asks for, or agrees to, their repair by or under an arrangement with the seller, or

(b) the goods are delivered to another under a sub-sale or other disposition.

(7) Where the contract is for the sale of goods making one or more commercial units, a buyer accepting any goods included in a unit is deemed to have accepted all the goods making the unit; and in this subsection 'commercial unit' means a unit division of which would materially impair the value of the goods or the character of the unit.

(8) Paragraph 10 of Schedule 1 below applies in relation to a contract made before 22 April 1967 or (in the application of this Act to Northern Ireland) 28 July 1967.

35A. Right of partial rejection

(1) If the buyer—

(a) has the right to reject the goods by reason of a breach on the part of the seller that affects some or all of them, but

(b) accepts some of the goods, including, where there are any goods unaffected by the breach, all such goods,

he does not by accepting them lose his right to reject the rest.

(2) In the case of a buyer having the right to reject an instalment of goods, subsection (1) above applies as if references to the goods were references to the goods comprised in the instalment.

(3) For the purposes of subsection (1) above, goods are affected by a breach if by reason of the breach they are not in conformity with the contract.

(4) This section applies unless a contrary intention appears in, or is to be implied from, the contract.

36. Buyer not bound to return rejected goods

Unless otherwise agreed, where goods are delivered to the buyer, and he refuses to accept them, having the right to do so, he is not bound to return them to the seller, but it is sufficient if he intimates to the seller that he refuses to accept them.

37. Buyer's liability for not taking delivery of goods

(1) When the seller is ready and willing to deliver the goods, and requests the buyer to take delivery, and the buyer does not within a reasonable time after such request take delivery of the goods, he is liable to the seller for any loss occasioned by his neglect or refusal to take delivery, and also for a reasonable charge for the care and custody of the goods.

(2) Nothing in this section affects the rights of the seller where the neglect or refusal of the buyer to take delivery amounts to a repudiation of the contract.

PART V RIGHTS OF UNPAID SELLER AGAINST THE GOODS

Preliminary

38. Unpaid seller defined

(1) The seller of goods is an unpaid seller within the meaning of this Act—

(a) when the whole of the price has not been paid or tendered;

(b) when a bill of exchange or other negotiable instrument has been received as conditional payment, and the condition on which it was received has not been fulfilled by reason of the dishonour of the instrument or otherwise.

(2) In this Part of this Act 'seller' includes any person who is in the position of a seller, as, for instance, an agent of the seller to whom the bill of lading has been indorsed, or a consignor or agent who has himself paid (or is directly responsible for) the price.

39. Unpaid seller's rights

(1) Subject to this and any other Act, notwithstanding that the property in the goods may have passed to the buyer, the unpaid seller of goods, as such, has by implication of law—

(a) a lien on the goods or right to retain them for the price while he is in possession of them;

(b) in the case of the insolvency of the buyer, a right of stopping the goods in transit after he has parted with the possession of them;

(c) a right of re-sale as limited by this Act.

(2) Where the property in goods has not passed to the buyer, the unpaid seller has (in addition to his other remedies) a right of withholding delivery similar to and coextensive with his rights of lien or retention and stoppage in transit where the property has passed to the buyer.

Unpaid seller's lien

41 Seller's lien

(1) Subject to this Act, the unpaid seller of goods who is in possession of them is entitled to retain possession of them until payment or tender of the price in the following cases:-

(a) where the goods have been sold without any stipulation as to credit;

(b) where the goods have been sold on credit but the term of credit has expired;

(c) where the buyer becomes insolvent.

(2) The seller may exercise his lien or right of retention notwithstanding that he is in possession of the goods as agent or bailee or custodier for the buyer.

42 Part delivery

Where an unpaid seller has made part delivery of the goods, he may exercise his lien or right of retention on the remainder, unless such part delivery has been made under such circumstances as to show an agreement to waive the lien or right of retention.

43 Termination of lien

(1) The unpaid seller of goods loses his lien or right of retention in respect of them-

(a) when he delivers the goods to a carrier or other bailee or custodier for the purpose of transmission to the buyer without reserving the right of disposal of the goods;

(b) when the buyer or his agent lawfully obtains possession of the goods;

(c) by waiver of the lien or right of retention.

(2) An unpaid seller of goods who has a lien or right of retention in respect of them does not lose his lien or right of retention by reason only that he has obtained judgment or decree for the price of the goods.

Stoppage in transit

44 Right of stoppage in transit

Subject to this Act, when the buyer of goods becomes insolvent the unpaid seller who has parted with the possession of the goods has the right of stopping them in transit, that is to say, he may resume possession of the goods as long as they are in course of transit, and may retain them until payment or tender of the price.

45 Duration of transit

(1) Goods are deemed to be in course of transit from the time when they are delivered to a carrier or other bailee or custodier for the purpose of transmission to the buyer, until the buyer or his agent in that behalf takes delivery of them from the carrier or other bailee or custodier.

(2) If the buyer or his agent in that behalf obtains delivery of the goods before their arrival at the appointed destination, the transit is at an end.

(3) If, after the arrival of the goods at the appointed destination, the carrier or other bailee or custodier acknowledges to the buyer or his agent that he holds the goods on his behalf and continues in possession of them as bailee or custodier for the buyer or his agent, the transit is at an end, and it is immaterial that a further destination for the goods may have been indicated by the buyer.

(4) If the goods are rejected by the buyer, and the carrier or other bailee or custodier continues in possession of them, the transit is not deemed to be at an end, even if the seller has refused to receive them back.

(5) When goods are delivered to a ship chartered by the buyer it is a question depending on the circumstances of the particular case whether they are in the possession of the master as a carrier or as agent to the buyer.

(6) Where the carrier or other bailee or custodier wrongfully refuses to deliver the goods to the buyer or his agent in that behalf, the transit is deemed to be at an end.

(7) Where part delivery of the goods has been made to the buyer or his agent in that behalf, the remainder of the goods may be stopped in transit, unless such part delivery has been made under such circumstances as to show an agreement to give up possession of the whole of the goods.

46 How stoppage in transit is effected

(1) The unpaid seller may exercise his right of stoppage in transit either by taking actual possession of the goods or by giving notice of his claim to the carrier or other bailee or custodier in whose possession the goods are.

(2) The notice may be given either to the person in actual possession of the goods or to his principal.

(3) If given to the principal, the notice is ineffective unless given at such time and under such circumstances that the principal, by the exercise of reasonable diligence, may communicate it to his servant or agent in time to prevent a delivery to the buyer.

(4) When notice of stoppage in transit is given by the seller to the carrier or other bailee or custodier in possession of the goods, he must re-deliver the goods to, or according to the directions of, the seller; and the expenses of the re-delivery must be borne by the seller.

Re-sale etc by buyer

47 Effect of sub-sale etc by buyer

(1) Subject to this Act, the unpaid seller's right of lien or retention or stoppage in transit is not affected by any sale or other disposition of the goods which the buyer may have made, unless the seller has assented to it.

(2) Where a document of title to goods has been lawfully transferred to any person as buyer or owner of the goods, and that person transfers the document to a person who takes it in good faith and for valuable consideration, then-

(a) if the last-mentioned transfer was by way of sale the unpaid seller's right of lien or retention or stoppage in transit is defeated; and

(b) if the last-mentioned transfer was made by way of pledge or other disposition for value, the unpaid seller's right of lien or retention or stoppage in transit can only be exercised subject to the rights of the transferee.

Rescission: and re-sale by seller

48 Rescission: and re-sale by seller

(1) Subject to this section, a contract of sale is not rescinded by the mere exercise by an unpaid seller of his right of lien or retention or stoppage in transit.

(2) Where an unpaid seller who has exercised his right of lien or retention or stoppage in transit re-sells the goods, the buyer acquires a good title to them as against the original buyer.

(3) Where the goods are of a perishable nature, or where the unpaid seller gives notice to the buyer of his intention to re-sell, and the buyer does not within a reasonable time pay or tender the price, the unpaid seller may re-sell the goods and recover from the original buyer damages for any loss occasioned by his breach of contract.

(4) Where the seller expressly reserves the right of re-sale in case the buyer should make default, and on the buyer making default re-sells the goods, the original contract of sale is rescinded but without prejudice to any claim the seller may have for damages.

PART 5A

ADDITIONAL RIGHTS OF BUYER IN CONSUMER CASES

48A Introductory

(1) This section applies if—

(a) the buyer deals as consumer or, in Scotland, there is a consumer contract in which the buyer is a consumer, and

(b) the goods do not conform to the contract of sale at the time of delivery.

(2) If this section applies, the buyer has the right—

(a) under and in accordance with section 48B below, to require the seller to repair or replace the goods, or

(b) under and in accordance with section 48C below—

(i) to require the seller to reduce the purchase price of the goods to the buyer by an appropriate amount, or

(ii) to rescind the contract with regard to the goods in question.

(3) For the purposes of subsection (1)(b) above goods which do not conform to the contract of sale at any time within the period of six months starting with the date on which the goods were delivered to the buyer must be taken not to have so conformed at that date.

(4) Subsection (3) above does not apply if—

(a) it is established that the goods did so conform at that date;

(b) its application is incompatible with the nature of the goods or the nature of the lack of conformity.

48B Repair or replacement of the goods

(1) If section 48A above applies, the buyer may require the seller—

(a) to repair the goods, or

(b) to replace the goods.

(2) If the buyer requires the seller to repair or replace the goods, the seller must—

(a) repair or, as the case may be, replace the goods within a reasonable time but without causing significant inconvenience to the buyer;

(b) bear any necessary costs incurred in doing so (including in particular the cost of any labour, materials or postage).

(3) The buyer must not require the seller to repair or, as the case may be, replace the goods if that remedy is—

(a) impossible, or

(b) disproportionate in comparison to the other of those remedies, or

(c) disproportionate in comparison to an appropriate reduction in the purchase price under paragraph (a), or rescission under paragraph (b), of section 48C(1) below.

(4) One remedy is disproportionate in comparison to the other if the one imposes costs on the seller which, in comparison to those imposed on him by the other, are unreasonable, taking into account—

(a) the value which the goods would have if they conformed to the contract of sale,

(b) the significance of the lack of conformity, and

(c) whether the other remedy could be effected without significant inconvenience to the buyer.

(5) Any question as to what is a reasonable time or significant inconvenience is to be determined by reference to—

(a) the nature of the goods, and

(b) the purpose for which the goods were acquired.

48C Reduction of purchase price or rescission of contract

(1) If section 48A above applies, the buyer may—

(a) require the seller to reduce the purchase price of the goods in question to the buyer by an appropriate amount, or

(b) rescind the contract with regard to those goods,

if the condition in subsection (2) below is satisfied.

(2) The condition is that—

(a) by virtue of section 48B(3) above the buyer may require neither repair nor replacement of the goods; or

(b) the buyer has required the seller to repair or replace the goods, but the seller is in breach of the requirement of section 48B(2)(a) above to do so within a reasonable time and without significant inconvenience to the buyer.

(3) For the purposes of this Part, if the buyer rescinds the contract, any reimbursement to the buyer may be reduced to take account of the use he has had of the goods since they were delivered to him.

48D Relation to other remedies etc

(1) If the buyer requires the seller to repair or replace the goods the buyer must not act under subsection (2) until he has given the seller a reasonable time in which to repair or replace (as the case may be) the goods.

(2) The buyer acts under this subsection if—

(a) in England and Wales or Northern Ireland he rejects the goods and terminates the contract for breach of condition;

(b) in Scotland he rejects any goods delivered under the contract and treats it as repudiated;

(c) he requires the goods to be replaced or repaired (as the case may be).

48E Powers of the court

(1) In any proceedings in which a remedy is sought by virtue of this Part the court, in addition to any other power it has, may act under this section.

(2) On the application of the buyer the court may make an order requiring specific performance or, in Scotland, specific implement by the seller of any obligation imposed on him by virtue of section 48B above.

(3) Subsection (4) applies if—

(a) the buyer requires the seller to give effect to a remedy under section 48B or 48C above or has claims to rescind under section 48C, but

(b) the court decides that another remedy under section 48B or 48C is appropriate.

(4) The court may proceed—

(a) as if the buyer had required the seller to give effect to the other remedy, or if the other remedy is rescission under section 48C

(b) as if the buyer had claimed to rescind the contract under that section.

(5) If the buyer has claimed to rescind the contract the court may order that any reimbursement to the buyer is reduced to take account of the use he has had of the goods since they were delivered to him.

(6) The court may make an order under this section unconditionally or on such terms and conditions as to damages, payment of the price and otherwise as it thinks just.

48F Conformity with the contract

For the purposes of this Part, goods do not conform to a contract of sale if there is, in relation to the goods, a breach of an express term of the contract or a term implied by section 13, 14 or 15 above.

PART VI ACTIONS FOR BREACH OF THE CONTRACT

Seller's remedies

49. Action for price

(1) Where, under a contract of sale, the property in the goods has passed to the buyer and he wrongfully neglects or refuses to pay for the goods according to the terms of the contract, the seller may maintain an action against him for the price of the goods.

(2) Where, under a contract of sale, the price is payable on a day certain irrespective of delivery and the buyer wrongfully neglects or refuses to pay such price, the seller may maintain an action for the price, although the property in goods has not passed and the goods have not been appropriated to the contract.

(3) Nothing in this section prejudices the right of the seller in Scotland to recover interest on the price from the date of tender of the goods, or from the date on which the price was payable, as the case may be.

50. Damages for non-acceptance

(1) Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may maintain an action against him for damages for non-acceptance.

(2) The measure of damages is the estimated loss directly and naturally resulting in the ordinary course of events, from the buyer's breach of contract.

(3) Where there is an available market for the goods in question the measure of damages is prima facie to be ascertained by the difference between the contract price and the market or current price at the time or times when the goods ought to have been accepted or (if no time was fixed for acceptance) at the time of the refusal to accept.

Buyer's remedies

51. Damages for non-delivery

(1) Where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may maintain an action against the seller for damages for non-delivery.

(2) The measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of events, from the seller's breach of contract.

(3) Where there is an available market for the goods in question the measure of damages is prima facie to be ascertained by the difference between the contract price and the market or current price of the goods at the time or times when they ought to have been delivered or (if no time was fixed) at the time of the refusal to deliver.

52. Specific performance

(1) If any action for breach of contract to deliver specific or ascertained goods the court may, if it thinks fit, on the plaintiff's application, by its judgment or decree direct that the contract shall be performed specifically, without giving the defendant the option of retaining the goods on payment of damages.

(2) The plaintiff's application may be made at any time before judgment or decree.

(3) The judgment or decree may be unconditional, or on such terms and conditions as to damages, payment of the price and otherwise as seem just to the court.

(4) The provisions of this section shall be deemed to be supplementary to, and not in derogation of, the right of specific implement in Scotland.

53. Remedy for breach of warranty

(1) Where there is a breach of warranty by the seller, or where the buyer elects (or is compelled) to treat any breach of a condition on the part of the seller as a breach of warranty, the buyer is not by reason only of such breach of warranty entitled to reject the goods; but he may—

(a) set up against the seller the breach of warranty in diminution of extinction of the price, or

(b) maintain an action against the seller for damages for the breach of warranty.

(2) The measure of damages for breach of warranty is the estimated loss directly and naturally resulting, in the ordinary course of events, from the breach of warranty.

(3) In the case of breach of warranty of quality such loss is prima facie the difference between the value of the goods at the time of delivery to the buyer and the value they would have had if they had fulfilled the warranty.

(4) The fact that the buyer has set up the breach of warranty in diminution or extinction of the price does not prevent him from maintaining an action for the same breach of warranty if he has suffered further damage.

(5) This section does not apply to Scotland.

Interest, etc.

54. Interest, etc.

Nothing in this Act affects the right of the buyer or the seller to recover interest or special damages in any case where by law interest or special damages may be recoverable, or to recover money paid where the consideration for the payment of it has failed.

PART VII SUPPLEMENTARY

55. Exclusion of implied terms

(1) Where a right duty or liability would arise under a contract of sale of goods by implication of law, it may (subject to the Unfair Contract Terms Act 1977) be negatived or varied by express agreement, or by the course of dealing between the parties, or by such usage as binds both parties to the contract.

(2) An express term does not negative a term implied by this Act unless inconsistent with it.

(3) Paragraph 11 of Schedule 1 below applies in relation to a contract made on or after 18 May 1973 and before 1 February 1978, and paragraph 12 in relation to one made before 18 May 1973.

56. Conflict of laws

Paragraph 13 of Schedule 1 below applies in relation to a contract made on or after 18 May 1973 and before 1 February 1978, so as to make provision about conflict of laws in relation to such a contract.

57. Auction sales

(1) Where goods are put up for sale by auction in lots, each lot is prima facie deemed to be the subject of a separate contract of sale.

(2) A sale by auction is complete when the auctioneer announces its completion by the fall of the hammer, or in other customary manner; and until the announcement is made any bidder may retract his bid.

(3) A sale by auction may be notified to be subject to a reserve or upset price, and a right to bid may also be reserved expressly by or on behalf of the seller.

(4) Where a sale by auction is not notified to be subject to a right to bid by or on behalf of the seller, it is not lawful for the seller to bid himself or to employ any person to bid at the sale, or for the auctioneer knowingly to take any bid from the seller or any such person.

(5) A sale contravening subsection (4) above may be treated as fraudulent by the buyer.

(6) Where, in respect of a sale by auction, a right to bid is expressly reserved (but not otherwise) the seller or any one person on his behalf may bid at the auction.

59. Reasonable time a question of fact

Where a reference is made in this Act to a reasonable time the question what is a reasonable time is a question of fact.

60. Rights etc. enforceable by action

Where a right, duty or liability is declared by this Act, it may (unless otherwise provided by this Act) be enforced by action.

61. Interpretation

(1) In this Act, unless the context or subject matter otherwise requires,—

'action' includes counterclaim and set-off, and in Scotland condescendence and claim and compensation;

'bulk' means a mass or collection of goods of the same kind which—

(a) is contained in a defined space or area; and

(b) is such that any goods in the bulk are interchangeable with any other goods therein of the same number or quantity;

'business' includes a profession and the activities of any government department (including a Northern Ireland department) or local or public authority;

'buyer' means a person who buys or agrees to buy goods;

'consumer contract' has the same meaning as in section 25(1) of the Unfair Contract Terms Act 1977; and for the purposes of this Act the onus of proving that a contract is not to be regarded as a consumer contract shall lie on the seller

'contract of sale' includes an agreement to sell as well as a sale,

'credit-broker' means a person acting in the course of a business of credit brokerage carried on by him, that is a business of effecting introductions of individuals desiring to obtain credit—

(a) to persons carrying on any business so far as it relates to the provision of credit, or

(b) to other persons engaged in credit brokerage;

'defendant' includes in Scotland defender, respondent, and claimant in a multiplepoinding;

'delivery' means voluntary transfer of possession from one person to another; except that in relation to sections 20A and 20B above it includes such appropriation of goods to the contract as results in property in the goods being transferred to the buyer;

'document of title to goods' has the same meaning as it has in the Factors Acts;

'Factors Acts' means the Factors Act 1889, the Factors (Scotland) Act 1890, and any enactment amending or substituted for the same;

'fault' means wrongful act or default;

'future goods' means goods to be manufactured or acquired by the seller after the making of the contract of sale;

'goods' includes all personal chattels other than things in action and money, and in Scotland all corporeal moveables except money; and in particular 'goods' includes emblements, industrial growing crops, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale; and includes an undivided share in goods;

'plaintiff ' includes pursuer, complainer, claimant in a multiplepoinding and defendant or defender counter-claiming;

“producer” means the manufacturer of goods, the importer of goods into the European Economic Area or any person purporting to be a producer by placing his name, trade mark or other distinctive sign on the goods;

'property' means the general property in goods, and not merely a special property;

“repair” means, in cases where there is a lack of conformity in goods for the purposes of section 48F of this Act, to bring the goods into conformity with the contract;

'sale' includes a bargain and sale as well as a sale and delivery;

'seller' means a person who sells or agrees to sell goods;

'specific goods' means goods identified and agreed on at the time a contract of sale is made; and includes an undivided share, specified as a fraction or percentage, of goods identified and agreed on as aforesaid;

'warranty' (as regards England and Wales and Northern Ireland) means an agreement with reference to goods which are the subject of a contract of sale, but collateral to the main purpose of such contract, the breach of which gives rise to a claim for damages, but not to a right to reject the goods and treat the contract as repudiated.

(3) A thing is deemed to be done in good faith within the meaning of this Act when it is in fact done honestly, whether it is done negligently or not.

(4) A person is deemed to be insolvent within the meaning of this Act if he has either ceased to pay his debts in the ordinary course of business or he cannot pay his debts as they become due.

(5) Goods are in a deliverable state within the meaning of this Act when they are in such a state that the buyer would under the contract be bound to take delivery of them.

(5A) References in this Act to dealing as consumer are to be construed in accordance with Part I of the Unfair Contract Terms Act 1977; and, for the purposes of this Act, it is for a seller claiming that the buyer does not deal as consumer to show that he does not.

(6) As regards the definition of 'business' in subsection (1) above, paragraph 14 of Schedule 1 below applies in relation to a contract made on or after 18 May 1973 and before 1 February 1978, and paragraph 15 in relation to one made before 18 May 1973.

62 Savings: rules of law etc

(1) The rules in bankruptcy relating to contracts of sale apply to those contracts, notwithstanding anything in this Act.

(2) The rules of the common law, including the law merchant, except in so far as they are inconsistent with the provisions of this Act, and in particular the rules relating to the law of principal and agent and the effect of fraud, misrepresentation, duress or coercion, mistake, or other invalidating cause, apply to contracts for the sale of goods.

(3) Nothing in this Act or the Sale of Goods Act 1893 affects the enactments relating to bills of sale, or any enactment relating to the sale of goods which is not expressly repealed or amended by this Act or that.

(4) The provisions of this Act about contracts of sale do not apply to a transaction in the form of a contract of sale which is intended to operate by way of mortgage, pledge, charge, or other security.

(5) Nothing in this Act prejudices or affects the landlord's right of hypothec or sequestration for rent in Scotland.

This Act is reproduced with amendments as at 1st October 2003. Crown Copyright material is reproduced with the permission of the Controller of HMSO and the Queen's Printer for Scotland. Disclaimer



Enterprise act 2002, Chapter 40 Part 8. relevant sections


Enterprise Act 2002

2002 Chapter 40 - continued





PART 8

ENFORCEMENT OF CERTAIN CONSUMER LEGISLATION

Introduction

210 Consumers

(1) In this Part references to consumers must be construed in accordance with this section.

(2) In relation to a domestic infringement a consumer is an individual in respect of whom the first and second conditions are satisfied.

(3) The first condition is that-

(a) goods are or are sought to be supplied to the individual (whether by way of sale or otherwise) in the course of a business carried on by the person supplying or seeking to supply them, or

(b) services are or are sought to be supplied to the individual in the course of a business carried on by the person supplying or seeking to supply them.

(4) The second condition is that-

(a) the individual receives or seeks to receive the goods or services otherwise than in the course of a business carried on by him, or

(b) the individual receives or seeks to receive the goods or services with a view to carrying on a business but not in the course of a business carried on by him.

(5) For the purposes of a domestic infringement it is immaterial whether a person supplying goods or services has a place of business in the United Kingdom.

(6) In relation to a Community infringement a consumer is a person who is a consumer for the purposes of-

(a) the Injunctions Directive, and

(b) the listed Directive concerned.

(7) A Directive is a listed Directive-

(a) if it is a Directive of the Council of the European Communities or of the European Parliament and of the Council, and

(b) if it is specified in Schedule 13 or to the extent that any of its provisions is so specified.

(8) A business includes-

(a) a professional practice;

(b) any other undertaking carried on for gain or reward;

(c) any undertaking in the course of which goods or services are supplied otherwise than free of charge.

(9) The Secretary of State may by order modify Schedule 13.

(10) An order under this section must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

211 Domestic infringements

(1) In this Part a domestic infringement is an act or omission which-

(a) is done or made by a person in the course of a business,

(b) falls within subsection (2), and

(c) harms the collective interests of consumers in the United Kingdom.

(2) An act or omission falls within this subsection if it is of a description specified by the Secretary of State by order and consists of any of the following-

(a) a contravention of an enactment which imposes a duty, prohibition or restriction enforceable by criminal proceedings;

(b) an act done or omission made in breach of contract;

(c) an act done or omission made in breach of a non-contractual duty owed to a person by virtue of an enactment or rule of law and enforceable by civil proceedings;

(d) an act or omission in respect of which an enactment provides for a remedy or sanction enforceable by civil proceedings;

(e) an act done or omission made by a person supplying or seeking to supply goods or services as a result of which an agreement or security relating to the supply is void or unenforceable to any extent;

(f) an act or omission by which a person supplying or seeking to supply goods or services purports or attempts to exercise a right or remedy relating to the supply in circumstances where the exercise of the right or remedy is restricted or excluded under or by virtue of an enactment;

(g) an act or omission by which a person supplying or seeking to supply goods or services purports or attempts to avoid (to any extent) liability relating to the supply in circumstances where such avoidance is restricted or prevented under an enactment.

(3) But an order under this section may provide that any description of act or omission falling within subsection (2) is not a domestic infringement.

(4) For the purposes of subsection (2) it is immaterial-

(a) whether or not any duty, prohibition or restriction exists in relation to consumers as such;

(b) whether or not any remedy or sanction is provided for the benefit of consumers as such;

(c) whether or not any proceedings have been brought in relation to the act or omission;

(d) whether or not any person has been convicted of an offence in respect of the contravention mentioned in subsection (2)(a);

(e) whether or not there is a waiver in respect of the breach of contract mentioned in subsection (2)(b).

(5) References to an enactment include references to subordinate legislation (within the meaning of the Interpretation Act 1978 (c. 30)).

(6) The power to make an order under this section must be exercised by statutory instrument.

(7) But no such order may be made unless a draft of it has been laid before Parliament and approved by a resolution of each House.

212 Community infringements

(1) In this Part a Community infringement is an act or omission which harms the collective interests of consumers and which-

(a) contravenes a listed Directive as given effect by the laws, regulations or administrative provisions of an EEA State, or

(b) contravenes such laws, regulations or administrative provisions which provide additional permitted protections.

(2) The laws, regulations or administrative provisions of an EEA State which give effect to a listed Directive provide additional permitted protections if-

(a) they provide protection for consumers which is in addition to the minimum protection required by the Directive concerned, and

(b) such additional protection is permitted by that Directive.

(3) The Secretary of State may by order specify for the purposes of this section the law in the United Kingdom which-

(a) gives effect to the listed Directives;

(b) provides additional permitted protections.

(4) References to a listed Directive must be construed in accordance with section 210.

(5) An EEA State is a State which is a contracting party to the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 as adjusted by the Protocol signed at Brussels on 17th March 1993.

(6) An order under this section must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

213 Enforcers

(1) Each of the following is a general enforcer-

(a) the OFT;

(b) every local weights and measures authority in Great Britain;

(c) the Department of Enterprise, Trade and Investment in Northern Ireland.

(2) A designated enforcer is any person or body (whether or not incorporated) which the Secretary of State-

(a) thinks has as one of its purposes the protection of the collective interests of consumers, and

(b) designates by order.

(3) The Secretary of State may designate a public body only if he is satisfied that it is independent.

(4) The Secretary of State may designate a person or body which is not a public body only if the person or body (as the case may be) satisfies such criteria as the Secretary of State specifies by order.

(5) A Community enforcer is a qualified entity for the purposes of the Injunctions Directive-

(a) which is for the time being specified in the list published in the Official Journal of the European Communities in pursuance of Article 4.3 of that Directive, but

(b) which is not a general enforcer or a designated enforcer.

(6) An order under this section may designate an enforcer in respect of-

(a) all infringements;

(b) infringements of such descriptions as are specified in the order.

(7) An order under this section may make different provision for different purposes.

(8) The designation of a body by virtue of subsection (3) is conclusive evidence for the purposes of any question arising under this Part that the body is a public body.

(9) An order under this section must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

(10) If requested to do so by a designated enforcer which is designated in respect of one or more Community infringements the Secretary of State must notify the Commission of the European Communities-

(a) of its name and purpose;

(b) of the Community infringements in respect of which it is designated.

(11) The Secretary of State must also notify the Commission-

(a) of the fact that a person or body in respect of which he has given notice under subsection (10) ceases to be a designated enforcer;

(b) of any change in the name or purpose of a designated enforcer in respect of which he has given such notice;

(c) of any change to the Community infringements in respect of which a designated enforcer is designated.

Enforcement procedure

214 Consultation

(1) An enforcer must not make an application for an enforcement order unless he has engaged in appropriate consultation with-

(a) the person against whom the enforcement order would be made, and

(b) the OFT (if it is not the enforcer).

(2) Appropriate consultation is consultation for the purpose of-

(a) achieving the cessation of the infringement in a case where an infringement is occurring;

(b) ensuring that there will be no repetition of the infringement in a case where the infringement has occurred;

(c) ensuring that there will be no repetition of the infringement in a case where the cessation of the infringement is achieved under paragraph (a);

(d) ensuring that the infringement does not take place in the case of a Community infringement which the enforcer believes is likely to take place.

(3) Subsection (1) does not apply if the OFT thinks that an application for an enforcement order should be made without delay.

(4) Subsection (1) ceases to apply-

(a) for the purposes of an application for an enforcement order at the end of the period of 14 days beginning with the day after the person against whom the enforcement order would be made receives a request for consultation from the enforcer;

(b) for the purposes of an application for an interim enforcement order at the end of the period of seven days beginning with the day after the person against whom the interim enforcement order would be made receives a request for consultation from the enforcer.

(5) The Secretary of State may by order make rules in relation to consultation under this section.

(6) Such an order must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

(7) In this section (except subsection (4)) and in sections 215 and 216 references to an enforcement order include references to an interim enforcement order.

215 Applications

(1) An application for an enforcement order must name the person the enforcer thinks-

(a) has engaged or is engaging in conduct which constitutes a domestic or a Community infringement, or

(b) is likely to engage in conduct which constitutes a Community infringement.

(2) A general enforcer may make an application for an enforcement order in respect of any infringement.

(3) A designated enforcer may make an application for an enforcement order in respect of an infringement to which his designation relates.

(4) A Community enforcer may make an application for an enforcement order in respect of a Community infringement.

(5) The following courts have jurisdiction to make an enforcement order-

(a) the High Court or a county court if the person against whom the order is sought carries on business or has a place of business in England and Wales or Northern Ireland;

(b) the Court of Session or the sheriff if the person against whom the order is sought carries on business or has a place of business in Scotland.

(6) If an application for an enforcement order is made by a Community enforcer the court may examine whether the purpose of the enforcer justifies its making the application.

(7) If the court thinks that the purpose of the Community enforcer does not justify its making the application the court may refuse the application on that ground alone.

(8) The purpose of a Community enforcer must be construed by reference to the Injunctions Directive.

(9) An enforcer which is not the OFT must notify the OFT of the result of an application under this section.

216 Applications: directions by OFT

(1) This section applies if the OFT believes that an enforcer other than the OFT intends to apply for an enforcement order.

(2) In such a case the OFT may direct that if an application in respect of a particular infringement is to be made it must be made-

(a) only by the OFT, or

(b) only by such other enforcer as the OFT directs.

(3) If the OFT directs that only it may make an application that does not prevent-

(a) the OFT or any enforcer from accepting an undertaking under section 219, or

(b) the OFT from taking such other steps it thinks appropriate (apart from making an application) for the purpose of securing that the infringement is not committed, continued or repeated.

(4) The OFT may vary or withdraw a direction given under this section.

(5) The OFT must take such steps as it thinks appropriate to bring a direction (or a variation or withdrawal of a direction) to the attention of enforcers it thinks may be affected by it.

(6) But this section does not prevent an application for an enforcement order being made by a Community enforcer.

217 Enforcement orders

(1) This section applies if an application for an enforcement order is made under section 215 and the court finds that the person named in the application has engaged in conduct which constitutes the infringement.

(2) This section also applies if such an application is made in relation to a Community infringement and the court finds that the person named in the application is likely to engage in conduct which constitutes the infringement.

(3) If this section applies the court may make an enforcement order against the person.

(4) In considering whether to make an enforcement order the court must have regard to whether the person named in the application-

(a) has given an undertaking under section 219 in respect of conduct such as is mentioned in subsection (3) of that section;

(b) has failed to comply with the undertaking.

(5) An enforcement order must-

(a) indicate the nature of the conduct to which the finding under subsection (1) or (2) relates, and

(b) direct the person to comply with subsection (6).

(6) A person complies with this subsection if he-

(a) does not continue or repeat the conduct;

(b) does not engage in such conduct in the course of his business or another business;

(c) does not consent to or connive in the carrying out of such conduct by a body corporate with which he has a special relationship (within the meaning of section 222(3)).

(7) But subsection (6)(a) does not apply in the case of a finding under subsection (2).

(8) An enforcement order may require a person against whom the order is made to publish in such form and manner and to such extent as the court thinks appropriate for the purpose of eliminating any continuing effects of the infringement-

(a) the order;

(b) a corrective statement.

(9) If the court makes a finding under subsection (1) or (2) it may accept an undertaking by the person-

(a) to comply with subsection (6), or

(b) to take steps which the court believes will secure that he complies with subsection (6).

(10) An undertaking under subsection (9) may include a further undertaking by the person to publish in such form and manner and to such extent as the court thinks appropriate for the purpose of eliminating any continuing effects of the infringement-


(a) the terms of the undertaking;

(b) a corrective statement.

(11) If the court-

(a) makes a finding under subsection (1) or (2), and

(b) accepts an undertaking under subsection (9),

it must not make an enforcement order in respect of the infringement to which the undertaking relates.

(12) An enforcement order made by a court in one part of the United Kingdom has effect in any other part of the United Kingdom as if made by a court in that part.

218 Interim enforcement order

(1) The court may make an interim enforcement order against a person named in the application for the order if it appears to the court-

(a) that it is alleged that the person is engaged in conduct which constitutes a domestic or Community infringement or is likely to engage in conduct which constitutes a Community infringement,

(b) that if the application had been an application for an enforcement order it would be likely to be granted,

(c) that it is expedient that the conduct is prohibited or prevented (as the case may be) immediately, and

(d) if no notice of the application has been given to the person named in the application that it is appropriate to make an interim enforcement order without notice.

(2) An interim enforcement order must-

(a) indicate the nature of the alleged conduct, and

(b) direct the person to comply with subsection (3).

(3) A person complies with this subsection if he-

(a) does not continue or repeat the conduct;

(b) does not engage in such conduct in the course of his business or another business;

(c) does not consent to or connive in the carrying out of such conduct by a body corporate with which he has a special relationship (within the meaning of section 222(3)).

(4) But subsection (3)(a) does not apply in so far as the application is made in respect of an allegation that the person is likely to engage in conduct which constitutes a Community infringement.

(5) An application for an interim enforcement order against a person may be made at any time before an application for an enforcement order against the person in respect of the same conduct is determined.

(6) An application for an interim enforcement order must refer to all matters-

(a) which are known to the applicant, and

(b) which are material to the question whether or not the application is granted.

(7) If an application for an interim enforcement order is made without notice the application must state why no notice has been given.

(8) The court may vary or discharge an interim enforcement order on the application of-

(a) the enforcer who applied for the order;

(b) the person against whom it is made.

(9) An interim enforcement order against a person is discharged on the determination of an application for an enforcement order made against the person in respect of the same conduct.

(10) If it appears to the court as mentioned in subsection (1)(a) to (c) the court may instead of making an interim enforcement order accept an undertaking from the person named in the application-

(a) to comply with subsection (3), or

(b) to take steps which the court believes will secure that he complies with subsection (3).

(11) An interim enforcement order made by a court in one part of the United Kingdom has effect in any other part of the United Kingdom as if made by a court in that part.

219 Undertakings

(1) This section applies if an enforcer has power to make an application under section 215.

(2) In such a case the enforcer may accept from a person to whom subsection (3) applies an undertaking that the person will comply with subsection (4).

(3) This subsection applies to a person who the enforcer believes-

(a) has engaged in conduct which constitutes an infringement;

(b) is engaging in such conduct;

(c) is likely to engage in conduct which constitutes a Community infringement.

(4) A person complies with this subsection if he-

(a) does not continue or repeat the conduct;

(b) does not engage in such conduct in the course of his business or another business;

(c) does not consent to or connive in the carrying out of such conduct by a body corporate with which he has a special relationship (within the meaning of section 222(3)).

(5) But subsection (4)(a) does not apply in the case of an undertaking given by a person in so far as subsection (3) applies to him by virtue of paragraph (c).

(6) If an enforcer accepts an undertaking under this section it must notify the OFT-

(a) of the terms of the undertaking;

(b) of the identity of the person who gave it.

220 Further proceedings

(1) This section applies if the court-

(a) makes an enforcement order under section 217,

(b) makes an interim enforcement order under section 218, or

(c) accepts an undertaking under either of those sections.

(2) In such a case the OFT has the same right to apply to the court in respect of a failure to comply with the order or undertaking as the enforcer who made the application for the order.

(3) An application to the court in respect of a failure to comply with an undertaking may include an application for an enforcement order or for an interim enforcement order.

(4) If the court finds that an undertaking is not being complied with it may make an enforcement order or an interim enforcement order (instead of making any other order it has power to make).

(5) In the case of an application for an enforcement order or for an interim enforcement order as mentioned in subsection (3) sections 214 and 216 must be ignored and sections 215 and 217 or 218 (as the case may be) apply subject to the following modifications-

(a) section 215(1)(b) must be ignored;

(b) section 215(5) must be ignored and the application must be made to the court which accepted the undertaking;

(c) section 217(9) to (11) must be ignored;

(d) section 218(10) must be ignored.

(6) If an enforcer which is not the OFT makes an application in respect of the failure of a person to comply with an enforcement order, an interim enforcement order or an undertaking given under section 217 or 218 the enforcer must notify the OFT-

(a) of the application;

(b) of any order made by the court on the application.

221 Community infringements: proceedings

(1) Subsection (2) applies to-

(a) every general enforcer;

(b) every designated enforcer which is a public body.

(2) An enforcer to which this subsection applies has power to take proceedings in EEA States other than the United Kingdom for the cessation or prohibition of a Community infringement.

(3) Subsection (4) applies to-

(a) every general enforcer;

(b) every designated enforcer.

(4) An enforcer to which this subsection applies may co-operate with a Community enforcer-

(a) for the purpose of bringing proceedings mentioned in subsection (2);

(b) in connection with the exercise by the Community enforcer of its functions under this Part.

(5) An EEA State is a State which is a contracting party to the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 as adjusted by the Protocol signed at Brussels on 17th March 1993.

222 Bodies corporate: accessories

(1) This section applies if the person whose conduct constitutes a domestic infringement or a Community infringement is a body corporate.

(2) If the conduct takes place with the consent or connivance of a person (an accessory) who has a special relationship with the body corporate, the consent or connivance is also conduct which constitutes the infringement.

(3) A person has a special relationship with a body corporate if he is-

(a) a controller of the body corporate, or

(b) a director, manager, secretary or other similar officer of the body corporate or a person purporting to act in such a capacity.

(4) A person is a controller of a body corporate if-

(a) the directors of the body corporate or of another body corporate which is its controller are accustomed to act in accordance with the person's directions or instructions, or

(b) either alone or with an associate or associates he is entitled to exercise or control the exercise of one third or more of the voting power at any general meeting of the body corporate or of another body corporate which is its controller.

(5) An enforcement order or an interim enforcement order may be made against an accessory in respect of an infringement whether or not such an order is made against the body corporate.

(6) The court may accept an undertaking under section 217(9) or 218(10) from an accessory in respect of an infringement whether or not it accepts such an undertaking from the body corporate.

(7) An enforcer may accept an undertaking under section 219 from an accessory in respect of an infringement whether or not it accepts such an undertaking from the body corporate.

(8) Subsection (9) applies if-

(a) an order is made as mentioned in subsection (5), or

(b) an undertaking is accepted as mentioned in subsection (6) or (7).

(9) In such a case for subsection (6) of section 217, subsection (3) of section 218 or subsection (4) of section 219 (as the case may be) there is substituted the following subsection-

"( ) A person complies with this subsection if he-

(a) does not continue or repeat the conduct;

(b) does not in the course of any business carried on by him engage in conduct such as that which constitutes the infringement committed by the body corporate mentioned in section 222(1);

(c) does not consent to or connive in the carrying out of such conduct by another body corporate with which he has a special relationship (within the meaning of section 222(3))."


(10) A person is an associate of an individual if-

(a) he is the spouse of the individual;

(b) he is a relative of the individual;

(c) he is a relative of the individual's spouse;

(d) he is the spouse of a relative of the individual;

(e) he is the spouse of a relative of the individual's spouse;

(f) he lives in the same household as the individual otherwise than merely because he or the individual is the other's employer, tenant, lodger or boarder;

(g) he is a relative of a person who is an associate of the individual by virtue of paragraph (f);

(h) he has at some time in the past fallen within any of paragraphs (a) to (g).

(11) A person is also an associate of-

(a) an individual with whom he is in partnership;

(b) an individual who is an associate of the individual mentioned in paragraph (a);

(c) a body corporate if he is a controller of it or he is an associate of a person who is a controller of the body corporate.

(12) A body corporate is an associate of another body corporate if-

(a) the same person is a controller of both;

(b) a person is a controller of one and persons who are his associates are controllers of the other;

(c) a person is a controller of one and he and persons who are his associates are controllers of the other;

(d) a group of two or more persons is a controller of each company and the groups consist of the same persons;

(e) a group of two or more persons is a controller of each company and the groups may be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person of whom he is an associate.

(13) A relative is a brother, sister, uncle, aunt, nephew, niece, lineal ancestor or lineal descendant.

223 Bodies corporate: orders

(1) This section applies if a court makes an enforcement order or an interim enforcement order against a body corporate and-

(a) at the time the order is made the body corporate is a member of a group of interconnected bodies corporate,

(b) at any time when the order is in force the body corporate becomes a member of a group of interconnected bodies corporate, or

(c) at any time when the order is in force a group of interconnected bodies corporate of which the body corporate is a member is increased by the addition of one or more further members.

(2) The court may direct that the order is binding upon all of the members of the group as if each of them were the body corporate against which the order is made.

(3) A group of interconnected bodies corporate is a group consisting of two or more bodies corporate all of whom are interconnected with each other.

(4) Any two bodies corporate are interconnected-

(a) if one of them is a subsidiary of the other, or

(b) if both of them are subsidiaries of the same body corporate.

(5) "Subsidiary" must be construed in accordance with section 736 of the Companies Act 1985 (c. 6).

Information

224 OFT

(1) The OFT may for any of the purposes mentioned in subsection (2) give notice to any person requiring the person to provide it with the information specified in the notice.

(2) The purposes are-

(a) to enable the OFT to exercise or to consider whether to exercise any function it has under this Part;

(b) to enable a designated enforcer to which section 225 does not apply to consider whether to exercise any function it has under this Part;

(c) to enable a Community enforcer to consider whether to exercise any function it has under this Part;

(d) to ascertain whether a person has complied with or is complying with an enforcement order, an interim enforcement order or an undertaking given under section 217(9), 218(10) or 219.

225 Other enforcers

(1) This section applies to-

(a) every general enforcer (other than the OFT);

(b) every designated enforcer which is a public body.

(2) An enforcer to which this section applies may for any of the purposes mentioned in subsection (3) give notice to any person requiring the person to provide the enforcer with the information specified in the notice.

(3) The purposes are-

(a) to enable the enforcer to exercise or to consider whether to exercise any function it has under this Part;

(b) to ascertain whether a person has complied with or is complying with an enforcement order or an interim enforcement order made on the application of the enforcer or an undertaking given under section 217(9) or 218(10) (as the case may be) following such an application or an undertaking given to the enforcer under section 219.

226 Notices: procedure

(1) This section applies to a notice given under section 224 or 225.

(2) The notice must-

(a) be in writing;

(b) specify the purpose for which the information is required.

(3) If the purpose is as mentioned in section 224(2)(a), (b) or (c) or 225(3)(a) the notice must specify the function concerned.

(4) A notice may specify the time within which and manner in which it is to be complied with.

(5) A notice may require the production of documents or any description of documents.

(6) An enforcer may take copies of any documents produced in compliance with such a requirement.

(7) A notice may be varied or revoked by a subsequent notice.

(8) But a notice must not require a person to provide any information or produce any document which he would be entitled to refuse to provide or produce-

(a) in proceedings in the High Court on the grounds of legal professional privilege;

(b) in proceedings in the Court of Session on the grounds of confidentiality of communications.

227 Notices: enforcement

(1) If a person fails to comply with a notice given under section 224 or 225 the enforcer who gave the notice may make an application under this section.

(2) If it appears to the court that the person to whom the notice was given has failed to comply with the notice the court may make an order under this section.

(3) An order under this section may require the person to whom the notice was given to do anything the court thinks it is reasonable for him to do for any of the purposes mentioned in section 224 or 225 (as the case may be) to ensure that the notice is complied with.

(4) An order under this section may require the person to meet all the costs or expenses of the application.

(5) If the person is a company or association the court in proceeding under subsection (4) may require any officer of the company or association who is responsible for the failure to meet the costs or expenses.

(6) The court is a court which may make an enforcement order.

(7) In subsection (5) an officer of a company is a person who is a director, manager, secretary or other similar officer of the company.

Miscellaneous

228 Evidence

(1) Proceedings under this Part are civil proceedings for the purposes of-

(a) section 11 of the Civil Evidence Act 1968 (c. 64) (convictions admissible as evidence in civil proceedings);

(b) section 10 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1968 (c. 70) (corresponding provision in Scotland);

(c) section 7 of the Civil Evidence Act (Northern Ireland) 1971 (c. 36 (N.I.)) (corresponding provision in Northern Ireland).

(2) In proceedings under this Part any finding by a court in civil proceedings that an act or omission mentioned in section 211(2)(b), (c) or (d) or 212(1) has occurred-

(a) is admissible as evidence that the act or omission occurred;

(b) unless the contrary is proved, is sufficient evidence that the act or omission occurred.

(3) But subsection (2) does not apply to any finding-

(a) which has been reversed on appeal;

(b) which has been varied on appeal so as to negative it.

229 Advice and information

(1) As soon as is reasonably practicable after the passing of this Act the OFT must prepare and publish advice and information with a view to-

(a) explaining the provisions of this Part to persons who are likely to be affected by them, and

(b) indicating how the OFT expects such provisions to operate.

(2) The OFT may at any time publish revised or new advice or information.

(3) Advice or information published in pursuance of subsection (1)(b) may include advice or information about the factors which the OFT may take into account in considering how to exercise the functions conferred on it by this Part.

(4) Advice or information published by the OFT under this section is to be published in such form and in such manner as it considers appropriate.

(5) In preparing advice or information under this section the OFT must consult such persons as it thinks are representative of persons affected by this Part.

(6) If any proposed advice or information relates to a matter in respect of which another general enforcer or a designated enforcer may act the persons to be consulted must include that enforcer.

230 Notice to OFT of intended prosecution

(1) This section applies if a local weights and measures authority in England and Wales intends to start proceedings for an offence under an enactment or subordinate legislation specified by the Secretary of State by order for the purposes of this section.

(2) The authority must give the OFT-

(a) notice of its intention to start the proceedings;

(b) a summary of the evidence it intends to lead in respect of the charges.

(3) The authority must not start the proceedings until whichever is the earlier of the following-

(a) the end of the period of 14 days starting with the day on which the authority gives the notice;

(b) the day on which it is notified by the OFT that the OFT has received the notice and summary given under subsection (2).

(4) The authority must also notify the OFT of the outcome of the proceedings after they are finally determined.

(5) But such proceedings are not invalid by reason only of the failure of the authority to comply with this section.

(6) Subordinate legislation has the same meaning as in section 21(1) of the Interpretation Act 1978 (c. 30).

(7) An order under this section must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

231 Notice of convictions and judgments to OFT

(1) This section applies if-

(a) a person is convicted of an offence by or before a court in the United Kingdom, or

(b) a judgment is given against a person by a court in civil proceedings in the United Kingdom.

(2) The court may make arrangements to bring the conviction or judgment to the attention of the OFT if it appears to the court-

(a) having regard to the functions of the OFT under this Part or under the Estate Agents Act 1979 (c. 38) that it is expedient for the conviction or judgment to be brought to the attention of the OFT, and

(b) without such arrangements the conviction or judgment may not be brought to the attention of the OFT.

(3) For the purposes of subsection (2) it is immaterial that the proceedings have been finally disposed of by the court.

(4) Judgment includes an order or decree and references to the giving of the judgment must be construed accordingly.

Interpretation

232 Goods and services

(1) References in this Part to goods and services must be construed in accordance with this section.

(2) Goods include-

(a) buildings and other structures;

(b) ships, aircraft and hovercraft.

(3) The supply of goods includes-

(a) supply by way of sale, lease, hire or hire purchase;

(b) in relation to buildings and other structures, construction of them by one person for another.

(4) Goods or services which are supplied wholly or partly outside the United Kingdom must be taken to be supplied to or for a person in the United Kingdom if they are supplied in accordance with arrangements falling within subsection (5).

(5) Arrangements fall within this subsection if they are made by any means and-

(a) at the time the arrangements are made the person seeking the supply is in the United Kingdom, or

(b) at the time the goods or services are supplied (or ought to be supplied in accordance with the arrangements) the person responsible under the arrangements for effecting the supply is in or has a place of business in the United Kingdom.

233 Person supplying goods

(1) This section has effect for the purpose of references in this Part to a person supplying or seeking to supply goods under-

(a) a hire-purchase agreement;

(b) a credit-sale agreement;

(c) a conditional sale agreement.

(2) The references include references to a person who conducts any antecedent negotiations relating to the agreement.

(3) The following expressions must be construed in accordance with section 189 of the Consumer Credit Act 1974 (c. 39) -

(a) hire-purchase agreement;

(b) credit-sale agreement;

(c) conditional sale agreement;

(d) antecedent negotiations.

234 Supply of services

(1) References in this Part to the supply of services must be construed in accordance with this section.

(2) The supply of services does not include the provision of services under a contract of service or of apprenticeship whether it is express or implied and (if it is express) whether it is oral or in writing.

(3) The supply of services includes-

(a) performing for gain or reward any activity other than the supply of goods;

(b) rendering services to order;

(c) the provision of services by making them available to potential users.

(4) The supply of services includes making arrangements for the use of computer software or for granting access to data stored in any form which is not readily accessible.

(5) The supply of services includes making arrangements by means of a relevant agreement (within the meaning of section 189(2) of the Broadcasting Act 1990 (c. 42)) for sharing the use of telecommunications apparatus.

(6) The supply of services includes permitting or making arrangements to permit the use of land in such circumstances as the Secretary of State specifies by order.

(7) The power to make an order under subsection (6) must be exercised by statutory instrument.

(8) But no such order may be made unless a draft of it has been laid before Parliament and approved by a resolution of each House.

235 Injunctions Directive

In this Part the Injunctions Directive is Directive 98/27/EC of the European Parliament and of the Council on injunctions for the protection of consumers' interests.

Crown

236 Crown

This Part binds the Crown.



Enterprise Act 2002

2002 Chapter 40 - continued




back to previous text

PART 8

ENFORCEMENT OF CERTAIN CONSUMER LEGISLATION

Introduction

210 Consumers

(1) In this Part references to consumers must be construed in accordance with this section.

(2) In relation to a domestic infringement a consumer is an individual in respect of whom the first and second conditions are satisfied.

(3) The first condition is that-

(a) goods are or are sought to be supplied to the individual (whether by way of sale or otherwise) in the course of a business carried on by the person supplying or seeking to supply them, or

(b) services are or are sought to be supplied to the individual in the course of a business carried on by the person supplying or seeking to supply them.

(4) The second condition is that-

(a) the individual receives or seeks to receive the goods or services otherwise than in the course of a business carried on by him, or

(b) the individual receives or seeks to receive the goods or services with a view to carrying on a business but not in the course of a business carried on by him.

(5) For the purposes of a domestic infringement it is immaterial whether a person supplying goods or services has a place of business in the United Kingdom.

(6) In relation to a Community infringement a consumer is a person who is a consumer for the purposes of-

(a) the Injunctions Directive, and

(b) the listed Directive concerned.

(7) A Directive is a listed Directive-

(a) if it is a Directive of the Council of the European Communities or of the European Parliament and of the Council, and

(b) if it is specified in Schedule 13 or to the extent that any of its provisions is so specified.

(8) A business includes-

(a) a professional practice;

(b) any other undertaking carried on for gain or reward;

(c) any undertaking in the course of which goods or services are supplied otherwise than free of charge.

(9) The Secretary of State may by order modify Schedule 13.

(10) An order under this section must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

211 Domestic infringements

(1) In this Part a domestic infringement is an act or omission which-

(a) is done or made by a person in the course of a business,

(b) falls within subsection (2), and

(c) harms the collective interests of consumers in the United Kingdom.

(2) An act or omission falls within this subsection if it is of a description specified by the Secretary of State by order and consists of any of the following-

(a) a contravention of an enactment which imposes a duty, prohibition or restriction enforceable by criminal proceedings;

(b) an act done or omission made in breach of contract;

(c) an act done or omission made in breach of a non-contractual duty owed to a person by virtue of an enactment or rule of law and enforceable by civil proceedings;

(d) an act or omission in respect of which an enactment provides for a remedy or sanction enforceable by civil proceedings;

(e) an act done or omission made by a person supplying or seeking to supply goods or services as a result of which an agreement or security relating to the supply is void or unenforceable to any extent;

(f) an act or omission by which a person supplying or seeking to supply goods or services purports or attempts to exercise a right or remedy relating to the supply in circumstances where the exercise of the right or remedy is restricted or excluded under or by virtue of an enactment;

(g) an act or omission by which a person supplying or seeking to supply goods or services purports or attempts to avoid (to any extent) liability relating to the supply in circumstances where such avoidance is restricted or prevented under an enactment.

(3) But an order under this section may provide that any description of act or omission falling within subsection (2) is not a domestic infringement.

(4) For the purposes of subsection (2) it is immaterial-

(a) whether or not any duty, prohibition or restriction exists in relation to consumers as such;

(b) whether or not any remedy or sanction is provided for the benefit of consumers as such;

(c) whether or not any proceedings have been brought in relation to the act or omission;

(d) whether or not any person has been convicted of an offence in respect of the contravention mentioned in subsection (2)(a);

(e) whether or not there is a waiver in respect of the breach of contract mentioned in subsection (2)(b).

(5) References to an enactment include references to subordinate legislation (within the meaning of the Interpretation Act 1978 (c. 30)).

(6) The power to make an order under this section must be exercised by statutory instrument.

(7) But no such order may be made unless a draft of it has been laid before Parliament and approved by a resolution of each House.

212 Community infringements

(1) In this Part a Community infringement is an act or omission which harms the collective interests of consumers and which-

(a) contravenes a listed Directive as given effect by the laws, regulations or administrative provisions of an EEA State, or

(b) contravenes such laws, regulations or administrative provisions which provide additional permitted protections.

(2) The laws, regulations or administrative provisions of an EEA State which give effect to a listed Directive provide additional permitted protections if-

(a) they provide protection for consumers which is in addition to the minimum protection required by the Directive concerned, and

(b) such additional protection is permitted by that Directive.

(3) The Secretary of State may by order specify for the purposes of this section the law in the United Kingdom which-

(a) gives effect to the listed Directives;

(b) provides additional permitted protections.

(4) References to a listed Directive must be construed in accordance with section 210.

(5) An EEA State is a State which is a contracting party to the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 as adjusted by the Protocol signed at Brussels on 17th March 1993.

(6) An order under this section must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

213 Enforcers

(1) Each of the following is a general enforcer-

(a) the OFT;

(b) every local weights and measures authority in Great Britain;

(c) the Department of Enterprise, Trade and Investment in Northern Ireland.

(2) A designated enforcer is any person or body (whether or not incorporated) which the Secretary of State-

(a) thinks has as one of its purposes the protection of the collective interests of consumers, and

(b) designates by order.

(3) The Secretary of State may designate a public body only if he is satisfied that it is independent.

(4) The Secretary of State may designate a person or body which is not a public body only if the person or body (as the case may be) satisfies such criteria as the Secretary of State specifies by order.

(5) A Community enforcer is a qualified entity for the purposes of the Injunctions Directive-

(a) which is for the time being specified in the list published in the Official Journal of the European Communities in pursuance of Article 4.3 of that Directive, but

(b) which is not a general enforcer or a designated enforcer.

(6) An order under this section may designate an enforcer in respect of-

(a) all infringements;

(b) infringements of such descriptions as are specified in the order.

(7) An order under this section may make different provision for different purposes.

(8) The designation of a body by virtue of subsection (3) is conclusive evidence for the purposes of any question arising under this Part that the body is a public body.

(9) An order under this section must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

(10) If requested to do so by a designated enforcer which is designated in respect of one or more Community infringements the Secretary of State must notify the Commission of the European Communities-

(a) of its name and purpose;

(b) of the Community infringements in respect of which it is designated.

(11) The Secretary of State must also notify the Commission-

(a) of the fact that a person or body in respect of which he has given notice under subsection (10) ceases to be a designated enforcer;

(b) of any change in the name or purpose of a designated enforcer in respect of which he has given such notice;

(c) of any change to the Community infringements in respect of which a designated enforcer is designated.

Enforcement procedure

214 Consultation

(1) An enforcer must not make an application for an enforcement order unless he has engaged in appropriate consultation with-

(a) the person against whom the enforcement order would be made, and

(b) the OFT (if it is not the enforcer).

(2) Appropriate consultation is consultation for the purpose of-

(a) achieving the cessation of the infringement in a case where an infringement is occurring;

(b) ensuring that there will be no repetition of the infringement in a case where the infringement has occurred;

(c) ensuring that there will be no repetition of the infringement in a case where the cessation of the infringement is achieved under paragraph (a);

(d) ensuring that the infringement does not take place in the case of a Community infringement which the enforcer believes is likely to take place.

(3) Subsection (1) does not apply if the OFT thinks that an application for an enforcement order should be made without delay.

(4) Subsection (1) ceases to apply-

(a) for the purposes of an application for an enforcement order at the end of the period of 14 days beginning with the day after the person against whom the enforcement order would be made receives a request for consultation from the enforcer;

(b) for the purposes of an application for an interim enforcement order at the end of the period of seven days beginning with the day after the person against whom the interim enforcement order would be made receives a request for consultation from the enforcer.

(5) The Secretary of State may by order make rules in relation to consultation under this section.

(6) Such an order must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

(7) In this section (except subsection (4)) and in sections 215 and 216 references to an enforcement order include references to an interim enforcement order.

215 Applications

(1) An application for an enforcement order must name the person the enforcer thinks-

(a) has engaged or is engaging in conduct which constitutes a domestic or a Community infringement, or

(b) is likely to engage in conduct which constitutes a Community infringement.

(2) A general enforcer may make an application for an enforcement order in respect of any infringement.

(3) A designated enforcer may make an application for an enforcement order in respect of an infringement to which his designation relates.

(4) A Community enforcer may make an application for an enforcement order in respect of a Community infringement.

(5) The following courts have jurisdiction to make an enforcement order-

(a) the High Court or a county court if the person against whom the order is sought carries on business or has a place of business in England and Wales or Northern Ireland;

(b) the Court of Session or the sheriff if the person against whom the order is sought carries on business or has a place of business in Scotland.

(6) If an application for an enforcement order is made by a Community enforcer the court may examine whether the purpose of the enforcer justifies its making the application.

(7) If the court thinks that the purpose of the Community enforcer does not justify its making the application the court may refuse the application on that ground alone.

(8) The purpose of a Community enforcer must be construed by reference to the Injunctions Directive.

(9) An enforcer which is not the OFT must notify the OFT of the result of an application under this section.

216 Applications: directions by OFT

(1) This section applies if the OFT believes that an enforcer other than the OFT intends to apply for an enforcement order.

(2) In such a case the OFT may direct that if an application in respect of a particular infringement is to be made it must be made-

(a) only by the OFT, or

(b) only by such other enforcer as the OFT directs.

(3) If the OFT directs that only it may make an application that does not prevent-

(a) the OFT or any enforcer from accepting an undertaking under section 219, or

(b) the OFT from taking such other steps it thinks appropriate (apart from making an application) for the purpose of securing that the infringement is not committed, continued or repeated.

(4) The OFT may vary or withdraw a direction given under this section.

(5) The OFT must take such steps as it thinks appropriate to bring a direction (or a variation or withdrawal of a direction) to the attention of enforcers it thinks may be affected by it.

(6) But this section does not prevent an application for an enforcement order being made by a Community enforcer.

217 Enforcement orders

(1) This section applies if an application for an enforcement order is made under section 215 and the court finds that the person named in the application has engaged in conduct which constitutes the infringement.

(2) This section also applies if such an application is made in relation to a Community infringement and the court finds that the person named in the application is likely to engage in conduct which constitutes the infringement.

(3) If this section applies the court may make an enforcement order against the person.

(4) In considering whether to make an enforcement order the court must have regard to whether the person named in the application-

(a) has given an undertaking under section 219 in respect of conduct such as is mentioned in subsection (3) of that section;

(b) has failed to comply with the undertaking.

(5) An enforcement order must-

(a) indicate the nature of the conduct to which the finding under subsection (1) or (2) relates, and

(b) direct the person to comply with subsection (6).

(6) A person complies with this subsection if he-

(a) does not continue or repeat the conduct;

(b) does not engage in such conduct in the course of his business or another business;

(c) does not consent to or connive in the carrying out of such conduct by a body corporate with which he has a special relationship (within the meaning of section 222(3)).

(7) But subsection (6)(a) does not apply in the case of a finding under subsection (2).

(8) An enforcement order may require a person against whom the order is made to publish in such form and manner and to such extent as the court thinks appropriate for the purpose of eliminating any continuing effects of the infringement-

(a) the order;

(b) a corrective statement.

(9) If the court makes a finding under subsection (1) or (2) it may accept an undertaking by the person-

(a) to comply with subsection (6), or

(b) to take steps which the court believes will secure that he complies with subsection (6).

(10) An undertaking under subsection (9) may include a further undertaking by the person to publish in such form and manner and to such extent as the court thinks appropriate for the purpose of eliminating any continuing effects of the infringement-


(a) the terms of the undertaking;

(b) a corrective statement.

(11) If the court-

(a) makes a finding under subsection (1) or (2), and

(b) accepts an undertaking under subsection (9),

it must not make an enforcement order in respect of the infringement to which the undertaking relates.

(12) An enforcement order made by a court in one part of the United Kingdom has effect in any other part of the United Kingdom as if made by a court in that part.

218 Interim enforcement order

(1) The court may make an interim enforcement order against a person named in the application for the order if it appears to the court-

(a) that it is alleged that the person is engaged in conduct which constitutes a domestic or Community infringement or is likely to engage in conduct which constitutes a Community infringement,

(b) that if the application had been an application for an enforcement order it would be likely to be granted,

(c) that it is expedient that the conduct is prohibited or prevented (as the case may be) immediately, and

(d) if no notice of the application has been given to the person named in the application that it is appropriate to make an interim enforcement order without notice.

(2) An interim enforcement order must-

(a) indicate the nature of the alleged conduct, and

(b) direct the person to comply with subsection (3).

(3) A person complies with this subsection if he-

(a) does not continue or repeat the conduct;

(b) does not engage in such conduct in the course of his business or another business;

(c) does not consent to or connive in the carrying out of such conduct by a body corporate with which he has a special relationship (within the meaning of section 222(3)).

(4) But subsection (3)(a) does not apply in so far as the application is made in respect of an allegation that the person is likely to engage in conduct which constitutes a Community infringement.

(5) An application for an interim enforcement order against a person may be made at any time before an application for an enforcement order against the person in respect of the same conduct is determined.

(6) An application for an interim enforcement order must refer to all matters-

(a) which are known to the applicant, and

(b) which are material to the question whether or not the application is granted.

(7) If an application for an interim enforcement order is made without notice the application must state why no notice has been given.

(8) The court may vary or discharge an interim enforcement order on the application of-

(a) the enforcer who applied for the order;

(b) the person against whom it is made.

(9) An interim enforcement order against a person is discharged on the determination of an application for an enforcement order made against the person in respect of the same conduct.

(10) If it appears to the court as mentioned in subsection (1)(a) to (c) the court may instead of making an interim enforcement order accept an undertaking from the person named in the application-

(a) to comply with subsection (3), or

(b) to take steps which the court believes will secure that he complies with subsection (3).

(11) An interim enforcement order made by a court in one part of the United Kingdom has effect in any other part of the United Kingdom as if made by a court in that part.

219 Undertakings

(1) This section applies if an enforcer has power to make an application under section 215.

(2) In such a case the enforcer may accept from a person to whom subsection (3) applies an undertaking that the person will comply with subsection (4).

(3) This subsection applies to a person who the enforcer believes-

(a) has engaged in conduct which constitutes an infringement;

(b) is engaging in such conduct;

(c) is likely to engage in conduct which constitutes a Community infringement.

(4) A person complies with this subsection if he-

(a) does not continue or repeat the conduct;

(b) does not engage in such conduct in the course of his business or another business;

(c) does not consent to or connive in the carrying out of such conduct by a body corporate with which he has a special relationship (within the meaning of section 222(3)).

(5) But subsection (4)(a) does not apply in the case of an undertaking given by a person in so far as subsection (3) applies to him by virtue of paragraph (c).

(6) If an enforcer accepts an undertaking under this section it must notify the OFT-

(a) of the terms of the undertaking;

(b) of the identity of the person who gave it.

220 Further proceedings

(1) This section applies if the court-

(a) makes an enforcement order under section 217,

(b) makes an interim enforcement order under section 218, or

(c) accepts an undertaking under either of those sections.

(2) In such a case the OFT has the same right to apply to the court in respect of a failure to comply with the order or undertaking as the enforcer who made the application for the order.

(3) An application to the court in respect of a failure to comply with an undertaking may include an application for an enforcement order or for an interim enforcement order.

(4) If the court finds that an undertaking is not being complied with it may make an enforcement order or an interim enforcement order (instead of making any other order it has power to make).

(5) In the case of an application for an enforcement order or for an interim enforcement order as mentioned in subsection (3) sections 214 and 216 must be ignored and sections 215 and 217 or 218 (as the case may be) apply subject to the following modifications-

(a) section 215(1)(b) must be ignored;

(b) section 215(5) must be ignored and the application must be made to the court which accepted the undertaking;

(c) section 217(9) to (11) must be ignored;

(d) section 218(10) must be ignored.

(6) If an enforcer which is not the OFT makes an application in respect of the failure of a person to comply with an enforcement order, an interim enforcement order or an undertaking given under section 217 or 218 the enforcer must notify the OFT-

(a) of the application;

(b) of any order made by the court on the application.

221 Community infringements: proceedings

(1) Subsection (2) applies to-

(a) every general enforcer;

(b) every designated enforcer which is a public body.

(2) An enforcer to which this subsection applies has power to take proceedings in EEA States other than the United Kingdom for the cessation or prohibition of a Community infringement.

(3) Subsection (4) applies to-

(a) every general enforcer;

(b) every designated enforcer.

(4) An enforcer to which this subsection applies may co-operate with a Community enforcer-

(a) for the purpose of bringing proceedings mentioned in subsection (2);

(b) in connection with the exercise by the Community enforcer of its functions under this Part.

(5) An EEA State is a State which is a contracting party to the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 as adjusted by the Protocol signed at Brussels on 17th March 1993.

222 Bodies corporate: accessories

(1) This section applies if the person whose conduct constitutes a domestic infringement or a Community infringement is a body corporate.

(2) If the conduct takes place with the consent or connivance of a person (an accessory) who has a special relationship with the body corporate, the consent or connivance is also conduct which constitutes the infringement.

(3) A person has a special relationship with a body corporate if he is-

(a) a controller of the body corporate, or

(b) a director, manager, secretary or other similar officer of the body corporate or a person purporting to act in such a capacity.

(4) A person is a controller of a body corporate if-

(a) the directors of the body corporate or of another body corporate which is its controller are accustomed to act in accordance with the person's directions or instructions, or

(b) either alone or with an associate or associates he is entitled to exercise or control the exercise of one third or more of the voting power at any general meeting of the body corporate or of another body corporate which is its controller.

(5) An enforcement order or an interim enforcement order may be made against an accessory in respect of an infringement whether or not such an order is made against the body corporate.

(6) The court may accept an undertaking under section 217(9) or 218(10) from an accessory in respect of an infringement whether or not it accepts such an undertaking from the body corporate.

(7) An enforcer may accept an undertaking under section 219 from an accessory in respect of an infringement whether or not it accepts such an undertaking from the body corporate.

(8) Subsection (9) applies if-

(a) an order is made as mentioned in subsection (5), or

(b) an undertaking is accepted as mentioned in subsection (6) or (7).

(9) In such a case for subsection (6) of section 217, subsection (3) of section 218 or subsection (4) of section 219 (as the case may be) there is substituted the following subsection-

"( ) A person complies with this subsection if he-

(a) does not continue or repeat the conduct;

(b) does not in the course of any business carried on by him engage in conduct such as that which constitutes the infringement committed by the body corporate mentioned in section 222(1);

(c) does not consent to or connive in the carrying out of such conduct by another body corporate with which he has a special relationship (within the meaning of section 222(3))."


(10) A person is an associate of an individual if-

(a) he is the spouse of the individual;

(b) he is a relative of the individual;

(c) he is a relative of the individual's spouse;

(d) he is the spouse of a relative of the individual;

(e) he is the spouse of a relative of the individual's spouse;

(f) he lives in the same household as the individual otherwise than merely because he or the individual is the other's employer, tenant, lodger or boarder;

(g) he is a relative of a person who is an associate of the individual by virtue of paragraph (f);

(h) he has at some time in the past fallen within any of paragraphs (a) to (g).

(11) A person is also an associate of-

(a) an individual with whom he is in partnership;

(b) an individual who is an associate of the individual mentioned in paragraph (a);

(c) a body corporate if he is a controller of it or he is an associate of a person who is a controller of the body corporate.

(12) A body corporate is an associate of another body corporate if-

(a) the same person is a controller of both;

(b) a person is a controller of one and persons who are his associates are controllers of the other;

(c) a person is a controller of one and he and persons who are his associates are controllers of the other;

(d) a group of two or more persons is a controller of each company and the groups consist of the same persons;

(e) a group of two or more persons is a controller of each company and the groups may be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person of whom he is an associate.

(13) A relative is a brother, sister, uncle, aunt, nephew, niece, lineal ancestor or lineal descendant.

223 Bodies corporate: orders

(1) This section applies if a court makes an enforcement order or an interim enforcement order against a body corporate and-

(a) at the time the order is made the body corporate is a member of a group of interconnected bodies corporate,

(b) at any time when the order is in force the body corporate becomes a member of a group of interconnected bodies corporate, or

(c) at any time when the order is in force a group of interconnected bodies corporate of which the body corporate is a member is increased by the addition of one or more further members.

(2) The court may direct that the order is binding upon all of the members of the group as if each of them were the body corporate against which the order is made.

(3) A group of interconnected bodies corporate is a group consisting of two or more bodies corporate all of whom are interconnected with each other.

(4) Any two bodies corporate are interconnected-

(a) if one of them is a subsidiary of the other, or

(b) if both of them are subsidiaries of the same body corporate.

(5) "Subsidiary" must be construed in accordance with section 736 of the Companies Act 1985 (c. 6).

Information

224 OFT

(1) The OFT may for any of the purposes mentioned in subsection (2) give notice to any person requiring the person to provide it with the information specified in the notice.

(2) The purposes are-

(a) to enable the OFT to exercise or to consider whether to exercise any function it has under this Part;

(b) to enable a designated enforcer to which section 225 does not apply to consider whether to exercise any function it has under this Part;

(c) to enable a Community enforcer to consider whether to exercise any function it has under this Part;

(d) to ascertain whether a person has complied with or is complying with an enforcement order, an interim enforcement order or an undertaking given under section 217(9), 218(10) or 219.

225 Other enforcers

(1) This section applies to-

(a) every general enforcer (other than the OFT);

(b) every designated enforcer which is a public body.

(2) An enforcer to which this section applies may for any of the purposes mentioned in subsection (3) give notice to any person requiring the person to provide the enforcer with the information specified in the notice.

(3) The purposes are-

(a) to enable the enforcer to exercise or to consider whether to exercise any function it has under this Part;

(b) to ascertain whether a person has complied with or is complying with an enforcement order or an interim enforcement order made on the application of the enforcer or an undertaking given under section 217(9) or 218(10) (as the case may be) following such an application or an undertaking given to the enforcer under section 219.

226 Notices: procedure

(1) This section applies to a notice given under section 224 or 225.

(2) The notice must-

(a) be in writing;

(b) specify the purpose for which the information is required.

(3) If the purpose is as mentioned in section 224(2)(a), (b) or (c) or 225(3)(a) the notice must specify the function concerned.

(4) A notice may specify the time within which and manner in which it is to be complied with.

(5) A notice may require the production of documents or any description of documents.

(6) An enforcer may take copies of any documents produced in compliance with such a requirement.

(7) A notice may be varied or revoked by a subsequent notice.

(8) But a notice must not require a person to provide any information or produce any document which he would be entitled to refuse to provide or produce-

(a) in proceedings in the High Court on the grounds of legal professional privilege;

(b) in proceedings in the Court of Session on the grounds of confidentiality of communications.

227 Notices: enforcement

(1) If a person fails to comply with a notice given under section 224 or 225 the enforcer who gave the notice may make an application under this section.

(2) If it appears to the court that the person to whom the notice was given has failed to comply with the notice the court may make an order under this section.

(3) An order under this section may require the person to whom the notice was given to do anything the court thinks it is reasonable for him to do for any of the purposes mentioned in section 224 or 225 (as the case may be) to ensure that the notice is complied with.

(4) An order under this section may require the person to meet all the costs or expenses of the application.

(5) If the person is a company or association the court in proceeding under subsection (4) may require any officer of the company or association who is responsible for the failure to meet the costs or expenses.

(6) The court is a court which may make an enforcement order.

(7) In subsection (5) an officer of a company is a person who is a director, manager, secretary or other similar officer of the company.

Miscellaneous

228 Evidence

(1) Proceedings under this Part are civil proceedings for the purposes of-

(a) section 11 of the Civil Evidence Act 1968 (c. 64) (convictions admissible as evidence in civil proceedings);

(b) section 10 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1968 (c. 70) (corresponding provision in Scotland);

(c) section 7 of the Civil Evidence Act (Northern Ireland) 1971 (c. 36 (N.I.)) (corresponding provision in Northern Ireland).

(2) In proceedings under this Part any finding by a court in civil proceedings that an act or omission mentioned in section 211(2)(b), (c) or (d) or 212(1) has occurred-

(a) is admissible as evidence that the act or omission occurred;

(b) unless the contrary is proved, is sufficient evidence that the act or omission occurred.

(3) But subsection (2) does not apply to any finding-

(a) which has been reversed on appeal;

(b) which has been varied on appeal so as to negative it.

229 Advice and information

(1) As soon as is reasonably practicable after the passing of this Act the OFT must prepare and publish advice and information with a view to-

(a) explaining the provisions of this Part to persons who are likely to be affected by them, and

(b) indicating how the OFT expects such provisions to operate.

(2) The OFT may at any time publish revised or new advice or information.

(3) Advice or information published in pursuance of subsection (1)(b) may include advice or information about the factors which the OFT may take into account in considering how to exercise the functions conferred on it by this Part.

(4) Advice or information published by the OFT under this section is to be published in such form and in such manner as it considers appropriate.

(5) In preparing advice or information under this section the OFT must consult such persons as it thinks are representative of persons affected by this Part.

(6) If any proposed advice or information relates to a matter in respect of which another general enforcer or a designated enforcer may act the persons to be consulted must include that enforcer.

230 Notice to OFT of intended prosecution

(1) This section applies if a local weights and measures authority in England and Wales intends to start proceedings for an offence under an enactment or subordinate legislation specified by the Secretary of State by order for the purposes of this section.

(2) The authority must give the OFT-

(a) notice of its intention to start the proceedings;

(b) a summary of the evidence it intends to lead in respect of the charges.

(3) The authority must not start the proceedings until whichever is the earlier of the following-

(a) the end of the period of 14 days starting with the day on which the authority gives the notice;

(b) the day on which it is notified by the OFT that the OFT has received the notice and summary given under subsection (2).

(4) The authority must also notify the OFT of the outcome of the proceedings after they are finally determined.

(5) But such proceedings are not invalid by reason only of the failure of the authority to comply with this section.

(6) Subordinate legislation has the same meaning as in section 21(1) of the Interpretation Act 1978 (c. 30).

(7) An order under this section must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

231 Notice of convictions and judgments to OFT

(1) This section applies if-

(a) a person is convicted of an offence by or before a court in the United Kingdom, or

(b) a judgment is given against a person by a court in civil proceedings in the United Kingdom.

(2) The court may make arrangements to bring the conviction or judgment to the attention of the OFT if it appears to the court-

(a) having regard to the functions of the OFT under this Part or under the Estate Agents Act 1979 (c. 38) that it is expedient for the conviction or judgment to be brought to the attention of the OFT, and

(b) without such arrangements the conviction or judgment may not be brought to the attention of the OFT.

(3) For the purposes of subsection (2) it is immaterial that the proceedings have been finally disposed of by the court.

(4) Judgment includes an order or decree and references to the giving of the judgment must be construed accordingly.

Interpretation

232 Goods and services

(1) References in this Part to goods and services must be construed in accordance with this section.

(2) Goods include-

(a) buildings and other structures;

(b) ships, aircraft and hovercraft.

(3) The supply of goods includes-

(a) supply by way of sale, lease, hire or hire purchase;

(b) in relation to buildings and other structures, construction of them by one person for another.

(4) Goods or services which are supplied wholly or partly outside the United Kingdom must be taken to be supplied to or for a person in the United Kingdom if they are supplied in accordance with arrangements falling within subsection (5).

(5) Arrangements fall within this subsection if they are made by any means and-

(a) at the time the arrangements are made the person seeking the supply is in the United Kingdom, or

(b) at the time the goods or services are supplied (or ought to be supplied in accordance with the arrangements) the person responsible under the arrangements for effecting the supply is in or has a place of business in the United Kingdom.

233 Person supplying goods

(1) This section has effect for the purpose of references in this Part to a person supplying or seeking to supply goods under-

(a) a hire-purchase agreement;

(b) a credit-sale agreement;

(c) a conditional sale agreement.

(2) The references include references to a person who conducts any antecedent negotiations relating to the agreement.

(3) The following expressions must be construed in accordance with section 189 of the Consumer Credit Act 1974 (c. 39) -

(a) hire-purchase agreement;

(b) credit-sale agreement;

(c) conditional sale agreement;

(d) antecedent negotiations.

234 Supply of services

(1) References in this Part to the supply of services must be construed in accordance with this section.

(2) The supply of services does not include the provision of services under a contract of service or of apprenticeship whether it is express or implied and (if it is express) whether it is oral or in writing.

(3) The supply of services includes-

(a) performing for gain or reward any activity other than the supply of goods;

(b) rendering services to order;

(c) the provision of services by making them available to potential users.

(4) The supply of services includes making arrangements for the use of computer software or for granting access to data stored in any form which is not readily accessible.

(5) The supply of services includes making arrangements by means of a relevant agreement (within the meaning of section 189(2) of the Broadcasting Act 1990 (c. 42)) for sharing the use of telecommunications apparatus.

(6) The supply of services includes permitting or making arrangements to permit the use of land in such circumstances as the Secretary of State specifies by order.

(7) The power to make an order under subsection (6) must be exercised by statutory instrument.

(8) But no such order may be made unless a draft of it has been laid before Parliament and approved by a resolution of each House.

235 Injunctions Directive

In this Part the Injunctions Directive is Directive 98/27/EC of the European Parliament and of the Council on injunctions for the protection of consumers' interests.

Crown

  1. Crown


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PART 8

ENFORCEMENT OF CERTAIN CONSUMER LEGISLATION

Introduction

210 Consumers

(1) In this Part references to consumers must be construed in accordance with this section.

(2) In relation to a domestic infringement a consumer is an individual in respect of whom the first and second conditions are satisfied.

(3) The first condition is that-

(a) goods are or are sought to be supplied to the individual (whether by way of sale or otherwise) in the course of a business carried on by the person supplying or seeking to supply them, or

(b) services are or are sought to be supplied to the individual in the course of a business carried on by the person supplying or seeking to supply them.

(4) The second condition is that-

(a) the individual receives or seeks to receive the goods or services otherwise than in the course of a business carried on by him, or

(b) the individual receives or seeks to receive the goods or services with a view to carrying on a business but not in the course of a business carried on by him.

(5) For the purposes of a domestic infringement it is immaterial whether a person supplying goods or services has a place of business in the United Kingdom.

(6) In relation to a Community infringement a consumer is a person who is a consumer for the purposes of-

(a) the Injunctions Directive, and

(b) the listed Directive concerned.

(7) A Directive is a listed Directive-

(a) if it is a Directive of the Council of the European Communities or of the European Parliament and of the Council, and

(b) if it is specified in Schedule 13 or to the extent that any of its provisions is so specified.

(8) A business includes-

(a) a professional practice;

(b) any other undertaking carried on for gain or reward;

(c) any undertaking in the course of which goods or services are supplied otherwise than free of charge.

(9) The Secretary of State may by order modify Schedule 13.

(10) An order under this section must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

211 Domestic infringements

(1) In this Part a domestic infringement is an act or omission which-

(a) is done or made by a person in the course of a business,

(b) falls within subsection (2), and

(c) harms the collective interests of consumers in the United Kingdom.

(2) An act or omission falls within this subsection if it is of a description specified by the Secretary of State by order and consists of any of the following-

(a) a contravention of an enactment which imposes a duty, prohibition or restriction enforceable by criminal proceedings;

(b) an act done or omission made in breach of contract;

(c) an act done or omission made in breach of a non-contractual duty owed to a person by virtue of an enactment or rule of law and enforceable by civil proceedings;

(d) an act or omission in respect of which an enactment provides for a remedy or sanction enforceable by civil proceedings;

(e) an act done or omission made by a person supplying or seeking to supply goods or services as a result of which an agreement or security relating to the supply is void or unenforceable to any extent;

(f) an act or omission by which a person supplying or seeking to supply goods or services purports or attempts to exercise a right or remedy relating to the supply in circumstances where the exercise of the right or remedy is restricted or excluded under or by virtue of an enactment;

(g) an act or omission by which a person supplying or seeking to supply goods or services purports or attempts to avoid (to any extent) liability relating to the supply in circumstances where such avoidance is restricted or prevented under an enactment.

(3) But an order under this section may provide that any description of act or omission falling within subsection (2) is not a domestic infringement.

(4) For the purposes of subsection (2) it is immaterial-

(a) whether or not any duty, prohibition or restriction exists in relation to consumers as such;

(b) whether or not any remedy or sanction is provided for the benefit of consumers as such;

(c) whether or not any proceedings have been brought in relation to the act or omission;

(d) whether or not any person has been convicted of an offence in respect of the contravention mentioned in subsection (2)(a);

(e) whether or not there is a waiver in respect of the breach of contract mentioned in subsection (2)(b).

(5) References to an enactment include references to subordinate legislation (within the meaning of the Interpretation Act 1978 (c. 30)).

(6) The power to make an order under this section must be exercised by statutory instrument.

(7) But no such order may be made unless a draft of it has been laid before Parliament and approved by a resolution of each House.

212 Community infringements

(1) In this Part a Community infringement is an act or omission which harms the collective interests of consumers and which-

(a) contravenes a listed Directive as given effect by the laws, regulations or administrative provisions of an EEA State, or

(b) contravenes such laws, regulations or administrative provisions which provide additional permitted protections.

(2) The laws, regulations or administrative provisions of an EEA State which give effect to a listed Directive provide additional permitted protections if-

(a) they provide protection for consumers which is in addition to the minimum protection required by the Directive concerned, and

(b) such additional protection is permitted by that Directive.

(3) The Secretary of State may by order specify for the purposes of this section the law in the United Kingdom which-

(a) gives effect to the listed Directives;

(b) provides additional permitted protections.

(4) References to a listed Directive must be construed in accordance with section 210.

(5) An EEA State is a State which is a contracting party to the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 as adjusted by the Protocol signed at Brussels on 17th March 1993.

(6) An order under this section must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

213 Enforcers

(1) Each of the following is a general enforcer-

(a) the OFT;

(b) every local weights and measures authority in Great Britain;

(c) the Department of Enterprise, Trade and Investment in Northern Ireland.

(2) A designated enforcer is any person or body (whether or not incorporated) which the Secretary of State-

(a) thinks has as one of its purposes the protection of the collective interests of consumers, and

(b) designates by order.

(3) The Secretary of State may designate a public body only if he is satisfied that it is independent.

(4) The Secretary of State may designate a person or body which is not a public body only if the person or body (as the case may be) satisfies such criteria as the Secretary of State specifies by order.

(5) A Community enforcer is a qualified entity for the purposes of the Injunctions Directive-

(a) which is for the time being specified in the list published in the Official Journal of the European Communities in pursuance of Article 4.3 of that Directive, but

(b) which is not a general enforcer or a designated enforcer.

(6) An order under this section may designate an enforcer in respect of-

(a) all infringements;

(b) infringements of such descriptions as are specified in the order.

(7) An order under this section may make different provision for different purposes.

(8) The designation of a body by virtue of subsection (3) is conclusive evidence for the purposes of any question arising under this Part that the body is a public body.

(9) An order under this section must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

(10) If requested to do so by a designated enforcer which is designated in respect of one or more Community infringements the Secretary of State must notify the Commission of the European Communities-

(a) of its name and purpose;

(b) of the Community infringements in respect of which it is designated.

(11) The Secretary of State must also notify the Commission-

(a) of the fact that a person or body in respect of which he has given notice under subsection (10) ceases to be a designated enforcer;

(b) of any change in the name or purpose of a designated enforcer in respect of which he has given such notice;

(c) of any change to the Community infringements in respect of which a designated enforcer is designated.

Enforcement procedure

214 Consultation

(1) An enforcer must not make an application for an enforcement order unless he has engaged in appropriate consultation with-

(a) the person against whom the enforcement order would be made, and

(b) the OFT (if it is not the enforcer).

(2) Appropriate consultation is consultation for the purpose of-

(a) achieving the cessation of the infringement in a case where an infringement is occurring;

(b) ensuring that there will be no repetition of the infringement in a case where the infringement has occurred;

(c) ensuring that there will be no repetition of the infringement in a case where the cessation of the infringement is achieved under paragraph (a);

(d) ensuring that the infringement does not take place in the case of a Community infringement which the enforcer believes is likely to take place.

(3) Subsection (1) does not apply if the OFT thinks that an application for an enforcement order should be made without delay.

(4) Subsection (1) ceases to apply-

(a) for the purposes of an application for an enforcement order at the end of the period of 14 days beginning with the day after the person against whom the enforcement order would be made receives a request for consultation from the enforcer;

(b) for the purposes of an application for an interim enforcement order at the end of the period of seven days beginning with the day after the person against whom the interim enforcement order would be made receives a request for consultation from the enforcer.

(5) The Secretary of State may by order make rules in relation to consultation under this section.

(6) Such an order must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

(7) In this section (except subsection (4)) and in sections 215 and 216 references to an enforcement order include references to an interim enforcement order.

215 Applications

(1) An application for an enforcement order must name the person the enforcer thinks-

(a) has engaged or is engaging in conduct which constitutes a domestic or a Community infringement, or

(b) is likely to engage in conduct which constitutes a Community infringement.

(2) A general enforcer may make an application for an enforcement order in respect of any infringement.

(3) A designated enforcer may make an application for an enforcement order in respect of an infringement to which his designation relates.

(4) A Community enforcer may make an application for an enforcement order in respect of a Community infringement.

(5) The following courts have jurisdiction to make an enforcement order-

(a) the High Court or a county court if the person against whom the order is sought carries on business or has a place of business in England and Wales or Northern Ireland;

(b) the Court of Session or the sheriff if the person against whom the order is sought carries on business or has a place of business in Scotland.

(6) If an application for an enforcement order is made by a Community enforcer the court may examine whether the purpose of the enforcer justifies its making the application.

(7) If the court thinks that the purpose of the Community enforcer does not justify its making the application the court may refuse the application on that ground alone.

(8) The purpose of a Community enforcer must be construed by reference to the Injunctions Directive.

(9) An enforcer which is not the OFT must notify the OFT of the result of an application under this section.

216 Applications: directions by OFT

(1) This section applies if the OFT believes that an enforcer other than the OFT intends to apply for an enforcement order.

(2) In such a case the OFT may direct that if an application in respect of a particular infringement is to be made it must be made-

(a) only by the OFT, or

(b) only by such other enforcer as the OFT directs.

(3) If the OFT directs that only it may make an application that does not prevent-

(a) the OFT or any enforcer from accepting an undertaking under section 219, or

(b) the OFT from taking such other steps it thinks appropriate (apart from making an application) for the purpose of securing that the infringement is not committed, continued or repeated.

(4) The OFT may vary or withdraw a direction given under this section.

(5) The OFT must take such steps as it thinks appropriate to bring a direction (or a variation or withdrawal of a direction) to the attention of enforcers it thinks may be affected by it.

(6) But this section does not prevent an application for an enforcement order being made by a Community enforcer.

217 Enforcement orders

(1) This section applies if an application for an enforcement order is made under section 215 and the court finds that the person named in the application has engaged in conduct which constitutes the infringement.

(2) This section also applies if such an application is made in relation to a Community infringement and the court finds that the person named in the application is likely to engage in conduct which constitutes the infringement.

(3) If this section applies the court may make an enforcement order against the person.

(4) In considering whether to make an enforcement order the court must have regard to whether the person named in the application-

(a) has given an undertaking under section 219 in respect of conduct such as is mentioned in subsection (3) of that section;

(b) has failed to comply with the undertaking.

(5) An enforcement order must-

(a) indicate the nature of the conduct to which the finding under subsection (1) or (2) relates, and

(b) direct the person to comply with subsection (6).

(6) A person complies with this subsection if he-

(a) does not continue or repeat the conduct;

(b) does not engage in such conduct in the course of his business or another business;

(c) does not consent to or connive in the carrying out of such conduct by a body corporate with which he has a special relationship (within the meaning of section 222(3)).

(7) But subsection (6)(a) does not apply in the case of a finding under subsection (2).

(8) An enforcement order may require a person against whom the order is made to publish in such form and manner and to such extent as the court thinks appropriate for the purpose of eliminating any continuing effects of the infringement-

(a) the order;

(b) a corrective statement.

(9) If the court makes a finding under subsection (1) or (2) it may accept an undertaking by the person-

(a) to comply with subsection (6), or

(b) to take steps which the court believes will secure that he complies with subsection (6).

(10) An undertaking under subsection (9) may include a further undertaking by the person to publish in such form and manner and to such extent as the court thinks appropriate for the purpose of eliminating any continuing effects of the infringement-


(a) the terms of the undertaking;

(b) a corrective statement.

(11) If the court-

(a) makes a finding under subsection (1) or (2), and

(b) accepts an undertaking under subsection (9),

it must not make an enforcement order in respect of the infringement to which the undertaking relates.

(12) An enforcement order made by a court in one part of the United Kingdom has effect in any other part of the United Kingdom as if made by a court in that part.

218 Interim enforcement order

(1) The court may make an interim enforcement order against a person named in the application for the order if it appears to the court-

(a) that it is alleged that the person is engaged in conduct which constitutes a domestic or Community infringement or is likely to engage in conduct which constitutes a Community infringement,

(b) that if the application had been an application for an enforcement order it would be likely to be granted,

(c) that it is expedient that the conduct is prohibited or prevented (as the case may be) immediately, and

(d) if no notice of the application has been given to the person named in the application that it is appropriate to make an interim enforcement order without notice.

(2) An interim enforcement order must-

(a) indicate the nature of the alleged conduct, and

(b) direct the person to comply with subsection (3).

(3) A person complies with this subsection if he-

(a) does not continue or repeat the conduct;

(b) does not engage in such conduct in the course of his business or another business;

(c) does not consent to or connive in the carrying out of such conduct by a body corporate with which he has a special relationship (within the meaning of section 222(3)).

(4) But subsection (3)(a) does not apply in so far as the application is made in respect of an allegation that the person is likely to engage in conduct which constitutes a Community infringement.

(5) An application for an interim enforcement order against a person may be made at any time before an application for an enforcement order against the person in respect of the same conduct is determined.

(6) An application for an interim enforcement order must refer to all matters-

(a) which are known to the applicant, and

(b) which are material to the question whether or not the application is granted.

(7) If an application for an interim enforcement order is made without notice the application must state why no notice has been given.

(8) The court may vary or discharge an interim enforcement order on the application of-

(a) the enforcer who applied for the order;

(b) the person against whom it is made.

(9) An interim enforcement order against a person is discharged on the determination of an application for an enforcement order made against the person in respect of the same conduct.

(10) If it appears to the court as mentioned in subsection (1)(a) to (c) the court may instead of making an interim enforcement order accept an undertaking from the person named in the application-

(a) to comply with subsection (3), or

(b) to take steps which the court believes will secure that he complies with subsection (3).

(11) An interim enforcement order made by a court in one part of the United Kingdom has effect in any other part of the United Kingdom as if made by a court in that part.

219 Undertakings

(1) This section applies if an enforcer has power to make an application under section 215.

(2) In such a case the enforcer may accept from a person to whom subsection (3) applies an undertaking that the person will comply with subsection (4).

(3) This subsection applies to a person who the enforcer believes-

(a) has engaged in conduct which constitutes an infringement;

(b) is engaging in such conduct;

(c) is likely to engage in conduct which constitutes a Community infringement.

(4) A person complies with this subsection if he-

(a) does not continue or repeat the conduct;

(b) does not engage in such conduct in the course of his business or another business;

(c) does not consent to or connive in the carrying out of such conduct by a body corporate with which he has a special relationship (within the meaning of section 222(3)).

(5) But subsection (4)(a) does not apply in the case of an undertaking given by a person in so far as subsection (3) applies to him by virtue of paragraph (c).

(6) If an enforcer accepts an undertaking under this section it must notify the OFT-

(a) of the terms of the undertaking;

(b) of the identity of the person who gave it.

220 Further proceedings

(1) This section applies if the court-

(a) makes an enforcement order under section 217,

(b) makes an interim enforcement order under section 218, or

(c) accepts an undertaking under either of those sections.

(2) In such a case the OFT has the same right to apply to the court in respect of a failure to comply with the order or undertaking as the enforcer who made the application for the order.

(3) An application to the court in respect of a failure to comply with an undertaking may include an application for an enforcement order or for an interim enforcement order.

(4) If the court finds that an undertaking is not being complied with it may make an enforcement order or an interim enforcement order (instead of making any other order it has power to make).

(5) In the case of an application for an enforcement order or for an interim enforcement order as mentioned in subsection (3) sections 214 and 216 must be ignored and sections 215 and 217 or 218 (as the case may be) apply subject to the following modifications-

(a) section 215(1)(b) must be ignored;

(b) section 215(5) must be ignored and the application must be made to the court which accepted the undertaking;

(c) section 217(9) to (11) must be ignored;

(d) section 218(10) must be ignored.

(6) If an enforcer which is not the OFT makes an application in respect of the failure of a person to comply with an enforcement order, an interim enforcement order or an undertaking given under section 217 or 218 the enforcer must notify the OFT-

(a) of the application;

(b) of any order made by the court on the application.

221 Community infringements: proceedings

(1) Subsection (2) applies to-

(a) every general enforcer;

(b) every designated enforcer which is a public body.

(2) An enforcer to which this subsection applies has power to take proceedings in EEA States other than the United Kingdom for the cessation or prohibition of a Community infringement.

(3) Subsection (4) applies to-

(a) every general enforcer;

(b) every designated enforcer.

(4) An enforcer to which this subsection applies may co-operate with a Community enforcer-

(a) for the purpose of bringing proceedings mentioned in subsection (2);

(b) in connection with the exercise by the Community enforcer of its functions under this Part.

(5) An EEA State is a State which is a contracting party to the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 as adjusted by the Protocol signed at Brussels on 17th March 1993.

222 Bodies corporate: accessories

(1) This section applies if the person whose conduct constitutes a domestic infringement or a Community infringement is a body corporate.

(2) If the conduct takes place with the consent or connivance of a person (an accessory) who has a special relationship with the body corporate, the consent or connivance is also conduct which constitutes the infringement.

(3) A person has a special relationship with a body corporate if he is-

(a) a controller of the body corporate, or

(b) a director, manager, secretary or other similar officer of the body corporate or a person purporting to act in such a capacity.

(4) A person is a controller of a body corporate if-

(a) the directors of the body corporate or of another body corporate which is its controller are accustomed to act in accordance with the person's directions or instructions, or

(b) either alone or with an associate or associates he is entitled to exercise or control the exercise of one third or more of the voting power at any general meeting of the body corporate or of another body corporate which is its controller.

(5) An enforcement order or an interim enforcement order may be made against an accessory in respect of an infringement whether or not such an order is made against the body corporate.

(6) The court may accept an undertaking under section 217(9) or 218(10) from an accessory in respect of an infringement whether or not it accepts such an undertaking from the body corporate.

(7) An enforcer may accept an undertaking under section 219 from an accessory in respect of an infringement whether or not it accepts such an undertaking from the body corporate.

(8) Subsection (9) applies if-

(a) an order is made as mentioned in subsection (5), or

(b) an undertaking is accepted as mentioned in subsection (6) or (7).

(9) In such a case for subsection (6) of section 217, subsection (3) of section 218 or subsection (4) of section 219 (as the case may be) there is substituted the following subsection-

"( ) A person complies with this subsection if he-

(a) does not continue or repeat the conduct;

(b) does not in the course of any business carried on by him engage in conduct such as that which constitutes the infringement committed by the body corporate mentioned in section 222(1);

(c) does not consent to or connive in the carrying out of such conduct by another body corporate with which he has a special relationship (within the meaning of section 222(3))."


(10) A person is an associate of an individual if-

(a) he is the spouse of the individual;

(b) he is a relative of the individual;

(c) he is a relative of the individual's spouse;

(d) he is the spouse of a relative of the individual;

(e) he is the spouse of a relative of the individual's spouse;

(f) he lives in the same household as the individual otherwise than merely because he or the individual is the other's employer, tenant, lodger or boarder;

(g) he is a relative of a person who is an associate of the individual by virtue of paragraph (f);

(h) he has at some time in the past fallen within any of paragraphs (a) to (g).

(11) A person is also an associate of-

(a) an individual with whom he is in partnership;

(b) an individual who is an associate of the individual mentioned in paragraph (a);

(c) a body corporate if he is a controller of it or he is an associate of a person who is a controller of the body corporate.

(12) A body corporate is an associate of another body corporate if-

(a) the same person is a controller of both;

(b) a person is a controller of one and persons who are his associates are controllers of the other;

(c) a person is a controller of one and he and persons who are his associates are controllers of the other;

(d) a group of two or more persons is a controller of each company and the groups consist of the same persons;

(e) a group of two or more persons is a controller of each company and the groups may be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person of whom he is an associate.

(13) A relative is a brother, sister, uncle, aunt, nephew, niece, lineal ancestor or lineal descendant.

223 Bodies corporate: orders

(1) This section applies if a court makes an enforcement order or an interim enforcement order against a body corporate and-

(a) at the time the order is made the body corporate is a member of a group of interconnected bodies corporate,

(b) at any time when the order is in force the body corporate becomes a member of a group of interconnected bodies corporate, or

(c) at any time when the order is in force a group of interconnected bodies corporate of which the body corporate is a member is increased by the addition of one or more further members.

(2) The court may direct that the order is binding upon all of the members of the group as if each of them were the body corporate against which the order is made.

(3) A group of interconnected bodies corporate is a group consisting of two or more bodies corporate all of whom are interconnected with each other.

(4) Any two bodies corporate are interconnected-

(a) if one of them is a subsidiary of the other, or

(b) if both of them are subsidiaries of the same body corporate.

(5) "Subsidiary" must be construed in accordance with section 736 of the Companies Act 1985 (c. 6).

Information

224 OFT

(1) The OFT may for any of the purposes mentioned in subsection (2) give notice to any person requiring the person to provide it with the information specified in the notice.

(2) The purposes are-

(a) to enable the OFT to exercise or to consider whether to exercise any function it has under this Part;

(b) to enable a designated enforcer to which section 225 does not apply to consider whether to exercise any function it has under this Part;

(c) to enable a Community enforcer to consider whether to exercise any function it has under this Part;

(d) to ascertain whether a person has complied with or is complying with an enforcement order, an interim enforcement order or an undertaking given under section 217(9), 218(10) or 219.

225 Other enforcers

(1) This section applies to-

(a) every general enforcer (other than the OFT);

(b) every designated enforcer which is a public body.

(2) An enforcer to which this section applies may for any of the purposes mentioned in subsection (3) give notice to any person requiring the person to provide the enforcer with the information specified in the notice.

(3) The purposes are-

(a) to enable the enforcer to exercise or to consider whether to exercise any function it has under this Part;

(b) to ascertain whether a person has complied with or is complying with an enforcement order or an interim enforcement order made on the application of the enforcer or an undertaking given under section 217(9) or 218(10) (as the case may be) following such an application or an undertaking given to the enforcer under section 219.

226 Notices: procedure

(1) This section applies to a notice given under section 224 or 225.

(2) The notice must-

(a) be in writing;

(b) specify the purpose for which the information is required.

(3) If the purpose is as mentioned in section 224(2)(a), (b) or (c) or 225(3)(a) the notice must specify the function concerned.

(4) A notice may specify the time within which and manner in which it is to be complied with.

(5) A notice may require the production of documents or any description of documents.

(6) An enforcer may take copies of any documents produced in compliance with such a requirement.

(7) A notice may be varied or revoked by a subsequent notice.

(8) But a notice must not require a person to provide any information or produce any document which he would be entitled to refuse to provide or produce-

(a) in proceedings in the High Court on the grounds of legal professional privilege;

(b) in proceedings in the Court of Session on the grounds of confidentiality of communications.

227 Notices: enforcement

(1) If a person fails to comply with a notice given under section 224 or 225 the enforcer who gave the notice may make an application under this section.

(2) If it appears to the court that the person to whom the notice was given has failed to comply with the notice the court may make an order under this section.

(3) An order under this section may require the person to whom the notice was given to do anything the court thinks it is reasonable for him to do for any of the purposes mentioned in section 224 or 225 (as the case may be) to ensure that the notice is complied with.

(4) An order under this section may require the person to meet all the costs or expenses of the application.

(5) If the person is a company or association the court in proceeding under subsection (4) may require any officer of the company or association who is responsible for the failure to meet the costs or expenses.

(6) The court is a court which may make an enforcement order.

(7) In subsection (5) an officer of a company is a person who is a director, manager, secretary or other similar officer of the company.

Miscellaneous

228 Evidence

(1) Proceedings under this Part are civil proceedings for the purposes of-

(a) section 11 of the Civil Evidence Act 1968 (c. 64) (convictions admissible as evidence in civil proceedings);

(b) section 10 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1968 (c. 70) (corresponding provision in Scotland);

(c) section 7 of the Civil Evidence Act (Northern Ireland) 1971 (c. 36 (N.I.)) (corresponding provision in Northern Ireland).

(2) In proceedings under this Part any finding by a court in civil proceedings that an act or omission mentioned in section 211(2)(b), (c) or (d) or 212(1) has occurred-

(a) is admissible as evidence that the act or omission occurred;

(b) unless the contrary is proved, is sufficient evidence that the act or omission occurred.

(3) But subsection (2) does not apply to any finding-

(a) which has been reversed on appeal;

(b) which has been varied on appeal so as to negative it.

229 Advice and information

(1) As soon as is reasonably practicable after the passing of this Act the OFT must prepare and publish advice and information with a view to-

(a) explaining the provisions of this Part to persons who are likely to be affected by them, and

(b) indicating how the OFT expects such provisions to operate.

(2) The OFT may at any time publish revised or new advice or information.

(3) Advice or information published in pursuance of subsection (1)(b) may include advice or information about the factors which the OFT may take into account in considering how to exercise the functions conferred on it by this Part.

(4) Advice or information published by the OFT under this section is to be published in such form and in such manner as it considers appropriate.

(5) In preparing advice or information under this section the OFT must consult such persons as it thinks are representative of persons affected by this Part.

(6) If any proposed advice or information relates to a matter in respect of which another general enforcer or a designated enforcer may act the persons to be consulted must include that enforcer.

230 Notice to OFT of intended prosecution

(1) This section applies if a local weights and measures authority in England and Wales intends to start proceedings for an offence under an enactment or subordinate legislation specified by the Secretary of State by order for the purposes of this section.

(2) The authority must give the OFT-

(a) notice of its intention to start the proceedings;

(b) a summary of the evidence it intends to lead in respect of the charges.

(3) The authority must not start the proceedings until whichever is the earlier of the following-

(a) the end of the period of 14 days starting with the day on which the authority gives the notice;

(b) the day on which it is notified by the OFT that the OFT has received the notice and summary given under subsection (2).

(4) The authority must also notify the OFT of the outcome of the proceedings after they are finally determined.

(5) But such proceedings are not invalid by reason only of the failure of the authority to comply with this section.

(6) Subordinate legislation has the same meaning as in section 21(1) of the Interpretation Act 1978 (c. 30).

(7) An order under this section must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

231 Notice of convictions and judgments to OFT

(1) This section applies if-

(a) a person is convicted of an offence by or before a court in the United Kingdom, or

(b) a judgment is given against a person by a court in civil proceedings in the United Kingdom.

(2) The court may make arrangements to bring the conviction or judgment to the attention of the OFT if it appears to the court-

(a) having regard to the functions of the OFT under this Part or under the Estate Agents Act 1979 (c. 38) that it is expedient for the conviction or judgment to be brought to the attention of the OFT, and

(b) without such arrangements the conviction or judgment may not be brought to the attention of the OFT.

(3) For the purposes of subsection (2) it is immaterial that the proceedings have been finally disposed of by the court.

(4) Judgment includes an order or decree and references to the giving of the judgment must be construed accordingly.

Interpretation

232 Goods and services

(1) References in this Part to goods and services must be construed in accordance with this section.

(2) Goods include-

(a) buildings and other structures;

(b) ships, aircraft and hovercraft.

(3) The supply of goods includes-

(a) supply by way of sale, lease, hire or hire purchase;

(b) in relation to buildings and other structures, construction of them by one person for another.

(4) Goods or services which are supplied wholly or partly outside the United Kingdom must be taken to be supplied to or for a person in the United Kingdom if they are supplied in accordance with arrangements falling within subsection (5).

(5) Arrangements fall within this subsection if they are made by any means and-

(a) at the time the arrangements are made the person seeking the supply is in the United Kingdom, or

(b) at the time the goods or services are supplied (or ought to be supplied in accordance with the arrangements) the person responsible under the arrangements for effecting the supply is in or has a place of business in the United Kingdom.

233 Person supplying goods

(1) This section has effect for the purpose of references in this Part to a person supplying or seeking to supply goods under-

(a) a hire-purchase agreement;

(b) a credit-sale agreement;

(c) a conditional sale agreement.

(2) The references include references to a person who conducts any antecedent negotiations relating to the agreement.

(3) The following expressions must be construed in accordance with section 189 of the Consumer Credit Act 1974 (c. 39) -

(a) hire-purchase agreement;

(b) credit-sale agreement;

(c) conditional sale agreement;

(d) antecedent negotiations.

234 Supply of services

(1) References in this Part to the supply of services must be construed in accordance with this section.

(2) The supply of services does not include the provision of services under a contract of service or of apprenticeship whether it is express or implied and (if it is express) whether it is oral or in writing.

(3) The supply of services includes-

(a) performing for gain or reward any activity other than the supply of goods;

(b) rendering services to order;

(c) the provision of services by making them available to potential users.

(4) The supply of services includes making arrangements for the use of computer software or for granting access to data stored in any form which is not readily accessible.

(5) The supply of services includes making arrangements by means of a relevant agreement (within the meaning of section 189(2) of the Broadcasting Act 1990 (c. 42)) for sharing the use of telecommunications apparatus.

(6) The supply of services includes permitting or making arrangements to permit the use of land in such circumstances as the Secretary of State specifies by order.

(7) The power to make an order under subsection (6) must be exercised by statutory instrument.

(8) But no such order may be made unless a draft of it has been laid before Parliament and approved by a resolution of each House.

235 Injunctions Directive

In this Part the Injunctions Directive is Directive 98/27/EC of the European Parliament and of the Council on injunctions for the protection of consumers' interests.

Crown

236 Crown

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PART 8

ENFORCEMENT OF CERTAIN CONSUMER LEGISLATION

Introduction

210 Consumers

(1) In this Part references to consumers must be construed in accordance with this section.

(2) In relation to a domestic infringement a consumer is an individual in respect of whom the first and second conditions are satisfied.

(3) The first condition is that-

(a) goods are or are sought to be supplied to the individual (whether by way of sale or otherwise) in the course of a business carried on by the person supplying or seeking to supply them, or

(b) services are or are sought to be supplied to the individual in the course of a business carried on by the person supplying or seeking to supply them.

(4) The second condition is that-

(a) the individual receives or seeks to receive the goods or services otherwise than in the course of a business carried on by him, or

(b) the individual receives or seeks to receive the goods or services with a view to carrying on a business but not in the course of a business carried on by him.

(5) For the purposes of a domestic infringement it is immaterial whether a person supplying goods or services has a place of business in the United Kingdom.

(6) In relation to a Community infringement a consumer is a person who is a consumer for the purposes of-

(a) the Injunctions Directive, and

(b) the listed Directive concerned.

(7) A Directive is a listed Directive-

(a) if it is a Directive of the Council of the European Communities or of the European Parliament and of the Council, and

(b) if it is specified in Schedule 13 or to the extent that any of its provisions is so specified.

(8) A business includes-

(a) a professional practice;

(b) any other undertaking carried on for gain or reward;

(c) any undertaking in the course of which goods or services are supplied otherwise than free of charge.

(9) The Secretary of State may by order modify Schedule 13.

(10) An order under this section must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

211 Domestic infringements

(1) In this Part a domestic infringement is an act or omission which-

(a) is done or made by a person in the course of a business,

(b) falls within subsection (2), and

(c) harms the collective interests of consumers in the United Kingdom.

(2) An act or omission falls within this subsection if it is of a description specified by the Secretary of State by order and consists of any of the following-

(a) a contravention of an enactment which imposes a duty, prohibition or restriction enforceable by criminal proceedings;

(b) an act done or omission made in breach of contract;

(c) an act done or omission made in breach of a non-contractual duty owed to a person by virtue of an enactment or rule of law and enforceable by civil proceedings;

(d) an act or omission in respect of which an enactment provides for a remedy or sanction enforceable by civil proceedings;

(e) an act done or omission made by a person supplying or seeking to supply goods or services as a result of which an agreement or security relating to the supply is void or unenforceable to any extent;

(f) an act or omission by which a person supplying or seeking to supply goods or services purports or attempts to exercise a right or remedy relating to the supply in circumstances where the exercise of the right or remedy is restricted or excluded under or by virtue of an enactment;

(g) an act or omission by which a person supplying or seeking to supply goods or services purports or attempts to avoid (to any extent) liability relating to the supply in circumstances where such avoidance is restricted or prevented under an enactment.

(3) But an order under this section may provide that any description of act or omission falling within subsection (2) is not a domestic infringement.

(4) For the purposes of subsection (2) it is immaterial-

(a) whether or not any duty, prohibition or restriction exists in relation to consumers as such;

(b) whether or not any remedy or sanction is provided for the benefit of consumers as such;

(c) whether or not any proceedings have been brought in relation to the act or omission;

(d) whether or not any person has been convicted of an offence in respect of the contravention mentioned in subsection (2)(a);

(e) whether or not there is a waiver in respect of the breach of contract mentioned in subsection (2)(b).

(5) References to an enactment include references to subordinate legislation (within the meaning of the Interpretation Act 1978 (c. 30)).

(6) The power to make an order under this section must be exercised by statutory instrument.

(7) But no such order may be made unless a draft of it has been laid before Parliament and approved by a resolution of each House.

212 Community infringements

(1) In this Part a Community infringement is an act or omission which harms the collective interests of consumers and which-

(a) contravenes a listed Directive as given effect by the laws, regulations or administrative provisions of an EEA State, or

(b) contravenes such laws, regulations or administrative provisions which provide additional permitted protections.

(2) The laws, regulations or administrative provisions of an EEA State which give effect to a listed Directive provide additional permitted protections if-

(a) they provide protection for consumers which is in addition to the minimum protection required by the Directive concerned, and

(b) such additional protection is permitted by that Directive.

(3) The Secretary of State may by order specify for the purposes of this section the law in the United Kingdom which-

(a) gives effect to the listed Directives;

(b) provides additional permitted protections.

(4) References to a listed Directive must be construed in accordance with section 210.

(5) An EEA State is a State which is a contracting party to the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 as adjusted by the Protocol signed at Brussels on 17th March 1993.

(6) An order under this section must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

213 Enforcers

(1) Each of the following is a general enforcer-

(a) the OFT;

(b) every local weights and measures authority in Great Britain;

(c) the Department of Enterprise, Trade and Investment in Northern Ireland.

(2) A designated enforcer is any person or body (whether or not incorporated) which the Secretary of State-

(a) thinks has as one of its purposes the protection of the collective interests of consumers, and

(b) designates by order.

(3) The Secretary of State may designate a public body only if he is satisfied that it is independent.

(4) The Secretary of State may designate a person or body which is not a public body only if the person or body (as the case may be) satisfies such criteria as the Secretary of State specifies by order.

(5) A Community enforcer is a qualified entity for the purposes of the Injunctions Directive-

(a) which is for the time being specified in the list published in the Official Journal of the European Communities in pursuance of Article 4.3 of that Directive, but

(b) which is not a general enforcer or a designated enforcer.

(6) An order under this section may designate an enforcer in respect of-

(a) all infringements;

(b) infringements of such descriptions as are specified in the order.

(7) An order under this section may make different provision for different purposes.

(8) The designation of a body by virtue of subsection (3) is conclusive evidence for the purposes of any question arising under this Part that the body is a public body.

(9) An order under this section must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

(10) If requested to do so by a designated enforcer which is designated in respect of one or more Community infringements the Secretary of State must notify the Commission of the European Communities-

(a) of its name and purpose;

(b) of the Community infringements in respect of which it is designated.

(11) The Secretary of State must also notify the Commission-

(a) of the fact that a person or body in respect of which he has given notice under subsection (10) ceases to be a designated enforcer;

(b) of any change in the name or purpose of a designated enforcer in respect of which he has given such notice;

(c) of any change to the Community infringements in respect of which a designated enforcer is designated.

Enforcement procedure

214 Consultation

(1) An enforcer must not make an application for an enforcement order unless he has engaged in appropriate consultation with-

(a) the person against whom the enforcement order would be made, and

(b) the OFT (if it is not the enforcer).

(2) Appropriate consultation is consultation for the purpose of-

(a) achieving the cessation of the infringement in a case where an infringement is occurring;

(b) ensuring that there will be no repetition of the infringement in a case where the infringement has occurred;

(c) ensuring that there will be no repetition of the infringement in a case where the cessation of the infringement is achieved under paragraph (a);

(d) ensuring that the infringement does not take place in the case of a Community infringement which the enforcer believes is likely to take place.

(3) Subsection (1) does not apply if the OFT thinks that an application for an enforcement order should be made without delay.

(4) Subsection (1) ceases to apply-

(a) for the purposes of an application for an enforcement order at the end of the period of 14 days beginning with the day after the person against whom the enforcement order would be made receives a request for consultation from the enforcer;

(b) for the purposes of an application for an interim enforcement order at the end of the period of seven days beginning with the day after the person against whom the interim enforcement order would be made receives a request for consultation from the enforcer.

(5) The Secretary of State may by order make rules in relation to consultation under this section.

(6) Such an order must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

(7) In this section (except subsection (4)) and in sections 215 and 216 references to an enforcement order include references to an interim enforcement order.

215 Applications

(1) An application for an enforcement order must name the person the enforcer thinks-

(a) has engaged or is engaging in conduct which constitutes a domestic or a Community infringement, or

(b) is likely to engage in conduct which constitutes a Community infringement.

(2) A general enforcer may make an application for an enforcement order in respect of any infringement.

(3) A designated enforcer may make an application for an enforcement order in respect of an infringement to which his designation relates.

(4) A Community enforcer may make an application for an enforcement order in respect of a Community infringement.

(5) The following courts have jurisdiction to make an enforcement order-

(a) the High Court or a county court if the person against whom the order is sought carries on business or has a place of business in England and Wales or Northern Ireland;

(b) the Court of Session or the sheriff if the person against whom the order is sought carries on business or has a place of business in Scotland.

(6) If an application for an enforcement order is made by a Community enforcer the court may examine whether the purpose of the enforcer justifies its making the application.

(7) If the court thinks that the purpose of the Community enforcer does not justify its making the application the court may refuse the application on that ground alone.

(8) The purpose of a Community enforcer must be construed by reference to the Injunctions Directive.

(9) An enforcer which is not the OFT must notify the OFT of the result of an application under this section.

216 Applications: directions by OFT

(1) This section applies if the OFT believes that an enforcer other than the OFT intends to apply for an enforcement order.

(2) In such a case the OFT may direct that if an application in respect of a particular infringement is to be made it must be made-

(a) only by the OFT, or

(b) only by such other enforcer as the OFT directs.

(3) If the OFT directs that only it may make an application that does not prevent-

(a) the OFT or any enforcer from accepting an undertaking under section 219, or

(b) the OFT from taking such other steps it thinks appropriate (apart from making an application) for the purpose of securing that the infringement is not committed, continued or repeated.

(4) The OFT may vary or withdraw a direction given under this section.

(5) The OFT must take such steps as it thinks appropriate to bring a direction (or a variation or withdrawal of a direction) to the attention of enforcers it thinks may be affected by it.

(6) But this section does not prevent an application for an enforcement order being made by a Community enforcer.

217 Enforcement orders

(1) This section applies if an application for an enforcement order is made under section 215 and the court finds that the person named in the application has engaged in conduct which constitutes the infringement.

(2) This section also applies if such an application is made in relation to a Community infringement and the court finds that the person named in the application is likely to engage in conduct which constitutes the infringement.

(3) If this section applies the court may make an enforcement order against the person.

(4) In considering whether to make an enforcement order the court must have regard to whether the person named in the application-

(a) has given an undertaking under section 219 in respect of conduct such as is mentioned in subsection (3) of that section;

(b) has failed to comply with the undertaking.

(5) An enforcement order must-

(a) indicate the nature of the conduct to which the finding under subsection (1) or (2) relates, and

(b) direct the person to comply with subsection (6).

(6) A person complies with this subsection if he-

(a) does not continue or repeat the conduct;

(b) does not engage in such conduct in the course of his business or another business;

(c) does not consent to or connive in the carrying out of such conduct by a body corporate with which he has a special relationship (within the meaning of section 222(3)).

(7) But subsection (6)(a) does not apply in the case of a finding under subsection (2).

(8) An enforcement order may require a person against whom the order is made to publish in such form and manner and to such extent as the court thinks appropriate for the purpose of eliminating any continuing effects of the infringement-

(a) the order;

(b) a corrective statement.

(9) If the court makes a finding under subsection (1) or (2) it may accept an undertaking by the person-

(a) to comply with subsection (6), or

(b) to take steps which the court believes will secure that he complies with subsection (6).

(10) An undertaking under subsection (9) may include a further undertaking by the person to publish in such form and manner and to such extent as the court thinks appropriate for the purpose of eliminating any continuing effects of the infringement-


(a) the terms of the undertaking;

(b) a corrective statement.

(11) If the court-

(a) makes a finding under subsection (1) or (2), and

(b) accepts an undertaking under subsection (9),

it must not make an enforcement order in respect of the infringement to which the undertaking relates.

(12) An enforcement order made by a court in one part of the United Kingdom has effect in any other part of the United Kingdom as if made by a court in that part.

218 Interim enforcement order

(1) The court may make an interim enforcement order against a person named in the application for the order if it appears to the court-

(a) that it is alleged that the person is engaged in conduct which constitutes a domestic or Community infringement or is likely to engage in conduct which constitutes a Community infringement,

(b) that if the application had been an application for an enforcement order it would be likely to be granted,

(c) that it is expedient that the conduct is prohibited or prevented (as the case may be) immediately, and

(d) if no notice of the application has been given to the person named in the application that it is appropriate to make an interim enforcement order without notice.

(2) An interim enforcement order must-

(a) indicate the nature of the alleged conduct, and

(b) direct the person to comply with subsection (3).

(3) A person complies with this subsection if he-

(a) does not continue or repeat the conduct;

(b) does not engage in such conduct in the course of his business or another business;

(c) does not consent to or connive in the carrying out of such conduct by a body corporate with which he has a special relationship (within the meaning of section 222(3)).

(4) But subsection (3)(a) does not apply in so far as the application is made in respect of an allegation that the person is likely to engage in conduct which constitutes a Community infringement.

(5) An application for an interim enforcement order against a person may be made at any time before an application for an enforcement order against the person in respect of the same conduct is determined.

(6) An application for an interim enforcement order must refer to all matters-

(a) which are known to the applicant, and

(b) which are material to the question whether or not the application is granted.

(7) If an application for an interim enforcement order is made without notice the application must state why no notice has been given.

(8) The court may vary or discharge an interim enforcement order on the application of-

(a) the enforcer who applied for the order;

(b) the person against whom it is made.

(9) An interim enforcement order against a person is discharged on the determination of an application for an enforcement order made against the person in respect of the same conduct.

(10) If it appears to the court as mentioned in subsection (1)(a) to (c) the court may instead of making an interim enforcement order accept an undertaking from the person named in the application-

(a) to comply with subsection (3), or

(b) to take steps which the court believes will secure that he complies with subsection (3).

(11) An interim enforcement order made by a court in one part of the United Kingdom has effect in any other part of the United Kingdom as if made by a court in that part.

219 Undertakings

(1) This section applies if an enforcer has power to make an application under section 215.

(2) In such a case the enforcer may accept from a person to whom subsection (3) applies an undertaking that the person will comply with subsection (4).

(3) This subsection applies to a person who the enforcer believes-

(a) has engaged in conduct which constitutes an infringement;

(b) is engaging in such conduct;

(c) is likely to engage in conduct which constitutes a Community infringement.

(4) A person complies with this subsection if he-

(a) does not continue or repeat the conduct;

(b) does not engage in such conduct in the course of his business or another business;

(c) does not consent to or connive in the carrying out of such conduct by a body corporate with which he has a special relationship (within the meaning of section 222(3)).

(5) But subsection (4)(a) does not apply in the case of an undertaking given by a person in so far as subsection (3) applies to him by virtue of paragraph (c).

(6) If an enforcer accepts an undertaking under this section it must notify the OFT-

(a) of the terms of the undertaking;

(b) of the identity of the person who gave it.

220 Further proceedings

(1) This section applies if the court-

(a) makes an enforcement order under section 217,

(b) makes an interim enforcement order under section 218, or

(c) accepts an undertaking under either of those sections.

(2) In such a case the OFT has the same right to apply to the court in respect of a failure to comply with the order or undertaking as the enforcer who made the application for the order.

(3) An application to the court in respect of a failure to comply with an undertaking may include an application for an enforcement order or for an interim enforcement order.

(4) If the court finds that an undertaking is not being complied with it may make an enforcement order or an interim enforcement order (instead of making any other order it has power to make).

(5) In the case of an application for an enforcement order or for an interim enforcement order as mentioned in subsection (3) sections 214 and 216 must be ignored and sections 215 and 217 or 218 (as the case may be) apply subject to the following modifications-

(a) section 215(1)(b) must be ignored;

(b) section 215(5) must be ignored and the application must be made to the court which accepted the undertaking;

(c) section 217(9) to (11) must be ignored;

(d) section 218(10) must be ignored.

(6) If an enforcer which is not the OFT makes an application in respect of the failure of a person to comply with an enforcement order, an interim enforcement order or an undertaking given under section 217 or 218 the enforcer must notify the OFT-

(a) of the application;

(b) of any order made by the court on the application.

221 Community infringements: proceedings

(1) Subsection (2) applies to-

(a) every general enforcer;

(b) every designated enforcer which is a public body.

(2) An enforcer to which this subsection applies has power to take proceedings in EEA States other than the United Kingdom for the cessation or prohibition of a Community infringement.

(3) Subsection (4) applies to-

(a) every general enforcer;

(b) every designated enforcer.

(4) An enforcer to which this subsection applies may co-operate with a Community enforcer-

(a) for the purpose of bringing proceedings mentioned in subsection (2);

(b) in connection with the exercise by the Community enforcer of its functions under this Part.

(5) An EEA State is a State which is a contracting party to the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 as adjusted by the Protocol signed at Brussels on 17th March 1993.

222 Bodies corporate: accessories

(1) This section applies if the person whose conduct constitutes a domestic infringement or a Community infringement is a body corporate.

(2) If the conduct takes place with the consent or connivance of a person (an accessory) who has a special relationship with the body corporate, the consent or connivance is also conduct which constitutes the infringement.

(3) A person has a special relationship with a body corporate if he is-

(a) a controller of the body corporate, or

(b) a director, manager, secretary or other similar officer of the body corporate or a person purporting to act in such a capacity.

(4) A person is a controller of a body corporate if-

(a) the directors of the body corporate or of another body corporate which is its controller are accustomed to act in accordance with the person's directions or instructions, or

(b) either alone or with an associate or associates he is entitled to exercise or control the exercise of one third or more of the voting power at any general meeting of the body corporate or of another body corporate which is its controller.

(5) An enforcement order or an interim enforcement order may be made against an accessory in respect of an infringement whether or not such an order is made against the body corporate.

(6) The court may accept an undertaking under section 217(9) or 218(10) from an accessory in respect of an infringement whether or not it accepts such an undertaking from the body corporate.

(7) An enforcer may accept an undertaking under section 219 from an accessory in respect of an infringement whether or not it accepts such an undertaking from the body corporate.

(8) Subsection (9) applies if-

(a) an order is made as mentioned in subsection (5), or

(b) an undertaking is accepted as mentioned in subsection (6) or (7).

(9) In such a case for subsection (6) of section 217, subsection (3) of section 218 or subsection (4) of section 219 (as the case may be) there is substituted the following subsection-

"( ) A person complies with this subsection if he-

(a) does not continue or repeat the conduct;

(b) does not in the course of any business carried on by him engage in conduct such as that which constitutes the infringement committed by the body corporate mentioned in section 222(1);

(c) does not consent to or connive in the carrying out of such conduct by another body corporate with which he has a special relationship (within the meaning of section 222(3))."


(10) A person is an associate of an individual if-

(a) he is the spouse of the individual;

(b) he is a relative of the individual;

(c) he is a relative of the individual's spouse;

(d) he is the spouse of a relative of the individual;

(e) he is the spouse of a relative of the individual's spouse;

(f) he lives in the same household as the individual otherwise than merely because he or the individual is the other's employer, tenant, lodger or boarder;

(g) he is a relative of a person who is an associate of the individual by virtue of paragraph (f);

(h) he has at some time in the past fallen within any of paragraphs (a) to (g).

(11) A person is also an associate of-

(a) an individual with whom he is in partnership;

(b) an individual who is an associate of the individual mentioned in paragraph (a);

(c) a body corporate if he is a controller of it or he is an associate of a person who is a controller of the body corporate.

(12) A body corporate is an associate of another body corporate if-

(a) the same person is a controller of both;

(b) a person is a controller of one and persons who are his associates are controllers of the other;

(c) a person is a controller of one and he and persons who are his associates are controllers of the other;

(d) a group of two or more persons is a controller of each company and the groups consist of the same persons;

(e) a group of two or more persons is a controller of each company and the groups may be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person of whom he is an associate.

(13) A relative is a brother, sister, uncle, aunt, nephew, niece, lineal ancestor or lineal descendant.

223 Bodies corporate: orders

(1) This section applies if a court makes an enforcement order or an interim enforcement order against a body corporate and-

(a) at the time the order is made the body corporate is a member of a group of interconnected bodies corporate,

(b) at any time when the order is in force the body corporate becomes a member of a group of interconnected bodies corporate, or

(c) at any time when the order is in force a group of interconnected bodies corporate of which the body corporate is a member is increased by the addition of one or more further members.

(2) The court may direct that the order is binding upon all of the members of the group as if each of them were the body corporate against which the order is made.

(3) A group of interconnected bodies corporate is a group consisting of two or more bodies corporate all of whom are interconnected with each other.

(4) Any two bodies corporate are interconnected-

(a) if one of them is a subsidiary of the other, or

(b) if both of them are subsidiaries of the same body corporate.

(5) "Subsidiary" must be construed in accordance with section 736 of the Companies Act 1985 (c. 6).

Information

224 OFT

(1) The OFT may for any of the purposes mentioned in subsection (2) give notice to any person requiring the person to provide it with the information specified in the notice.

(2) The purposes are-

(a) to enable the OFT to exercise or to consider whether to exercise any function it has under this Part;

(b) to enable a designated enforcer to which section 225 does not apply to consider whether to exercise any function it has under this Part;

(c) to enable a Community enforcer to consider whether to exercise any function it has under this Part;

(d) to ascertain whether a person has complied with or is complying with an enforcement order, an interim enforcement order or an undertaking given under section 217(9), 218(10) or 219.

225 Other enforcers

(1) This section applies to-

(a) every general enforcer (other than the OFT);

(b) every designated enforcer which is a public body.

(2) An enforcer to which this section applies may for any of the purposes mentioned in subsection (3) give notice to any person requiring the person to provide the enforcer with the information specified in the notice.

(3) The purposes are-

(a) to enable the enforcer to exercise or to consider whether to exercise any function it has under this Part;

(b) to ascertain whether a person has complied with or is complying with an enforcement order or an interim enforcement order made on the application of the enforcer or an undertaking given under section 217(9) or 218(10) (as the case may be) following such an application or an undertaking given to the enforcer under section 219.

226 Notices: procedure

(1) This section applies to a notice given under section 224 or 225.

(2) The notice must-

(a) be in writing;

(b) specify the purpose for which the information is required.

(3) If the purpose is as mentioned in section 224(2)(a), (b) or (c) or 225(3)(a) the notice must specify the function concerned.

(4) A notice may specify the time within which and manner in which it is to be complied with.

(5) A notice may require the production of documents or any description of documents.

(6) An enforcer may take copies of any documents produced in compliance with such a requirement.

(7) A notice may be varied or revoked by a subsequent notice.

(8) But a notice must not require a person to provide any information or produce any document which he would be entitled to refuse to provide or produce-

(a) in proceedings in the High Court on the grounds of legal professional privilege;

(b) in proceedings in the Court of Session on the grounds of confidentiality of communications.

227 Notices: enforcement

(1) If a person fails to comply with a notice given under section 224 or 225 the enforcer who gave the notice may make an application under this section.

(2) If it appears to the court that the person to whom the notice was given has failed to comply with the notice the court may make an order under this section.

(3) An order under this section may require the person to whom the notice was given to do anything the court thinks it is reasonable for him to do for any of the purposes mentioned in section 224 or 225 (as the case may be) to ensure that the notice is complied with.

(4) An order under this section may require the person to meet all the costs or expenses of the application.

(5) If the person is a company or association the court in proceeding under subsection (4) may require any officer of the company or association who is responsible for the failure to meet the costs or expenses.

(6) The court is a court which may make an enforcement order.

(7) In subsection (5) an officer of a company is a person who is a director, manager, secretary or other similar officer of the company.

Miscellaneous

228 Evidence

(1) Proceedings under this Part are civil proceedings for the purposes of-

(a) section 11 of the Civil Evidence Act 1968 (c. 64) (convictions admissible as evidence in civil proceedings);

(b) section 10 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1968 (c. 70) (corresponding provision in Scotland);

(c) section 7 of the Civil Evidence Act (Northern Ireland) 1971 (c. 36 (N.I.)) (corresponding provision in Northern Ireland).

(2) In proceedings under this Part any finding by a court in civil proceedings that an act or omission mentioned in section 211(2)(b), (c) or (d) or 212(1) has occurred-

(a) is admissible as evidence that the act or omission occurred;

(b) unless the contrary is proved, is sufficient evidence that the act or omission occurred.

(3) But subsection (2) does not apply to any finding-

(a) which has been reversed on appeal;

(b) which has been varied on appeal so as to negative it.

229 Advice and information

(1) As soon as is reasonably practicable after the passing of this Act the OFT must prepare and publish advice and information with a view to-

(a) explaining the provisions of this Part to persons who are likely to be affected by them, and

(b) indicating how the OFT expects such provisions to operate.

(2) The OFT may at any time publish revised or new advice or information.

(3) Advice or information published in pursuance of subsection (1)(b) may include advice or information about the factors which the OFT may take into account in considering how to exercise the functions conferred on it by this Part.

(4) Advice or information published by the OFT under this section is to be published in such form and in such manner as it considers appropriate.

(5) In preparing advice or information under this section the OFT must consult such persons as it thinks are representative of persons affected by this Part.

(6) If any proposed advice or information relates to a matter in respect of which another general enforcer or a designated enforcer may act the persons to be consulted must include that enforcer.

230 Notice to OFT of intended prosecution

(1) This section applies if a local weights and measures authority in England and Wales intends to start proceedings for an offence under an enactment or subordinate legislation specified by the Secretary of State by order for the purposes of this section.

(2) The authority must give the OFT-

(a) notice of its intention to start the proceedings;

(b) a summary of the evidence it intends to lead in respect of the charges.

(3) The authority must not start the proceedings until whichever is the earlier of the following-

(a) the end of the period of 14 days starting with the day on which the authority gives the notice;

(b) the day on which it is notified by the OFT that the OFT has received the notice and summary given under subsection (2).

(4) The authority must also notify the OFT of the outcome of the proceedings after they are finally determined.

(5) But such proceedings are not invalid by reason only of the failure of the authority to comply with this section.

(6) Subordinate legislation has the same meaning as in section 21(1) of the Interpretation Act 1978 (c. 30).

(7) An order under this section must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

231 Notice of convictions and judgments to OFT

(1) This section applies if-

(a) a person is convicted of an offence by or before a court in the United Kingdom, or

(b) a judgment is given against a person by a court in civil proceedings in the United Kingdom.

(2) The court may make arrangements to bring the conviction or judgment to the attention of the OFT if it appears to the court-

(a) having regard to the functions of the OFT under this Part or under the Estate Agents Act 1979 (c. 38) that it is expedient for the conviction or judgment to be brought to the attention of the OFT, and

(b) without such arrangements the conviction or judgment may not be brought to the attention of the OFT.

(3) For the purposes of subsection (2) it is immaterial that the proceedings have been finally disposed of by the court.

(4) Judgment includes an order or decree and references to the giving of the judgment must be construed accordingly.

Interpretation

232 Goods and services

(1) References in this Part to goods and services must be construed in accordance with this section.

(2) Goods include-

(a) buildings and other structures;

(b) ships, aircraft and hovercraft.

(3) The supply of goods includes-

(a) supply by way of sale, lease, hire or hire purchase;

(b) in relation to buildings and other structures, construction of them by one person for another.

(4) Goods or services which are supplied wholly or partly outside the United Kingdom must be taken to be supplied to or for a person in the United Kingdom if they are supplied in accordance with arrangements falling within subsection (5).

(5) Arrangements fall within this subsection if they are made by any means and-

(a) at the time the arrangements are made the person seeking the supply is in the United Kingdom, or

(b) at the time the goods or services are supplied (or ought to be supplied in accordance with the arrangements) the person responsible under the arrangements for effecting the supply is in or has a place of business in the United Kingdom.

233 Person supplying goods

(1) This section has effect for the purpose of references in this Part to a person supplying or seeking to supply goods under-

(a) a hire-purchase agreement;

(b) a credit-sale agreement;

(c) a conditional sale agreement.

(2) The references include references to a person who conducts any antecedent negotiations relating to the agreement.

(3) The following expressions must be construed in accordance with section 189 of the Consumer Credit Act 1974 (c. 39) -

(a) hire-purchase agreement;

(b) credit-sale agreement;

(c) conditional sale agreement;

(d) antecedent negotiations.

234 Supply of services

(1) References in this Part to the supply of services must be construed in accordance with this section.

(2) The supply of services does not include the provision of services under a contract of service or of apprenticeship whether it is express or implied and (if it is express) whether it is oral or in writing.

(3) The supply of services includes-

(a) performing for gain or reward any activity other than the supply of goods;

(b) rendering services to order;

(c) the provision of services by making them available to potential users.

(4) The supply of services includes making arrangements for the use of computer software or for granting access to data stored in any form which is not readily accessible.

(5) The supply of services includes making arrangements by means of a relevant agreement (within the meaning of section 189(2) of the Broadcasting Act 1990 (c. 42)) for sharing the use of telecommunications apparatus.

(6) The supply of services includes permitting or making arrangements to permit the use of land in such circumstances as the Secretary of State specifies by order.

(7) The power to make an order under subsection (6) must be exercised by statutory instrument.

(8) But no such order may be made unless a draft of it has been laid before Parliament and approved by a resolution of each House.

235 Injunctions Directive

In this Part the Injunctions Directive is Directive 98/27/EC of the European Parliament and of the Council on injunctions for the protection of consumers' interests.

Crown

236 Crown

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PART 8

ENFORCEMENT OF CERTAIN CONSUMER LEGISLATION

Introduction

210 Consumers

(1) In this Part references to consumers must be construed in accordance with this section.

(2) In relation to a domestic infringement a consumer is an individual in respect of whom the first and second conditions are satisfied.

(3) The first condition is that-

(a) goods are or are sought to be supplied to the individual (whether by way of sale or otherwise) in the course of a business carried on by the person supplying or seeking to supply them, or

(b) services are or are sought to be supplied to the individual in the course of a business carried on by the person supplying or seeking to supply them.

(4) The second condition is that-

(a) the individual receives or seeks to receive the goods or services otherwise than in the course of a business carried on by him, or

(b) the individual receives or seeks to receive the goods or services with a view to carrying on a business but not in the course of a business carried on by him.

(5) For the purposes of a domestic infringement it is immaterial whether a person supplying goods or services has a place of business in the United Kingdom.

(6) In relation to a Community infringement a consumer is a person who is a consumer for the purposes of-

(a) the Injunctions Directive, and

(b) the listed Directive concerned.

(7) A Directive is a listed Directive-

(a) if it is a Directive of the Council of the European Communities or of the European Parliament and of the Council, and

(b) if it is specified in Schedule 13 or to the extent that any of its provisions is so specified.

(8) A business includes-

(a) a professional practice;

(b) any other undertaking carried on for gain or reward;

(c) any undertaking in the course of which goods or services are supplied otherwise than free of charge.

(9) The Secretary of State may by order modify Schedule 13.

(10) An order under this section must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

211 Domestic infringements

(1) In this Part a domestic infringement is an act or omission which-

(a) is done or made by a person in the course of a business,

(b) falls within subsection (2), and

(c) harms the collective interests of consumers in the United Kingdom.

(2) An act or omission falls within this subsection if it is of a description specified by the Secretary of State by order and consists of any of the following-

(a) a contravention of an enactment which imposes a duty, prohibition or restriction enforceable by criminal proceedings;

(b) an act done or omission made in breach of contract;

(c) an act done or omission made in breach of a non-contractual duty owed to a person by virtue of an enactment or rule of law and enforceable by civil proceedings;

(d) an act or omission in respect of which an enactment provides for a remedy or sanction enforceable by civil proceedings;

(e) an act done or omission made by a person supplying or seeking to supply goods or services as a result of which an agreement or security relating to the supply is void or unenforceable to any extent;

(f) an act or omission by which a person supplying or seeking to supply goods or services purports or attempts to exercise a right or remedy relating to the supply in circumstances where the exercise of the right or remedy is restricted or excluded under or by virtue of an enactment;

(g) an act or omission by which a person supplying or seeking to supply goods or services purports or attempts to avoid (to any extent) liability relating to the supply in circumstances where such avoidance is restricted or prevented under an enactment.

(3) But an order under this section may provide that any description of act or omission falling within subsection (2) is not a domestic infringement.

(4) For the purposes of subsection (2) it is immaterial-

(a) whether or not any duty, prohibition or restriction exists in relation to consumers as such;

(b) whether or not any remedy or sanction is provided for the benefit of consumers as such;

(c) whether or not any proceedings have been brought in relation to the act or omission;

(d) whether or not any person has been convicted of an offence in respect of the contravention mentioned in subsection (2)(a);

(e) whether or not there is a waiver in respect of the breach of contract mentioned in subsection (2)(b).

(5) References to an enactment include references to subordinate legislation (within the meaning of the Interpretation Act 1978 (c. 30)).

(6) The power to make an order under this section must be exercised by statutory instrument.

(7) But no such order may be made unless a draft of it has been laid before Parliament and approved by a resolution of each House.

212 Community infringements

(1) In this Part a Community infringement is an act or omission which harms the collective interests of consumers and which-

(a) contravenes a listed Directive as given effect by the laws, regulations or administrative provisions of an EEA State, or

(b) contravenes such laws, regulations or administrative provisions which provide additional permitted protections.

(2) The laws, regulations or administrative provisions of an EEA State which give effect to a listed Directive provide additional permitted protections if-

(a) they provide protection for consumers which is in addition to the minimum protection required by the Directive concerned, and

(b) such additional protection is permitted by that Directive.

(3) The Secretary of State may by order specify for the purposes of this section the law in the United Kingdom which-

(a) gives effect to the listed Directives;

(b) provides additional permitted protections.

(4) References to a listed Directive must be construed in accordance with section 210.

(5) An EEA State is a State which is a contracting party to the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 as adjusted by the Protocol signed at Brussels on 17th March 1993.

(6) An order under this section must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

213 Enforcers

(1) Each of the following is a general enforcer-

(a) the OFT;

(b) every local weights and measures authority in Great Britain;

(c) the Department of Enterprise, Trade and Investment in Northern Ireland.

(2) A designated enforcer is any person or body (whether or not incorporated) which the Secretary of State-

(a) thinks has as one of its purposes the protection of the collective interests of consumers, and

(b) designates by order.

(3) The Secretary of State may designate a public body only if he is satisfied that it is independent.

(4) The Secretary of State may designate a person or body which is not a public body only if the person or body (as the case may be) satisfies such criteria as the Secretary of State specifies by order.

(5) A Community enforcer is a qualified entity for the purposes of the Injunctions Directive-

(a) which is for the time being specified in the list published in the Official Journal of the European Communities in pursuance of Article 4.3 of that Directive, but

(b) which is not a general enforcer or a designated enforcer.

(6) An order under this section may designate an enforcer in respect of-

(a) all infringements;

(b) infringements of such descriptions as are specified in the order.

(7) An order under this section may make different provision for different purposes.

(8) The designation of a body by virtue of subsection (3) is conclusive evidence for the purposes of any question arising under this Part that the body is a public body.

(9) An order under this section must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

(10) If requested to do so by a designated enforcer which is designated in respect of one or more Community infringements the Secretary of State must notify the Commission of the European Communities-

(a) of its name and purpose;

(b) of the Community infringements in respect of which it is designated.

(11) The Secretary of State must also notify the Commission-

(a) of the fact that a person or body in respect of which he has given notice under subsection (10) ceases to be a designated enforcer;

(b) of any change in the name or purpose of a designated enforcer in respect of which he has given such notice;

(c) of any change to the Community infringements in respect of which a designated enforcer is designated.

Enforcement procedure

214 Consultation

(1) An enforcer must not make an application for an enforcement order unless he has engaged in appropriate consultation with-

(a) the person against whom the enforcement order would be made, and

(b) the OFT (if it is not the enforcer).

(2) Appropriate consultation is consultation for the purpose of-

(a) achieving the cessation of the infringement in a case where an infringement is occurring;

(b) ensuring that there will be no repetition of the infringement in a case where the infringement has occurred;

(c) ensuring that there will be no repetition of the infringement in a case where the cessation of the infringement is achieved under paragraph (a);

(d) ensuring that the infringement does not take place in the case of a Community infringement which the enforcer believes is likely to take place.

(3) Subsection (1) does not apply if the OFT thinks that an application for an enforcement order should be made without delay.

(4) Subsection (1) ceases to apply-

(a) for the purposes of an application for an enforcement order at the end of the period of 14 days beginning with the day after the person against whom the enforcement order would be made receives a request for consultation from the enforcer;

(b) for the purposes of an application for an interim enforcement order at the end of the period of seven days beginning with the day after the person against whom the interim enforcement order would be made receives a request for consultation from the enforcer.

(5) The Secretary of State may by order make rules in relation to consultation under this section.

(6) Such an order must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

(7) In this section (except subsection (4)) and in sections 215 and 216 references to an enforcement order include references to an interim enforcement order.

215 Applications

(1) An application for an enforcement order must name the person the enforcer thinks-

(a) has engaged or is engaging in conduct which constitutes a domestic or a Community infringement, or

(b) is likely to engage in conduct which constitutes a Community infringement.

(2) A general enforcer may make an application for an enforcement order in respect of any infringement.

(3) A designated enforcer may make an application for an enforcement order in respect of an infringement to which his designation relates.

(4) A Community enforcer may make an application for an enforcement order in respect of a Community infringement.

(5) The following courts have jurisdiction to make an enforcement order-

(a) the High Court or a county court if the person against whom the order is sought carries on business or has a place of business in England and Wales or Northern Ireland;

(b) the Court of Session or the sheriff if the person against whom the order is sought carries on business or has a place of business in Scotland.

(6) If an application for an enforcement order is made by a Community enforcer the court may examine whether the purpose of the enforcer justifies its making the application.

(7) If the court thinks that the purpose of the Community enforcer does not justify its making the application the court may refuse the application on that ground alone.

(8) The purpose of a Community enforcer must be construed by reference to the Injunctions Directive.

(9) An enforcer which is not the OFT must notify the OFT of the result of an application under this section.

216 Applications: directions by OFT

(1) This section applies if the OFT believes that an enforcer other than the OFT intends to apply for an enforcement order.

(2) In such a case the OFT may direct that if an application in respect of a particular infringement is to be made it must be made-

(a) only by the OFT, or

(b) only by such other enforcer as the OFT directs.

(3) If the OFT directs that only it may make an application that does not prevent-

(a) the OFT or any enforcer from accepting an undertaking under section 219, or

(b) the OFT from taking such other steps it thinks appropriate (apart from making an application) for the purpose of securing that the infringement is not committed, continued or repeated.

(4) The OFT may vary or withdraw a direction given under this section.

(5) The OFT must take such steps as it thinks appropriate to bring a direction (or a variation or withdrawal of a direction) to the attention of enforcers it thinks may be affected by it.

(6) But this section does not prevent an application for an enforcement order being made by a Community enforcer.

217 Enforcement orders

(1) This section applies if an application for an enforcement order is made under section 215 and the court finds that the person named in the application has engaged in conduct which constitutes the infringement.

(2) This section also applies if such an application is made in relation to a Community infringement and the court finds that the person named in the application is likely to engage in conduct which constitutes the infringement.

(3) If this section applies the court may make an enforcement order against the person.

(4) In considering whether to make an enforcement order the court must have regard to whether the person named in the application-

(a) has given an undertaking under section 219 in respect of conduct such as is mentioned in subsection (3) of that section;

(b) has failed to comply with the undertaking.

(5) An enforcement order must-

(a) indicate the nature of the conduct to which the finding under subsection (1) or (2) relates, and

(b) direct the person to comply with subsection (6).

(6) A person complies with this subsection if he-

(a) does not continue or repeat the conduct;

(b) does not engage in such conduct in the course of his business or another business;

(c) does not consent to or connive in the carrying out of such conduct by a body corporate with which he has a special relationship (within the meaning of section 222(3)).

(7) But subsection (6)(a) does not apply in the case of a finding under subsection (2).

(8) An enforcement order may require a person against whom the order is made to publish in such form and manner and to such extent as the court thinks appropriate for the purpose of eliminating any continuing effects of the infringement-

(a) the order;

(b) a corrective statement.

(9) If the court makes a finding under subsection (1) or (2) it may accept an undertaking by the person-

(a) to comply with subsection (6), or

(b) to take steps which the court believes will secure that he complies with subsection (6).

(10) An undertaking under subsection (9) may include a further undertaking by the person to publish in such form and manner and to such extent as the court thinks appropriate for the purpose of eliminating any continuing effects of the infringement-


(a) the terms of the undertaking;

(b) a corrective statement.

(11) If the court-

(a) makes a finding under subsection (1) or (2), and

(b) accepts an undertaking under subsection (9),

it must not make an enforcement order in respect of the infringement to which the undertaking relates.

(12) An enforcement order made by a court in one part of the United Kingdom has effect in any other part of the United Kingdom as if made by a court in that part.

218 Interim enforcement order

(1) The court may make an interim enforcement order against a person named in the application for the order if it appears to the court-

(a) that it is alleged that the person is engaged in conduct which constitutes a domestic or Community infringement or is likely to engage in conduct which constitutes a Community infringement,

(b) that if the application had been an application for an enforcement order it would be likely to be granted,

(c) that it is expedient that the conduct is prohibited or prevented (as the case may be) immediately, and

(d) if no notice of the application has been given to the person named in the application that it is appropriate to make an interim enforcement order without notice.

(2) An interim enforcement order must-

(a) indicate the nature of the alleged conduct, and

(b) direct the person to comply with subsection (3).

(3) A person complies with this subsection if he-

(a) does not continue or repeat the conduct;

(b) does not engage in such conduct in the course of his business or another business;

(c) does not consent to or connive in the carrying out of such conduct by a body corporate with which he has a special relationship (within the meaning of section 222(3)).

(4) But subsection (3)(a) does not apply in so far as the application is made in respect of an allegation that the person is likely to engage in conduct which constitutes a Community infringement.

(5) An application for an interim enforcement order against a person may be made at any time before an application for an enforcement order against the person in respect of the same conduct is determined.

(6) An application for an interim enforcement order must refer to all matters-

(a) which are known to the applicant, and

(b) which are material to the question whether or not the application is granted.

(7) If an application for an interim enforcement order is made without notice the application must state why no notice has been given.

(8) The court may vary or discharge an interim enforcement order on the application of-

(a) the enforcer who applied for the order;

(b) the person against whom it is made.

(9) An interim enforcement order against a person is discharged on the determination of an application for an enforcement order made against the person in respect of the same conduct.

(10) If it appears to the court as mentioned in subsection (1)(a) to (c) the court may instead of making an interim enforcement order accept an undertaking from the person named in the application-

(a) to comply with subsection (3), or

(b) to take steps which the court believes will secure that he complies with subsection (3).

(11) An interim enforcement order made by a court in one part of the United Kingdom has effect in any other part of the United Kingdom as if made by a court in that part.

219 Undertakings

(1) This section applies if an enforcer has power to make an application under section 215.

(2) In such a case the enforcer may accept from a person to whom subsection (3) applies an undertaking that the person will comply with subsection (4).

(3) This subsection applies to a person who the enforcer believes-

(a) has engaged in conduct which constitutes an infringement;

(b) is engaging in such conduct;

(c) is likely to engage in conduct which constitutes a Community infringement.

(4) A person complies with this subsection if he-

(a) does not continue or repeat the conduct;

(b) does not engage in such conduct in the course of his business or another business;

(c) does not consent to or connive in the carrying out of such conduct by a body corporate with which he has a special relationship (within the meaning of section 222(3)).

(5) But subsection (4)(a) does not apply in the case of an undertaking given by a person in so far as subsection (3) applies to him by virtue of paragraph (c).

(6) If an enforcer accepts an undertaking under this section it must notify the OFT-

(a) of the terms of the undertaking;

(b) of the identity of the person who gave it.

220 Further proceedings

(1) This section applies if the court-

(a) makes an enforcement order under section 217,

(b) makes an interim enforcement order under section 218, or

(c) accepts an undertaking under either of those sections.

(2) In such a case the OFT has the same right to apply to the court in respect of a failure to comply with the order or undertaking as the enforcer who made the application for the order.

(3) An application to the court in respect of a failure to comply with an undertaking may include an application for an enforcement order or for an interim enforcement order.

(4) If the court finds that an undertaking is not being complied with it may make an enforcement order or an interim enforcement order (instead of making any other order it has power to make).

(5) In the case of an application for an enforcement order or for an interim enforcement order as mentioned in subsection (3) sections 214 and 216 must be ignored and sections 215 and 217 or 218 (as the case may be) apply subject to the following modifications-

(a) section 215(1)(b) must be ignored;

(b) section 215(5) must be ignored and the application must be made to the court which accepted the undertaking;

(c) section 217(9) to (11) must be ignored;

(d) section 218(10) must be ignored.

(6) If an enforcer which is not the OFT makes an application in respect of the failure of a person to comply with an enforcement order, an interim enforcement order or an undertaking given under section 217 or 218 the enforcer must notify the OFT-

(a) of the application;

(b) of any order made by the court on the application.

221 Community infringements: proceedings

(1) Subsection (2) applies to-

(a) every general enforcer;

(b) every designated enforcer which is a public body.

(2) An enforcer to which this subsection applies has power to take proceedings in EEA States other than the United Kingdom for the cessation or prohibition of a Community infringement.

(3) Subsection (4) applies to-

(a) every general enforcer;

(b) every designated enforcer.

(4) An enforcer to which this subsection applies may co-operate with a Community enforcer-

(a) for the purpose of bringing proceedings mentioned in subsection (2);

(b) in connection with the exercise by the Community enforcer of its functions under this Part.

(5) An EEA State is a State which is a contracting party to the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 as adjusted by the Protocol signed at Brussels on 17th March 1993.

222 Bodies corporate: accessories

(1) This section applies if the person whose conduct constitutes a domestic infringement or a Community infringement is a body corporate.

(2) If the conduct takes place with the consent or connivance of a person (an accessory) who has a special relationship with the body corporate, the consent or connivance is also conduct which constitutes the infringement.

(3) A person has a special relationship with a body corporate if he is-

(a) a controller of the body corporate, or

(b) a director, manager, secretary or other similar officer of the body corporate or a person purporting to act in such a capacity.

(4) A person is a controller of a body corporate if-

(a) the directors of the body corporate or of another body corporate which is its controller are accustomed to act in accordance with the person's directions or instructions, or

(b) either alone or with an associate or associates he is entitled to exercise or control the exercise of one third or more of the voting power at any general meeting of the body corporate or of another body corporate which is its controller.

(5) An enforcement order or an interim enforcement order may be made against an accessory in respect of an infringement whether or not such an order is made against the body corporate.

(6) The court may accept an undertaking under section 217(9) or 218(10) from an accessory in respect of an infringement whether or not it accepts such an undertaking from the body corporate.

(7) An enforcer may accept an undertaking under section 219 from an accessory in respect of an infringement whether or not it accepts such an undertaking from the body corporate.

(8) Subsection (9) applies if-

(a) an order is made as mentioned in subsection (5), or

(b) an undertaking is accepted as mentioned in subsection (6) or (7).

(9) In such a case for subsection (6) of section 217, subsection (3) of section 218 or subsection (4) of section 219 (as the case may be) there is substituted the following subsection-

"( ) A person complies with this subsection if he-

(a) does not continue or repeat the conduct;

(b) does not in the course of any business carried on by him engage in conduct such as that which constitutes the infringement committed by the body corporate mentioned in section 222(1);

(c) does not consent to or connive in the carrying out of such conduct by another body corporate with which he has a special relationship (within the meaning of section 222(3))."


(10) A person is an associate of an individual if-

(a) he is the spouse of the individual;

(b) he is a relative of the individual;

(c) he is a relative of the individual's spouse;

(d) he is the spouse of a relative of the individual;

(e) he is the spouse of a relative of the individual's spouse;

(f) he lives in the same household as the individual otherwise than merely because he or the individual is the other's employer, tenant, lodger or boarder;

(g) he is a relative of a person who is an associate of the individual by virtue of paragraph (f);

(h) he has at some time in the past fallen within any of paragraphs (a) to (g).

(11) A person is also an associate of-

(a) an individual with whom he is in partnership;

(b) an individual who is an associate of the individual mentioned in paragraph (a);

(c) a body corporate if he is a controller of it or he is an associate of a person who is a controller of the body corporate.

(12) A body corporate is an associate of another body corporate if-

(a) the same person is a controller of both;

(b) a person is a controller of one and persons who are his associates are controllers of the other;

(c) a person is a controller of one and he and persons who are his associates are controllers of the other;

(d) a group of two or more persons is a controller of each company and the groups consist of the same persons;

(e) a group of two or more persons is a controller of each company and the groups may be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person of whom he is an associate.

(13) A relative is a brother, sister, uncle, aunt, nephew, niece, lineal ancestor or lineal descendant.

223 Bodies corporate: orders

(1) This section applies if a court makes an enforcement order or an interim enforcement order against a body corporate and-

(a) at the time the order is made the body corporate is a member of a group of interconnected bodies corporate,

(b) at any time when the order is in force the body corporate becomes a member of a group of interconnected bodies corporate, or

(c) at any time when the order is in force a group of interconnected bodies corporate of which the body corporate is a member is increased by the addition of one or more further members.

(2) The court may direct that the order is binding upon all of the members of the group as if each of them were the body corporate against which the order is made.

(3) A group of interconnected bodies corporate is a group consisting of two or more bodies corporate all of whom are interconnected with each other.

(4) Any two bodies corporate are interconnected-

(a) if one of them is a subsidiary of the other, or

(b) if both of them are subsidiaries of the same body corporate.

(5) "Subsidiary" must be construed in accordance with section 736 of the Companies Act 1985 (c. 6).

Information

224 OFT

(1) The OFT may for any of the purposes mentioned in subsection (2) give notice to any person requiring the person to provide it with the information specified in the notice.

(2) The purposes are-

(a) to enable the OFT to exercise or to consider whether to exercise any function it has under this Part;

(b) to enable a designated enforcer to which section 225 does not apply to consider whether to exercise any function it has under this Part;

(c) to enable a Community enforcer to consider whether to exercise any function it has under this Part;

(d) to ascertain whether a person has complied with or is complying with an enforcement order, an interim enforcement order or an undertaking given under section 217(9), 218(10) or 219.

225 Other enforcers

(1) This section applies to-

(a) every general enforcer (other than the OFT);

(b) every designated enforcer which is a public body.

(2) An enforcer to which this section applies may for any of the purposes mentioned in subsection (3) give notice to any person requiring the person to provide the enforcer with the information specified in the notice.

(3) The purposes are-

(a) to enable the enforcer to exercise or to consider whether to exercise any function it has under this Part;

(b) to ascertain whether a person has complied with or is complying with an enforcement order or an interim enforcement order made on the application of the enforcer or an undertaking given under section 217(9) or 218(10) (as the case may be) following such an application or an undertaking given to the enforcer under section 219.

226 Notices: procedure

(1) This section applies to a notice given under section 224 or 225.

(2) The notice must-

(a) be in writing;

(b) specify the purpose for which the information is required.

(3) If the purpose is as mentioned in section 224(2)(a), (b) or (c) or 225(3)(a) the notice must specify the function concerned.

(4) A notice may specify the time within which and manner in which it is to be complied with.

(5) A notice may require the production of documents or any description of documents.

(6) An enforcer may take copies of any documents produced in compliance with such a requirement.

(7) A notice may be varied or revoked by a subsequent notice.

(8) But a notice must not require a person to provide any information or produce any document which he would be entitled to refuse to provide or produce-

(a) in proceedings in the High Court on the grounds of legal professional privilege;

(b) in proceedings in the Court of Session on the grounds of confidentiality of communications.

227 Notices: enforcement

(1) If a person fails to comply with a notice given under section 224 or 225 the enforcer who gave the notice may make an application under this section.

(2) If it appears to the court that the person to whom the notice was given has failed to comply with the notice the court may make an order under this section.

(3) An order under this section may require the person to whom the notice was given to do anything the court thinks it is reasonable for him to do for any of the purposes mentioned in section 224 or 225 (as the case may be) to ensure that the notice is complied with.

(4) An order under this section may require the person to meet all the costs or expenses of the application.

(5) If the person is a company or association the court in proceeding under subsection (4) may require any officer of the company or association who is responsible for the failure to meet the costs or expenses.

(6) The court is a court which may make an enforcement order.

(7) In subsection (5) an officer of a company is a person who is a director, manager, secretary or other similar officer of the company.

Miscellaneous

228 Evidence

(1) Proceedings under this Part are civil proceedings for the purposes of-

(a) section 11 of the Civil Evidence Act 1968 (c. 64) (convictions admissible as evidence in civil proceedings);

(b) section 10 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1968 (c. 70) (corresponding provision in Scotland);

(c) section 7 of the Civil Evidence Act (Northern Ireland) 1971 (c. 36 (N.I.)) (corresponding provision in Northern Ireland).

(2) In proceedings under this Part any finding by a court in civil proceedings that an act or omission mentioned in section 211(2)(b), (c) or (d) or 212(1) has occurred-

(a) is admissible as evidence that the act or omission occurred;

(b) unless the contrary is proved, is sufficient evidence that the act or omission occurred.

(3) But subsection (2) does not apply to any finding-

(a) which has been reversed on appeal;

(b) which has been varied on appeal so as to negative it.

229 Advice and information

(1) As soon as is reasonably practicable after the passing of this Act the OFT must prepare and publish advice and information with a view to-

(a) explaining the provisions of this Part to persons who are likely to be affected by them, and

(b) indicating how the OFT expects such provisions to operate.

(2) The OFT may at any time publish revised or new advice or information.

(3) Advice or information published in pursuance of subsection (1)(b) may include advice or information about the factors which the OFT may take into account in considering how to exercise the functions conferred on it by this Part.

(4) Advice or information published by the OFT under this section is to be published in such form and in such manner as it considers appropriate.

(5) In preparing advice or information under this section the OFT must consult such persons as it thinks are representative of persons affected by this Part.

(6) If any proposed advice or information relates to a matter in respect of which another general enforcer or a designated enforcer may act the persons to be consulted must include that enforcer.

230 Notice to OFT of intended prosecution

(1) This section applies if a local weights and measures authority in England and Wales intends to start proceedings for an offence under an enactment or subordinate legislation specified by the Secretary of State by order for the purposes of this section.

(2) The authority must give the OFT-

(a) notice of its intention to start the proceedings;

(b) a summary of the evidence it intends to lead in respect of the charges.

(3) The authority must not start the proceedings until whichever is the earlier of the following-

(a) the end of the period of 14 days starting with the day on which the authority gives the notice;

(b) the day on which it is notified by the OFT that the OFT has received the notice and summary given under subsection (2).

(4) The authority must also notify the OFT of the outcome of the proceedings after they are finally determined.

(5) But such proceedings are not invalid by reason only of the failure of the authority to comply with this section.

(6) Subordinate legislation has the same meaning as in section 21(1) of the Interpretation Act 1978 (c. 30).

(7) An order under this section must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

231 Notice of convictions and judgments to OFT

(1) This section applies if-

(a) a person is convicted of an offence by or before a court in the United Kingdom, or

(b) a judgment is given against a person by a court in civil proceedings in the United Kingdom.

(2) The court may make arrangements to bring the conviction or judgment to the attention of the OFT if it appears to the court-

(a) having regard to the functions of the OFT under this Part or under the Estate Agents Act 1979 (c. 38) that it is expedient for the conviction or judgment to be brought to the attention of the OFT, and

(b) without such arrangements the conviction or judgment may not be brought to the attention of the OFT.

(3) For the purposes of subsection (2) it is immaterial that the proceedings have been finally disposed of by the court.

(4) Judgment includes an order or decree and references to the giving of the judgment must be construed accordingly.

Interpretation

232 Goods and services

(1) References in this Part to goods and services must be construed in accordance with this section.

(2) Goods include-

(a) buildings and other structures;

(b) ships, aircraft and hovercraft.

(3) The supply of goods includes-

(a) supply by way of sale, lease, hire or hire purchase;

(b) in relation to buildings and other structures, construction of them by one person for another.

(4) Goods or services which are supplied wholly or partly outside the United Kingdom must be taken to be supplied to or for a person in the United Kingdom if they are supplied in accordance with arrangements falling within subsection (5).

(5) Arrangements fall within this subsection if they are made by any means and-

(a) at the time the arrangements are made the person seeking the supply is in the United Kingdom, or

(b) at the time the goods or services are supplied (or ought to be supplied in accordance with the arrangements) the person responsible under the arrangements for effecting the supply is in or has a place of business in the United Kingdom.

233 Person supplying goods

(1) This section has effect for the purpose of references in this Part to a person supplying or seeking to supply goods under-

(a) a hire-purchase agreement;

(b) a credit-sale agreement;

(c) a conditional sale agreement.

(2) The references include references to a person who conducts any antecedent negotiations relating to the agreement.

(3) The following expressions must be construed in accordance with section 189 of the Consumer Credit Act 1974 (c. 39) -

(a) hire-purchase agreement;

(b) credit-sale agreement;

(c) conditional sale agreement;

(d) antecedent negotiations.

234 Supply of services

(1) References in this Part to the supply of services must be construed in accordance with this section.

(2) The supply of services does not include the provision of services under a contract of service or of apprenticeship whether it is express or implied and (if it is express) whether it is oral or in writing.

(3) The supply of services includes-

(a) performing for gain or reward any activity other than the supply of goods;

(b) rendering services to order;

(c) the provision of services by making them available to potential users.

(4) The supply of services includes making arrangements for the use of computer software or for granting access to data stored in any form which is not readily accessible.

(5) The supply of services includes making arrangements by means of a relevant agreement (within the meaning of section 189(2) of the Broadcasting Act 1990 (c. 42)) for sharing the use of telecommunications apparatus.

(6) The supply of services includes permitting or making arrangements to permit the use of land in such circumstances as the Secretary of State specifies by order.

(7) The power to make an order under subsection (6) must be exercised by statutory instrument.

(8) But no such order may be made unless a draft of it has been laid before Parliament and approved by a resolution of each House.

235 Injunctions Directive

In this Part the Injunctions Directive is Directive 98/27/EC of the European Parliament and of the Council on injunctions for the protection of consumers' interests.

Crown

236 Crown

Competition Act 1998

This section is the index and synopsis only, complete act to be accessed and copied in due course if necessary.

In the United Kingdom, the Competition Act 1998 is designed to make sure that businesses compete on a level footing.  It does so by prohibiting certain types of anti-competitive behaviour (the Chapter I and Chapter II prohibitions). The OFT has strong powers to investigate businesses suspected of breaching the Act and to impose tough penalties on those that do. The Act was amended on 1 May 2004 to empower the OFT to investigate and impose penalties on undertakings breaching the prohibitions on anti-competitive behaviour contained in Articles 81 and 82 of the EC Treaty.

The Chapter I and Chapter II prohibitions and the prohibitions Articles 81 and 82 of the EC Treaty are similar, but not identical.

All businesses, no matter how small, need to know about the Chapter I and Chapter II prohibitions and Articles 81 and 82 - to avoid becoming a victim, and to avoid breaking the law.

The Act should not be viewed in isolation. The Enterprise Act 2002 among other things introduces a cartel offence under which individuals who dishonestly take part in the most serious types of anti-competitive agreements may be criminally prosecuted.

In addition, as a result of amendments to the Company Directors Disqualification Act 1986 under the Enterprise Act 2002, company directors whose companies breach competition law (including the prohibitions in Articles 81 and 82 and the Act) may be subject to Competition Disqualification Orders, which will prevent them from being concerned in the management of a company for a maximum of 15 years.

On these pages you can find out more about

Please note that in this section, the term 'business' means any entity that is engaged in economic or commercial activities, regardless of its legal status and the way in which it is funded.




Miscellaneous


On the Contracts (Rights Of Third Parties) Act 1999

Asif Tufal

http://www.lawteacher.net/Contract/Privity/Privity.htm


Law Teacher .net

Contract Law Page



PRIVITY OF CONTRACT

1. THE DOCTRINE OF PRIVITY

"The doctrine of privity means that a contract cannot, as a general rule, confer rights or impose obligations arising under it on any person except the parties to it." (GH Treitel, The Law of Contract)

The common law reasoned that:

1. Only a promisee may enforce the promise meaning that if the third party is not a promisee he is not privy to the contract. See:

Dunlop Tyre Co v Selfridge [1915] AC 847 - The plaintiffs sold tyres to Dew & Co, wholesale distributors, on terms that Dew would obtain an undertaking from retailers that they should not sell below the plaintiffs' list price. Dew sold some of the tyres to the defendants, who retailed them below list price. The plaintiffs sought an injunction and damages. The action failed because although there was a contract between the defendants and Dew, the plaintiffs were not a party to it and "only a person who is a party to a contract can sue on it," (per Lord Haldane).

2. There is the principle that consideration must move from the promisee. See:

Tweddle v Atkinson (1861) 1 B&S 393 - The fathers of a husband and wife agreed in writing that both should pay money to the husband, adding that the husband should have the power to sue them for the respective sums. The husband's claim against his wife's fathers' estate was dismissed, the court justifying the decision largely because no consideration moved from the husband.

The two principles of privity and consideration have become entwined but are still distinct.



2. EXCEPTIONS

If the doctrine of privity was inflexibly applied it would cause considerable injustice and inconvenience. Many exceptions to it have therefore been developed.



A) COLLATERAL CONTRACTS

A contract between two parties may be accompanied by a collateral contract between one of them and a third person relating to the same subject-matter. For example:

Shanklin Pier v Detel Products [1951] 2 KB 854. The plaintiffs had employed contractors to paint a pier. They told them to buy paint made by the defendants. The defendants had told them that the paint would last for seven years. It only lasted for three months. The court decided that the plaintiffs could sue the defendants on a collateral contract. They had provided consideration for the defendants' promise by entering into an agreement with the contractors, which entailed the purchase of the defendants' paint.

There must, however, be an intention to create a collateral contract before that contract can be formed



B) AGENCY

The concept of agency is an exception to the doctrine of privity in that an agent may contract on behalf of his principal with a third party and form a binding contract between the principal and third party.

For example, a third party may be able to take the benefit of an exclusion clause by proving that the party imposing the clause was acting as the agent of the third party, thereby bringing the third party into a direct contractual relationship with the plaintiff:

In Scruttons Ltd v Midland Silicones Ltd [1962] AC 446, a bill of lading limited the liability of a shipping company to $500 per package. The defendant stevedores had contracted with the shipping company to unload the plaintiff's goods on the basis that they were to be covered by the exclusion clause in the bill of lading. The plaintiffs were ignorant of the contract between the shipping company and the stevedores. Owing to the stevedores negligence, the cargo was damaged and, when sued, they pleaded the limitation clause in the bill of lading. The House of Lords held that the stevedores could not rely on the clause as there was no privity of contract between the plaintiffs and defendants.

Lord Reid suggested that the stevedores could be brought into a contractual relationship with the owner of the goods through the agency of the carrier provided certain conditions were met: (1) that the bill of lading makes it clear that the stevedore is intended to be protected by the exclusion clauses therein. (2) that the bill of lading makes it clear that the carrier is contracting as agent for the stevedore. (3) the carrier must have authority from the stevedore to act as agent, or perhaps, later ratification by the stevedore would suffice. (4) consideration must move from the stevedore.

All of the above conditions were satisfied in New Zealand Shipping v Satterthwaite (The Eurymedon) [1975] AC 154.



C) TRUSTS

Equity developed a general exception to the doctrine of privity by use of the concept of trust. A trust is an equitable obligation to hold property on behalf of another.

The device was approved by the House of Lords in Les Affreteurs Reunis v Leopold Walford [1919] AC 801, where a broker (C) negotiated a charterparty by which the shipowner (A) promised the charterer (B) to pay the broker a commission. It was held that B was trustee of this promise for C, who could thus enforce it against A.

However, the trust device has fallen into disuse because of the strict requirements of constituting a trust and most particularly that there should be a specific intention on the part of the person declaring the trust that it should be a trust.



D) RESTRICTIVE COVENANTS

Restrictive covenants may, if certain conditions are satisfied, run with the land and bind purchasers of it to observe the covenants for the benefit of adjoining owners.

For example, in Tulk v Moxhay (1848) 2 Ph 774, the plaintiff who owned several houses in Leicester Square sold the garden in the centre to Elms, who covenanted that he would keep the gardens and railings in their present condition and continue to allow individuals to use the gardens. The land was sold to the defendants who knew of the restriction contained in the contract between the plaintiff and Elms. The defendant announced that he was going to build on the land, and the plaintiff, who still owned several adjacent houses, sought an injunction to restrain him from doing so. It was held that the covenant would be enforced in equity against all subsequent purchasers with notice.

This device was carried over into the law of contract by the Privy Council in Lord Strathcona SS Co v Dominion Coal Co [1926] AC 108, but Diplock J refused to follow the decision in Port Line Ltd v Ben Line Steamers [1958] 2 QB 146. Most recently, in Law Debenture Trust Corp v Ural Caspian Oil Corp [1993] 2 All ER 355, it was emphasised that the principle permitted no more than the grant of a negative injunction to restrain the person acquiring the property from doing acts which would be inconsistent with the performance of the contract by his predecesser and had never been used to impose upon a purchaser a positive duty to perform the covenants of his predecessor.



E) STATUTES

Certain exceptions to the doctrine of privity have been created by statute, including price maintenance agreements; and certain contracts of insurance enforceable in favour of third parties. For example, under s148(4) of the Road Traffic Act 1972, an injured party may recover compensation from an insurance company once he has obtained judgment against the insured person.



F) REMEDIES OF THE CONTRACTING PARTY

The question of the extent to which a contracting party may recover for loss sustained by a third party who is intended to benefit from the contract was raised in:

Jackson v Horizon Holidays [1975] 1 WLR 1468. The plaintiff entered into a contract for himself and his family. The holiday provided failed to comply with the description given by the defendants in a number of respects. The plaintiff recovered damages and the defendants appealed against the amount. Lord Denning MR thought the amount awarded was excessive compensation for the plaintiff himself, but he upheld the award on the ground that the plaintiff had made a contract for the benefit of himself and his family, and that he could recover for their loss as well as for his own.

However, in Woodar Investment Development v Wimpey Construction [1980] 1 WLR 277, the House of Lords rejected the basis on which Lord Denning had arrived at his decision, and reaffirmed the view that a contracting party cannot recover damages for the loss sustained by the third party. Their Lordships did not dissent from the actual decision in Jackson, which they felt could be supported either because the damages were awarded for the plaintiff's own loss; or because booking family holidays or ordering meals in restaurants calls for special treatment.



3. ACADEMIC DEBATE ON THE DOCTRINE

GH Treitel, The Law of Contract, 9th ed, 1995, p588, states:

"The rule that no one except a party to a contract can be made liable under it is generally regarded as just and sensible. But the rule that no one except a party to a contract can enforce it may cause inconvenience where it prevents the person most interested in enforcing the contract from doing so. The many exceptions to the doctrine make it tolerable in practice, but they have provoked the question whether it would not be better further to modify the doctrine or to abolish it altogether."



4. REFORM

Proposals for legislative reform were made by the Law Revision Committee as long ago as 1937 (Cmnd. 5449) and further proposals were put forward for discussion by the Law Commission in 1991 (Paper No 121, 1991). In July 1996, the Law Commission published proposals in "Privity of Contract; Contracts for the Benefit of Third Parties" (Cmnd. 3329; Law Com No 242), which recommended that the law expressly provide for third parties to be able to enforce contracts (including taking advantage of exclusion/limitation clauses) in certain circumstances. These proposals for reform were acted upon.

The Contracts (Rights of Third Parties) Act 1999 received Royal Assent on 11 November 1999. It reforms the common law rule of privity of contract. Section 1 provides that a third party may in his own right enforce a term of a contract if:

(a) the contract expressly provides that he may, or

(b) the term purports to confer a benefit on him (except where on a proper construction of the contract it appears that the parties did not intend the term to be enforceable by the third party).

There shall be available to the third party any remedy that would have been available to him in an action for breach of contract if he had been a party to the contract: s1(5).





Agency exclusions

2.3 A GENCY A person may negotiate as agent to bring his principal into contractual relations with a third party. It is the principal and not the agent who is the party to the contract

The other main exception to the privity rule is agency, where the whole point is for the agent to bring about contractual relations between their principal and a third party.

In the area of motoring insurance statute law has intervened to permit third parties to claim directly against insurers, but much wider statutory intervention has been proposed by a recent Law Commission Report (1996) which recommended that third parties should be entitled to enforce contracts entered into for their benefit. At present if someone buys a present for someone else and it turns out to be faulty then, due to the operation of the privity rule, the recipient of the present has no contractual rights against the supplier. The Law Commission�s proposal would remove this legal technicality by permitting the third party to take action against the supplier. It should be noted that the proposal does not give rights to all third parties. It is essential, for example, that the contract actually seeks to benefit the third party so it will not affect the situation where someone buys something and makes a present of it to a third party. In such a situation the contract whereby the article was originally bought did not purport to give any rights to the third party and therefore it would still not be covered by the proposed legislation.

Capacity Capacity refers to the fact that the law does not recognise the ability of some people to enter into binding contractual arrangements, or at least limits their capacity to enter into such arrangements. The reason for this is the paternalistic one that such individuals might not be in a position to fully appreciate the terms of any agreement they might enter into and consequently there is the possibility that they will be taken advantage of without their even realising it.

2.3 Agency

A person may negotiate as agent to bring his principal into contractual relations with a third party. It is the principal and not the agent who is the party to the contract.




Collateral exclusions

the beneficiary sues in some other capacity. Although not a party to the original agreement, individuals may, nonetheless, acquire the power to enforce the contract where they are legally appointed to administer the affairs of one of the original parties. An example of this can be seen in Beswick v. Beswick (1967) in which a coal merchant sold his business to his nephew in return for a weekly consultancy fee during his lifetime, and thereafter an annuity of £5 per week payable to his widow. On the death of the uncle, the nephew stopped paying the widow. However, once the widow was appointed administratrix of her late husband�s estate she successfully sued the nephew for specific performance of the agreement in that capacity. Thus she was able to enforce an agreement in her favour that she could not have enforced in her personal capacity as she was not a party to it.

the situation involves a collateral contract. This situation arises where one party promises something to another party if that other party enters into a contract with a third party: e.g., A promises to give B something if B enters into a contract with C. In such a situation B can insist on A complying with the original promise. An example of the operation of collateral contracts can be seen in Shanklin Pier v. Detel Products Ltd (1951) which concerned the painting of a seaside pier. On the basis of promises as to its quality, the defendants persuaded the pier company to insist that a particular paint produced by Detel be used when their pier was repainted. The painters used the paint but it proved unsatisfactory. When the plaintiffs sued for breach of the original promise as to the paint�s suitability, the defendants countered that the only contract they had entered into was between them and the painters to whom they had sold the paint. They maintained that as the pier company was not a party to that contract it had no right of action against Detel. It was held that in addition to the contract for the sale of paint, there was a second collateral contract between the plaintiffs and the defendants by which the latter guaranteed the suitability of the paint in return for the pier company specifying that the painters used it. The pier company, therefore, successfully sued the paint manufacturers.

it is foreseeable that damage caused by any breach of contract will cause a loss to a third party. In Linden Gardens Trust Ltd v. Lenesta Sludge Disposals Ltd (1994) the original parties had entered into a contract for work to be carried out on property with the likelihood that it would subsequently be transferred to a third party. The defendant�s poor work, amounting to a breach of contract, only became apparent after the property had been transferred. There had been no assignment of the original contract and normally under the doctrine of privity the new owners would have no contractual rights against the defendants and the original owners of the property would have suffered only a nominal breach as they had sold it at no loss to themselves. Nonetheless the House of Lords held that under such circumstances and within a commercial context, the original promisee should be able to claim full damages on behalf of the third party for the breach of contract.


The other main exception to the privity rule is agency, where the whole point is for the agent to bring about contractual relations between their principal and a third party.

In the area of motoring insurance statute law has intervened to permit third parties to claim directly against insurers, but much wider statutory intervention has been proposed by a recent Law Commission Report (1996) which recommended that third parties should be entitled to enforce contracts entered into for their benefit. At present if someone buys a present for someone else and it turns out to be faulty then, due to the operation of the privity rule, the recipient of the present has no contractual rights against the supplier. The Law Commission�s proposal would remove this legal technicality by permitting the third party to take action against the supplier. It should be noted that the proposal does not give rights to all third parties. It is essential, for example, that the contract actually seeks to benefit the third party so it will not affect the situation where someone buys something and makes a present of it to a third party. In such a situation the contract whereby the article was originally bought did not purport to give any rights to the third party and therefore it would still not be covered by the proposed legislation.



2.2 Collateral Contracts

A collateral contract between A and C may come into existence dependent on a main contract between A and B: SHANKLIN PIER v DETEL PRODUCTS [1951] 2 KB. 854; [1951] 2 All ER 471; ANDREWS v HOPKINSON [1957] 1 QB 229; [1956] 3 All ER 422.

Exceptions

[edit]


Common law exceptions

There are exceptions to the general rule, allowing rights to third parties and some impositions of obligations. These are:



Privity itself.

History

Prior to 1833 there existed decisions in English allowing provisions of a contract to be enforced by persons not party to it, usually relatives of a promisee. The doctrine of privity emerged alongside the doctrine of consideration, the rules of which state that consideration must move from the promisee. That is to say that if nothing is given for the promise of something to be given in return, that promise is not legally binding unless promised as a deed. 1833 saw the case of Price v Easton, where a contract was made for work to be done in exchange for payment to a third party. When the third party attempted to sue for the payment, he was held to be not privy to the contract, and as such his claim failed. This was fully linked to the doctrine of consideration, and established as such, with the more famous case of Tweddle v Atkinson. In this case the plaintiff was unable to sue the executor of his father-in-law, who had promised to the plaintiff's father to make payment to the plaintiff, because he had not provided any consideration to the contract.

The doctrine was developed further in Dunlop Pnuematic Tyre Co. Ltd v Selfridge & Co. Ltd through the judgement of Lord Haldane


Consideration

Promissee

2. Who is a Party to a Contract?

In order to enforce a contractual promise, a person must show that the promise was made to him and that he provided consideration for it.

2.1 Joint Promisees

There is authority for the proposition that, where a promise is made to A and B jointly and only A supplies consideration for the promise, then B can enforce the promise in his own right: COULL’S v BAGOT’S TRUSTEE CO LTD (1969-70) 119 C.L.R. 469 (where A and B were husband and wife).


Conferring benefit

Privity of contract As contract law, a least in theory, is based upon negotiation, and market transactions freely entered into, it follows that as a general rule contractual agreements can only affect those persons who have entered into the agreement expressed in the terms of the contract.

Consideration

This is the last part of the constituents of the legal agreement.

English law of contract is concerned with the presence of and not the fairness of a bargain. The law requires that in all contracts other than those by deed, both parties bring something - to the agreement i.e. provide consideration to the bargain.

Note distinction between Executed and Executory Consideration

Consideration Must Move From Promisee

Tweddle v Atkinson 1861; No stranger to the consideration can take advantage of a contract although made for his benefit.

Consideration Need Not Be Adequate

A legal agreement requires an offer, an acceptance, an intent to create legal relations and the presence of consideration. We are now in a position to examine further aspects of the law of contract.


A legally binding contract needs offer, acceptance, intent to create legal relations and consideration. It is the presence of intent to create legal relations and of consideration that converts a social agreement into a legal agreement.

Manner of acceptance

1 by word written or spoken

2 by conduct Brogden v Metropolitan Railway 1877; where coal was supplied without formal agreement. Formal contract sent, returned with amendment. Coal still supplied even though supplier tried to claim amendment a counter offer. Held acceptance by conduct

Misrepresentation

An actionable misrepresentation is an untrue statement of past or existing fact made by one party to another party of the contract which induces the representee to enter the contract. Misrepresentation is best learnt by referring to the following statements and explanations.

Must be a Statement of Fact

Two good cases are Smith v Land and House Property Corporation 1884 and Bisset v Wilkinson 1927. Where statements of law are made then it is not a misrepresentation as everyone is deemed to know the law. See .Solle v Butcher 1950

Silence not Misrepresentation

No general duty to disclose facts that are not known to the other contracting party. Rule confirmed in Keates v Lord Cadogan 1851.

Exceptions to Silence Rule

With v O'Flanagan 1936

Re Kyslant 1931

Insurance contracts of the utmost good faith

Inducement in Misrepresentation

Representation must induce the representee to enter the contract and it is usual for the representee to prove that he was induced by the representation

Remedies for Misrepresentation

Misrepresentation Act 1967

Derry v Peak 1889

The main remedies are damages and or recission. Recission is an equitable remedy and it must be understood when recission will fail i.e. if we fail to act in time, and when a third party has develops rights are the most important. cases such as Leaf v International Galleries 1950 and Phillips v Brookes 1919 and Lewis v Avery 1972

Performance of Contract

General rule is that the contract must be performed in the exact and precise manner in which was agreed. See Cutter v Powell 1795 and Moore v Landauer 1921. We now need to examine some of the exceptions.

Exceptions to General Rule of Performance

Severable contracts

Prevention of performance i.e. Planche v Colburn 1831

Acceptance of partial performance

Agreement

Frustration

In Paradine v Jayne 1647 the severity of the common law was shown to parties who failed to perform their part of the contract even though it had become impossible for that to happen. Frustration is another example of equitable remedies and is best approached through case law.

Cases :

Taylor v Caldwell 1863 which set out the doctrine of subsequent impossibility (frustration) stated that the parties to a contract are excused further performance of their obligations if some event occur, without fault of either party, which makes further performance impossible or radically different from the original intention.

Krell v Henry 1903

Herne Bay Steamboat Company v Hutton 1903

Davis Contractors v Fareham UDC 1956

If the frustrating event was self induced then there is no frustration of contract. See Maritime National Fish Ltd v Ocean Trawlers Ltd 1935

If the event was foreseeable by both parties then the law is unclear whether there is frustration or not. See Ocean Tramp Tankers Corporation v Sovfracht : The Eugenia 1964

Finally note the importance of the Law Reform (Frustrated Contracts) Act 1943

Consider : England did not reach the World Cup rugby finals in South Africa in 1996. Could the fans who had made advanced bookings claim that the contract with the tour operator had been frustrated?

Remedies For Breach of Contract

Damages is the standard common law remedy. If the plaintiff proves the case then the plaintiff is entitled to damages for his loss. Other remedies are mainly equitable and as such are discretionary.

What is Purpose of Damages

The purpose of damages is to put the plaintiff back in the position he would have been in if the contract was carried out as agreed. See Lazenby Garages Ltd v Wright 1976 but note the case of Jarvis v Swan Tours 1973 and the consequence of that case on the travel tour industry and photographic development industry.

Mitigating Losses

The plaintiff has an express duty to mitigate losses.

Remoteness of Damages

Hadley v Baxendale 1854 and Victoria Laundry (Windsor) Ltd V Newman Industries Ltd 1949 are the important cases. Students frequently need to read and think both cases through before seeing the logic behind the theory of remoteness of damage. The lasting importance of Hadley v Baxendale is that it states damages should be awarded when :

"arising naturally or as may reasonably been supposed to have been in the contemplation of both the parties at the time they made the contract."

Liquidated Damages and Penalty Clauses

The parties to a contract may anticipate the possibility of a breach and include in the contract a term that a certain sum shall be paid to the injured party by the party in default if a specified breach occurs. If this sum is a genuine pre-estimate of the damage the term is known as Liquidated Damages. If the estimated sum is much less it is frequently termed a limitation clause. If it is much more it is termed a Penalty Clause. See Dunlop Pneumatic Tyre Co. Ltd v New Garage and Motor Co. Ltd 1915 which lays down the test for distinguishing between liquidated damages and penalty clauses.

Consider : B Builders agree to build a hotel for us. The hotel is to be handed over to us in March. We, as tough negotiators insert a clause stating that in the event of a delay, the builder will pay us compensation of £35,000 for each week's delay. If the hotel is handed over three weeks late what compensation will we receive from the builder?

What have We Learned

We should now have a sound knowledge of the basics of contract law. Before we finish we need to consider some factors that might affect the existence of a contract. These are restraint of trade, duress, undue influence and capacity to contract.

Clef Acquitaine v Laporte (2000) In fraudulent misrepresentation, the representor is liable for the losses that the injured party would have received had the contract not been induced

Dunlop v Selfridge (1915) There is no contract unless the promisee offers valuable consideration

Gordon v Sellico (1986) Misrepresentation may be by conduct

Hedley Byrne v Heller (1964) Liability arises in tort for negligent misstatement, absent a contract between the parties

Howard Marine v Ogden (1978) Liability for negligent misrepresentation under s2(1) of the Mispresentation Act 1967 is assessed as if the misrepresentation were fraudulent

Jackson v Horizon Holidays (1975) In breach of contract, damages may be awarded to compensate those not directly parties to it, if it is for their benefit

Krell v Henry (1903) A contract is frustrated if its purpose is wholly thwarted

L'Estrange v Graucob (1934) If a person signs a contract, it is presumed that he intends to be bound by it whether or not he has read it, or understood it

Shanklin Pier v Detel Products (1951) A collateral contract may be inferred where the doctrine of privity would prevent an equitable judgement in three-party cases


Donoghue v. Stevenson, [1932] A.C. 532, [1932] All ER Rep 1, is a famous House of Lords case in the area of the common law of tort/delict. It is perhaps most well known for the statement of Lord Atkin regarding the existence of a duty of care in Anglo-American Error! Hyperlink reference not valid.. Although Donoghue v. Stevenson was a Scottish case, it was undisputed by the parties that the Scots law — based on the civil law and not the common law — and the English law were identical on this issue. Consequently, the reasoning in this case has taken root in many countries.


The Facts

The case was heard as a preliminary point of law, and proceeded on the assumption that the facts were as claimed by the appellant, May Dohoghue. She claimed that on August 26 1928 she drank some of the contents of a bottle of ginger-beer, manufactured by the respondent, which a friend had bought for her at a cafe in Paisley, Scotland. When her friend poured the remainder of the bottle's contents into Mrs Donoghue's tumbler, "a snail, which was in a state of decomposition, floated out of the bottle". The bottle being opaque, the snail could not have been detected until the greater part of the contents of the bottle had been poured. As a result Mrs Donoghue alleged that she suffered from shock and severe gastroenteritis. Given that her friend had bought the drink there was no contract between Mrs Donoghue and the retailer, while the friend who did have a Error! Hyperlink reference not valid. with the retailer was unaffected by the event and could not seek damages on her behalf. Donoghue accordingly instituted the proceedings against the manufacturer of the ginger-beer.

Because of the preliminary nature of the case, some of the facts are unclear, the most central of these being whether there was a snail in the bottle at all. Lord Justice MacKinnon said in a speech in 1942 that when the facts came to be tried, it was found that there was no snail, and this was later repeated by Lord Justice Jenkins in the case of Adler v. Dickson. The statement seems to have been based on information given to MacKinnon by David Stevenson’s counsel, later Lord Normand. In fact there was no trial of the facts as the case was settled (for £200) by Mr Stevenson's executors following his death. Other uncertainties are whether the animal was a snail or a slug; whether the bottle did indeed contain ginger beer ("ginger" being the Scottish word for a carbonated drink); whether the drink was part of an ice cream float; and the identity of Mrs Donoghue's friend.


Lord Atkin's statement

Lord Atkin's statement about the foreseeability of the effects of one's Error! Hyperlink reference not valid. on one's neighbours is central to the existence of a duty of care in the law of tort/delict, especially on the then developing nascent tort/delict of negligence. In this judgement he formulates what is commonly known as the "neighbour principle".

There must be, and is, some general conception of relations giving rise to a duty of care, of which the particular cases found in the books are but instances. ... The rule that you are to love your neighbour becomes in law you must not injure your neighbour; and the lawyer's question: Who is my neighbour? receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law, is my neighbour? The answer seems to be — persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as long as so affected when I am directing my mind to the acts or omissions that are called in question.



C. THE UNFAIR CONTRACT TERMS ACT 1977

The basic purpose of UCTA 1977 is to restrict the extent to which liability in a contract can be excluded for breach of contract and negligence, largely by reference to a reasonableness requirement, but in some cases by a specific prohibition.


* Under s2(2) liability for negligence for any other kind of loss or damage can be excluded provided the term or notice satisfies the requirement of reasonableness.

s3, Exemption of Liability for Breach of Contract

Where one party deals as a consumer or on the other party's written standard terms of business, then the other party cannot exclude or restrict his liability for breach of contract, non-performance of the contract or different performance of the contract unless the exemption clause satisifies the requirement of reasonableness.

s8, Exemption of Liability for Misrepresentation

Any clause which excludes or restricts liability for misrepresentation is ineffective unless it satisfies the requirement of reasonableness.

s10, Exclusion Clauses in Secondary Contracts

Section 10 contains an anti-avoidance provision which prevents the rights preserved under one contract from being removed by a secondary contract.

3. THE REQUIREMENT OF REASONABLENESS

Under s11(1) the requirement of reasonableness is that "the term shall have been a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made."

Section 11(2) provides that, in determining whether the clause is a reasonable one for the purposes of ss6 and 7, regard shall be had to the Guidelines set out in Schedule 2 of the Act, which are as follows:

(1) The bargaining strengths of the parties relative to each other and the availability of alternative supplies.

(2) Whether the customer received an inducement to agree to the term. (The supplier may have offered the customer a choice: a lower price but subject to an exemption clause or a higher price without the exemption.)

(3) Whether the customer knew or ought reasonably to have known of the existence and extent of the term.

(4) Where the term excludes or restricts any relevant liability if some condition is not complied with, whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable.

(5) Whether the goods were manufactured, processed or adapted to the special order of the customer.

Under s11(3) in relation to a notice (not being a notice having contractual effect), the requirement of reasonableness is that it should be fair and reasonable to allow reliance on it, having regard to all the circumstances obtaining when the liability arose or (but for the notice) would have arisen. This provision applies a test of reasonableness to disclaimers for tortious liability. See:

Smith v Eric Bush [1989] 2 All ER 514.





In the assessment the candidate may be required to:

3.1 Analyse the various methods of circumventing the problems of privity of contract, ie through collateral contracts or warranties, indemnity clauses, agency arrangements and liability in negligence or under the Consumer Protection Act 1987 Part I.

3.2 Evaluate the operation of the Contract (Rights of Third Parties) Act 1999 and the limited operation of the legislation as a tool for avoidance of the rules of privity of contract.

3.3 Apply the rules relating to third party rights to given practical situations


Attwood v Small (1838) Misrepresentation is defeated if the injured party did not rely on the representation

Beswick v Beswick (1968) A third party cannot sue on a contract even if it is made for his benefit

Clef Acquitaine v Laporte (2000) In fraudulent misrepresentation, the representor is liable for the losses that the injured party would have received had the contract not been induced

Dunlop v Selfridge (1915) There is no contract unless the promisee offers valuable consideration

Gordon v Sellico (1986) Misrepresentation may be by conduct

Hedley Byrne v Heller (1964) Liability arises in tort for negligent misstatement, absent a contract between the parties

Howard Marine v Ogden (1978) Liability for negligent misrepresentation under s2(1) of the Mispresentation Act 1967 is assessed as if the misrepresentation were fraudulent

Jackson v Horizon Holidays (1975) In breach of contract, damages may be awarded to compensate those not directly parties to it, if it is for their benefit

Krell v Henry (1903) A contract is frustrated if its purpose is wholly thwarted

L'Estrange v Graucob (1934) If a person signs a contract, it is presumed that he intends to be bound by it whether or not he has read it, or understood it

Shanklin Pier v Detel Products (1951) A collateral contract may be inferred where the doctrine of privity would prevent an equitable judgement in three-party cases


estoppel A rule of evidence whereby a person is barred from denying the truth of a fact that has already been settled


If a third party is to be able to enforce a contract they will need to have access to/a copy of the contract.

P RIVITY 1. T HE B ASIC R ULE Put simply, the privity rule means that only a person who is a party to a contract can enforce rights under it (the benefit) or be adversely affected by it (the burden). This principle has now been altered by the Contracts (Rights of Third Parties) Act 1999. It is now possible for contracting parties to confer a benefit on a third party. (See ???????? The doctrine of privity of contract developed in the nineteenth century as a corollary of the bargain theory of contract. Contractual benefits and burdens could only be conferred on a person who provided some consideration. The doctrine of privity of contract acts as a boundary mark for the law of contract, preventing contractual obligations from spreading beyond the contractual bond. In one sense, the development of tortious liability in negligence under DONOGHUE v STEVENSON [1932] AC 562 filled the void created by the rigidity of the doctrine. The expansion, and the more recent restriction, of the tort of negligence affects the ambit of the law of contract.

TWEDDLE v ATKINSON (1861)1 B & S 393 (see Chapter 4 2.6) is usually cited as the case which first established the doctrine of privity of contract as part of English law. In reality the rule that consideration must move from the promisee is similar to, perhaps identical to, the privity rule.

Tweddle v Atkinson (1861)

This case (Tweddle v Atkinson [1861] 1 BS 393) demonstrates some of the issues assocated with privity (see: PrivityOfContract) and consideration (see: Consideration) in contracts.


Tweddle's father (whom I'll call Tweddle senior), and Atkinson -- Tweddle's father in law -- contracted to contribute a sum of money each to the support of Tweddle and his wife. Tweddle senior kept up his part of the bargain, but Atkinson died before paying anything. Tweddle sued the executors of Atkinson's estate. His suit was rejected because he himself was not party to the contract, even though it was for his benefit (see: PrivityOfContract). It is not possible to claim that there is an implicit contract between Tweddle (junior) and Atkinson, because there is no consideration from Tweddle to Atkinson.





It seems likely that Tweddle senior could have enforced the contract at law (though he did not), because the basic requirements of a contract were fulfilled. The consideration in this case would be that Tweddle senior accepted a detriment at the request of Atkinson, rather than the Tweddle senior gave some benefit to Atkinson.


8. The defendant did not contract with the claimants in respect of the collection and/or

delivery of the consignment and as such, the claimants have no locus stand! to

bring this claim or any claim against the defendant. The defendant was paid by the

Customer for the carriage of the consignment. The Claimant is the recipient of the

consignment and presumably a customer of the Customer.

The Decision

The issue of law before the House of Lords was whether the defendant (Stevenson) owed Mrs. Donoghue a duty of care. The case was never tried on the facts.

Dicta of Lord Atkin: ". The complainant has to show that he has been injured by the breach of duty owed to him in the circumstances by the defendant to take reasonable care to avoid such injury". The rule in Heaven v. Pender was "demonstrably too wide." The concept of negligence is based upon "a sentiment of moral wrongdoing (for) which the offender must pay." Not every moral wrong can have a practical effect in law so it must be limited to taking "...reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour." A neighbour is a person so closely connected with and directly affected by (proximate to) my act (or omission) that I should have had them in mind when I committed the act (or omission). It would be a grave defect in the law if a consumer could not claim in circumstances such as a manufacturer negligently mixing poison into a drink.

Lord Buckmaster referring to the dicta of Brett MR in Heaven v. Pender and the decision in George v. Skivington (1867) LR5 Ex 1 (which were applied by Lord Atkin): ". It is in my opinion better that they should be buried so securely that their perturbed spirits shall no longer vex the law."

You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour/another.

Note

Lord Atkin's statement

Lord Atkin's statement about the foreseeability of the effects of one's acts on one's neighbours is central to the existence of a duty of care in the law of tort/delict, especially on the then developing nascent tort/delict of negligence. In this judgement he formulates what is commonly known as the "neighbour principle".


There must be, and is, some general conception of relations giving rise to a duty of care, of which the particular cases found in the books are but instances. ... The rule that you are to love your neighbour becomes in law you must not injure your neighbour; and the lawyer's question: Who is my neighbour? receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law, is my neighbour? The answer seems to be — persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as long as so affected when I am directing my mind to the acts or omissions that are called in question.



Under a contract of employment, against an employee

The enforcement of a relevant contract by, or against an agency worker

A contract for the carriage of goods by sea (except that a third party may avail

itself of an exclusion or limitation of liability contained therein)

A contract for the carriage of goods by rail or road, or for the carriage of cargo by

air (which is subject to the rules of the appropriate international transport

convention) (except that a third party may avail itself of an exclusion or limitation

of liability contained therein).

· If the contracting parties do not wish to give third parties rights under a

contract, it is open to them to expressly so provide in their contract.

· The Act provides for the conferring of benefits on third parties. It does not

provide a vehicle for the passing of burdens or obligations onto third parties.

· If a third party makes a claim against the promisor, the promisor can make use of

any defence or set off arising out of the contract as if the claim had been made

by the other party to the contract.

3.0 PRACTICAL EXAMPLES OF THE OPERATION OF THE ACT

Some practical examples of the operation of the Act are set out below:-

(a) With respect to a contract between an Client and a Contractor under which

indemnities (typically in respect of personnel, property, pollution and consequential

loss) are given to the respective “Groups”, it will be possible for the other members of

the “Groups” to directly enforce the indemnities against the promisor.

(b) With respect to a sub-contract between a Contractor and a Sub -contractor under

which the Sub-contractor undertakes to indemnify the Contractor and the Client

(typically in respect of personnel, property, pollution and consequential loss), it will be

possibl e for the Client to directly enforce such indemnities against the Subcontractor.

Where there is no intention to create such rights, then a clause to this effect

should be included within the contract. Where, however, it is the intention to confer

specific rights on third parties, the following issues should be addressed: -

(a) A clause should be included in order to expressly identify the specific provisions of

the contract which are intended to confer a right on a third party (or third pa rties).

(b) A provision should be introduced to the effect that, except as expressly specified (as

per (a) above), the parties do not intend to create any third party rights by virtue of

the Act.

(c) Consideration should be given to introducing a provision in order to expressly provide

that the contract may be rescinded, amended or varied without notice to or consent

from the third party (even if, as a result of such rescission, amendment or variation,

the third party’s rights are extinguished).

(d) Consideration should be given to introducing a provision in order to set out any

specific conditions which should be applied in respect of the third party rights (e.g.

the notification of a claim within a specified period of time of the occurrence giving

rise to the claim).

(e) Although S.8 of the Act deals specifically with Arbitration cl auses, and provides that

where there is a valid Arbitration clause in the contract creating the third party right, it

will be binding on the third party, consideration should be given to other methods of

dispute resolution provided for in the contract which would not fall within the scope of

S.8 (e.g. ADR or adjudication). Where another method of dispute resolution is

provided for within the contract, consideration should be given to expressly providing

that any dispute concerning the third party’s rights are to be subject to the same

method of dispute resolution as is provided for in the contract.

(f) Consideration should be given to introducing a provision to the effect that the third

party may not assign its rights without the consent of the promisor.

(g) Whilst S.3 (“Defences available to promisor”) and S.5 (“Protection of promisor from

double liability”) of the Act may be of benefit to a Contractor promisor who has

conferred rights on a Client and its Co-venturers and Affiliates under a contract (in

that they provide (in S.3) that the promisor may use any defence or set-off arising out

of the contract as if the claim had been made by the other party to the contract and

(in S.5) that the promisor cannot be sued twice (i.e. by the other contracting party

and the third party beneficiary) for the same loss), it is suggested that the following

issues be considered with reference to a clause which limits the liability of the

Contractor:-

end




B) Topic 9: The Doctrine of Privity

A. Three Introductory Points

1. Definition = contract only be enforced by or be enforceable against the parties to the contract.

2. Two sides of privity – benefit and burden side.

3. 4 Classic cases

- Tweddle v Atkinson

- Dunlop v Selfridge

- Sruttons v Midland Silicones

- Beswick v Beswick

B. Exceptions to the Privity Rule

1. Agency

2. Assignment

3. Statutory Exceptions

4. The Tort of Negligence

In particular pure economic loss and White v Jones.

5. The Eurymedon

Enforcement by third party carriers (stevedores) of exclusion clause in contract, to which stevedores not party.

C. Promisee’s Remedies

Can the promisee sue on behalf of the third party?

- In the holiday-type case: Jackson v Horizon Holidays

- In the case where the contract involves land that may be been transferred to a third party or land that already belongs to a third party e.g. Linden Gardens v Lenesta Sludge, The Albazero, Darlington v Wiltshier, Alfred McAlpine v Panatown.

D. Arguments FOR and AGAINST Reform of the Privity Doctrine

For a good analysis of the arguments against the reform of privity, see this article by Robert Stevens: 'The Contracts (Rights of Third Parties) Act 1999' Law Quarterly Review 120 292-323

E. Contracts (Rights of Third Parties) Act 1999 – discussion of selected provisions

Section 1: who can enforce rights as a third party under Act? 2 TESTS:

(1) Where there is an express provision in the contract that a third party can sue. s1(1) (a), s1(3) of the 1999 Act.

(2) Where the contract “purports to confer a benefit on the third party.” s1(1)(b), s1(2), s1(3)

(a) purports confer benefit = intention that 3rd p benefit)

(b) identification – name, class, description

(c) Unless on proper construction the parties did not intend 3rd p to be able to sue.

Section 2: When can the parties to the contract vary (=change) the rights of the third parties?

Section 3: Defences

What kind of defences does the third party have when it enforces a benefit under the Act?

In this context defences means = matters affect existence, validity, enforceability of contract/term (10.2 Law Commission Report).

Sections 4/5 Rights of the Promisee

Can the promisee still sue when the third party sues under the 1999 Act?

Section 7: Exceptions

Crucial (1) The Act is one big exception to privity. The privity doctrine still exists.

(2) The 1999 Act does not abolish the exceptions to privity which existed before the Act.


Topic 10: Contractual Remedies

A. General principles

1. Damages and Specific Performance

Damages are the primary remedy.

2. Right to damages

Prima Facie: where a contract is breached the innocent party is entitled to damages.

NB: distinction between nominal and substantial damages

3. Measure of damages

(a) The Expectation Interest

(b) Modern Development: The Performance Interest

Ruxley v Forsyth: The Consumer Surplus

B. Case Study: Alfred McAlpine v Panatown

1. Facts: see diagram (on website).

2. Narrow Ground: ratio decidendi of the judgment

3. Broad Ground: minority view (2 judges)

(a) Example: wealthy citizen, x, wishes to benefit the whole community of a small village by paying for a church hall to be built. He enters into a contract with builder, B, for the construction of the hall, but in the end B carries out shockingly bad work: the roof is not waterproof and the building is not stable.

Can X sue here for loss of his own? (whether he can sue on behalf of the people in the village is the question of the narrow ground)

Remember: It is not x, but the community of the village, who benefit from the hall (x does not live in this village).

However, according to broad ground, X does have a loss. Something that was promised to him was not carried out and this in itself could be seen as a loss. X lost a bargain. The result of the loss of bargain was that he was not able to do what he set out to do, which was to make a gift of a church hall to the community.

How would you solve this case?

(To think about: would it make a difference if

(a) by the time X came to court he had already paid another builder to fix the hall?

Or (b) The whole community got together to fix the hall?)

(b) Lord Clyde’s Objection

Mere breach of contract is not a loss in itself and cannot lead to substantial damages.

(c) Points to remember about the broad ground

- It fits with the analysis in Ruxley v Forsyth.

- It may contradict the reasons for introducing the Contracts (Rights of Third Parties Act) 1999 – particularly the “Black Hole” argument










The English solution

if not under seal (ie a deed), contract is not binding unless promisee has given consideration for the promise or an estoppel arises

consideration is needed when a promise is first made, and again if it is varied

Tip: identifying consideration as an issue

First – identify the promise that a party is trying to enforce

Second – ask what that party gave in return for the promise

Wk 04-06

4

Definition

An act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable.”

Lord Dunedin in Dunlop v Selfridge [1915] AC 847 at 855

either a benefit flowing to one party or detriment suffered by the other

must be given in return for the promise

(price of promise or bargain theory)









See Consultation Paper No 121, paras 2.5-2.10. 1

See, eg, Tweddle v Atkinson (1861) 1 B & S 393; 121 ER 262; Dunlop Pneumatic Tyre Co Ltd v 2

Selfridge and Co Ltd [1915] AC 847, 853. See also Kepong Prospecting Ltd v Schmidt [1968] AC

810, 826.

The Law Revision Committee, Sixth Interim Report, (1937) para 37. See further above, paras 3

4.2-4.4.

M Furmston, "Return to Dunlop v Selfridge" (1960) 23 MLR 373, 382-384; B Coote, 4

"Consideration and the Joint Promisee" [1978] CLJ 301; R Flannigan "Privity - the End of an

Era (Error)" (1987) 103 LQR 564, 568-569. Cf H Collins, The Law of Contract (2nd ed, 1993)

pp 283-292 who supports the view that the third party rule is not inseparably linked with the

doctrine of consideration; Chitty on Contracts (27th ed, 1994) para 3-032 which accepts the view

that the rule that consideration must move from the promisee and the third party rule are not

inextricably linked; Anson's Law of Contract (ed Guest) (26th ed, 1984) pp 86-87; Treitel, The

Law of Contract (9th ed, 1995) p 539 is less categorical but also on balance supports this view.

See also E McKendrick, Contract Law (2nd ed, 1994) pp 129-130. 5

68

2. Consideration Must Move From the Promisee

6.3 This maxim is ambiguous. On the one hand, it can be taken to mean that to be binding

a promise must be supported by consideration. If A promises B £100, B cannot

enforce the promise (unless made under deed) because there is no consideration for

Consultation Paper No 121 para 2.1. 6

Consultation Paper No 121 para 2.10. 7

69

A's promise. The promise is a gratuitous one. This fundamental requirement of

consideration could be expressed by saying that B cannot succeed because, although

B is a promisee, it has not provided consideration and consideration must move from

the promisee.

6.4 In the Consultation Paper, the maxim "consideration must move from the promisee"

was essentially used in this first sense of consideration being a necessary requirement

for a valid contract. Hence the Paper included the following two passages: "[t]wo of

the central questions of policy in the law of contract are: (i) which promises are legally

enforceable; and (ii) who can enforce them? The first question is associated with the

doctrine of consideration; the second with the doctrine of privity...."; "we believe that 6

the third party rule, ie, that third parties cannot enforce contracts made for their

benefit, can be reformed without prejudicing the rule that consideration must move

from the promisee." Certainly once one has interpreted the maxim that consideration 7

must move from the promisee as meaning merely that consideration is necessary, one

can see that, at a formal level, there is no difficulty in reforming privity without altering

the need for consideration. That is, one can insist that, provided there is a contract

supported by consideration (or made by deed), it may then be enforceable by a third

party beneficiary who has not provided consideration.

6.5 But the maxim "consideration must move from the promisee" can also be used to

mean, and is probably generally understood to mean, that, even though the promise

is supported by consideration, the consideration must move from the plaintiff. That is,

the party seeking to enforce the contract must have provided the consideration. Used

in this sense one cannot, even at a formal level, reform the privity doctrine while

leaving untouched the rule that consideration must move from the promisee. A reform

allowing a third party to sue would achieve nothing, or almost nothing, unless there

was also a departure from the rule that a plaintiff could not sue on a contract if it has

not provided consideration. Used in this sense, the rule that consideration must move

from the promisee and the rule of privity that only a party to a contract can enforce it

are so closely linked that the essential dispute is whether they are distinguishable at all;

whether, in other words, there are two rules or one.

6.6 That dispute ultimately turns on what one means by "a party" to a contract where the

contract is supported by consideration rather than being made under deed. It can best

be illustrated by reference to the situation of joint promisees. Say, for example, that A

promises B and C to pay C £100 if B will do certain work desired by A. If B does the

work, and A declines to pay the £100 to C, can C sue? On the face of it, C, not having

provided consideration, cannot sue. This can be expressed in one of two ways: either

(i) that C cannot sue because, although a party to the contract and privy to it, C falls

foul of the rule that consideration must move from the promisee; or (ii) that C cannot

After discussions with the draftsman, we are satisfied that this recommendation will automatically 8

be met by the central clause of the legislation which gives a third party a right to enforce the

contract; such a clause can only be interpreted as also reforming the rule that consideration must

move from the promisee (where that rule means that consideration must move from the plaintiff).

This point is left unclear in the legislation enacted in, eg, New Zealand and Western Australia. 9

(1967) 119 CLR 461. For support in England see, for example, New Zealand Shipping Co Ltd 10

v A M Satterthwaite & Co Ltd [1975] AC 154, 180 (per Lord Simon of Glaisdale). See also

McEvoy v Belfast Banking Co Ltd [1935] AC 24, 43 (per Lord Atkin). See, generally, Chitty on

Contracts (27th ed, 1994) paras 3-035-3-036 and Treitel, The Law of Contract (9th ed) pp 532-

533 which draw a distinction between joint, joint and several, and several promises.

On the facts the majority (McTiernan, Taylor and Owen JJ) considered that Mrs Coulls was not 11

a promisee so that this joint promisee exception did not come into play. Barwick CJ and

Windeyer J dissented taking the view that Mrs Coulls was a joint promisee.

In his powerful article, "Consideration and the Joint Promisee" [1978] CLJ 301, Coote argues 12

that, in a bilateral contract, C can only be regarded as having provided consideration if it has

undertaken an obligation to A.

70

sue because, not having provided consideration for A's promise, C is not a party to the

contract and therefore falls foul of both the privity rule and the rule that consideration

must move from the promisee (which are merely two ways of expressing exactly the

same point).

6.7 Whichever of these two views is taken (and the practical significance of choosing

between them seems to relate only to how one deals with joint promisees, which we

discuss below) the central point is that the legislation must recognise that if, by

"consideration must move from the promisee" one means "consideration must move

from the plaintiff" one cannot sensibly reform privity without also departing from that

rule.

6.8 We therefore recommend that:

(6) the legislation should ensure that the rule that consideration must move

from the promisee is reformed to the extent necessary to avoid nullifying

our proposed reform of the doctrine of privity.8

3. The Joint Promisee Exception

6.9 A difficult linked issue is how we should deal with the question as to whether a joint

promisee can sue even though it has not provided consideration in a contract not made

by deed. In other words, how should we deal with the so-called 'joint promisee

exception'? The present English law on joint promisees is not entirely clear. However, 9

it seems likely that an English court would apply the approach of the High Court of

Australia in Coulls v Bagot's Executor & Trustee Co Ltd. In that case, four members 10

of the High Court suggested that a joint promisee could sue despite not having

provided consideration (although Windeyer J suggested that one could regard B as 11

having provided consideration on behalf of C). Barwick CJ explained that the 12

justification for this exception to the need for consideration to move from the promisee

was that the promise had been made to C and consideration for the promise had been

provided, albeit by B not C. This approach is reminiscent of the view of the Law

Sixth Interim Report (1937) para 37. See para 4.3, note 11 above. 13

Treitel, The Law of Contract (9th ed, 1995) pp 529-533. 14

Ibid, p 530. 15

Ibid, p 532. See also para 11.9, note 8, below. 16

For our proposals regarding joinder see paras 14.1-14.5 below. For our proposals regarding 17

releases, see paras 11.7-11.8 and 11.11-11.12 below.

It was implicit in the Consultation paper No 121, paras 2.7, 3.33, that a joint promisee should 18

not count as a third party for the purposes of our proposed reform.

71

Revision Committee in 1937. Having cited the joint promisee example given above,

the Committee continued, "[W]e can see no reason either of logic or of public policy

why A, who has got what he wanted from B in exchange for his promise, should not

be compelled by C to carry out that promise merely because C, a party to the contract,

did not furnish the consideration".13

6.10 We agree that C should have the entitlement to sue A. Indeed, given our reform of the

privity doctrine, it would be absurd if this were not so: that is, it would be absurd if a

joint promisee had no right to enforce the contract whereas a third party (to whom the

promise has not been given or made) would have that right. The much more difficult

question, however, is what should be the precise rights of enforcement of the joint

promisee (who has not provided consideration)? And, in particular, should such a joint

promisee be regarded as a third party within our proposed reforms? The advantage of

treating such a joint promisee as a third party is that the absurdity referred to above

would be avoided. But there are at least two possible disadvantages of this approach.

The first is that it is arguable that a joint promisee should have a more secure

entitlement to sue than (other) third parties on the basis that the promise was directly

addressed, or given, to him. On this basis, the joint promisee should not have to satisfy

the test of enforceability laid down in our proposals (discussed in Part VII below) and

ought not to be caught by the provisions allowing variation or cancellation without his

consent (discussed in Part IX below). The second disadvantage, and in a sense cutting

the other way from the first disadvantage, is that precisely because the promisee is a

joint promisee - and is therefore closely connected with the other joint promisee vis-avis

the promise - it is arguable that traditional rules on joint creditors should apply 14

and some of these rules (for example, requiring joinder of the other joint creditor to

any action and allowing one joint creditor to release the promisor provided not in 15

fraud of the other) differ from our proposals for third parties. 16 17

6.11 We have found these questions as to the precise rights of a joint promisee who has not

provided consideration difficult to resolve. As they were not put out to consultation,

and as the position of joint promisees is somewhat peripheral to the central focus of our

reform, we think it preferable to leave them to the courts to resolve if and when they

arise. In line with the implicit assumption of the Consultation Paper, we therefore 18

consider that a joint promisee who has not provided consideration should not count

as a third party within our proposed reforms. We adopt this approach in the confident

expectation that, particularly in the light of our reforms, the English courts will avoid

the absurdity referred to above by accepting the 'joint promisee exception' so that a

joint promisee who has not provided consideration will not be left without a basic right

to enforce the contract.

6.12 We therefore recommend that:

(7) without prejudice to his rights and remedies at common law, a joint

promisee who has not provided consideration should not be regarded as

a third party for the purposes of our reform. (Draft Bill, clause 8)

4. Reforming Privity Without Reforming Consideration: The Deeper Policy

Question

6.13 We have said above that, while at a formal level, it is possible to reform privity without

reforming the need for consideration, the question must be addressed at a deeper

policy level as to whether this involves relaxing the importance attached to

consideration. The argument that a reform of privity does relax the importance of

consideration rests on the proposition that a third party who has not provided

consideration, and hence not "earned" the promise, should be afforded no better rights

than a gratuitous promisee. The fact that someone else has provided consideration for

the promise is an irrelevance vis-à-vis the claim by the third party. Yet our proposed

reform not only affords a third party better rights than a gratuitous promisee, it also

allows the claim of the third party, who has provided no consideration, to trump the

rights of the contracting parties, who have provided consideration and hence have

earned each other's promise, to vary or cancel the contract.19

6.14 This argument can be illustrated by the following hypothetical example. A wants to

give a car to C that he is buying from B and also wants to assure C, in advance, that

the car will be his. In a first situation, in addition to its contract with B, A makes a

gratuitous promise to C. In a second situation A insists on a term of the contract with

B being that the car should be delivered, and title should pass, to C. A informs C of

that contract for his benefit. It is argued that the position of C, and the justice

underpinning whether C can sue A in the first situation or B in the second situation

for failure to deliver the car, is indistinguishable. But according to our proposed reform

C would be able to sue in the second situation, subject to satisfying the test of

enforceability, but not in the first situation.

6.15 At first blush one can resist this argument




Unfair Terms in Consumer Contracts - what is an unfair term?

An unfair term in a contract covered by the UTCCRs is not binding on the consumer.

Test of fairness

A term is unfair if :

contrary to the requirement of good faith it causes a significant imbalance in the parties' rights and obligations under the contract, to the detriment of consumers.

'Good faith' means that you must deal fairly and openly with consumers. Standard terms may be drafted to protect commercial needs but must also take account of the interests and rights of consumers by going no further than is necessary to protect those legitimate commercial interests.






facts/supplyofservices.htm

facts/supplyofservices.htmFact Sheet on Supply of Services


The Supply of Goods and Services Act 1982 requires traders to provide services to a proper standard of workmanship. Furthermore, if a definite completion date or a price has not been fixed then the work must be completed within a reasonable time and for a reasonable charge.

Also, any material used or goods supplied in providing the service must be of satisfactory quality.

The law treats failure to meet these obligations as breach of contract and consumers would be entitled to seek redress, if necessary through the civil courts.

Our Guide for traders is being amended - we hope to have it back on-line shortly.

Tortious duties, like contract duties can also be 'unfixed'! A contract term, or some other document or notice can attempt to exclude ,or limit, liability in tort. Examples of this can be revised from your contract studies. Look particularly at cases like:

Alderslade v Hendon Laundry Ltd (1945)

White v John Warwick & Co Ltd (1953)

Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd (1983)

Smith v Eric Bush (1990) (very much a leading obligations case)

Photo Production Ltd v Securicor Transport Ltd (1980) (ditto)

All of these cases are now subject to the Unfair Contract Terms Act 1977 (UCTA), particularly sections 1(1) and 1(3), 2, 11(1),11(3) (4) and (5), 13 and 14.



Third-party rights

Privity of contract occurs only between the parties to the contract, most commonly contract of sale of goods or services. If a third party gets a benefit under a contract, it does not have the right to go against the parties to the contract beyond its entitlement to a benefit. An example of this occurs when a manufacturer sells a product to a distributor and the distributor sells the product to a retailer. The retailer then sells the product to a consumer. There is no privity of contract between the manufacturer and the consumer.

This, however, does not mean that the parties do not have another form of action e.g. Donoghue v. Stevenson -- here a friend of Ms. D bought her a bottle of ginger beer, which was defective. Since the contract was between her friend and the shop owner, there was no privity of contract, but it was established that the manufacturer has a duty of care owed to their consumers and she was awarded damages in tort.

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History

Prior to 1833 there existed decisions in English allowing provisions of a contract to be enforced by persons not party to it, usually relatives of a promisee. The doctrine of privity emerged alongside the doctrine of consideration, the rules of which state that consideration must move from the promisee. That is to say that if nothing is given for the promise of something to be given in return, that promise is not legally binding unless promised as a deed. 1833 saw the case of Price v Easton, where a contract was made for work to be done in exchange for payment to a third party. When the third party attempted to sue for the payment, he was held to be not privy to the contract, and as such his claim failed. This was fully linked to the doctrine of consideration, and established as such, with the more famous case of Tweddle v Atkinson. In this case the plaintiff was unable to sue the executor of his father-in-law, who had promised to the plaintiff's father to make payment to the plaintiff, because he had not provided any consideration to the contract.

The doctrine was developed further in Dunlop Pnuematic Tyre Co. Ltd v Selfridge & Co. Ltd through the judgement of Lord Haldane

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Exceptions

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Common law exceptions

There are exceptions to the general rule, allowing rights to third parties and some impositions of obligations. These are:

Attempts have been made to evade the doctrine by implying trusts (with varying success), constructing the Law of Property Act 1925 s. 56(1) to read the words "other property" as including contractual rights, and applying the concept of restrictive covenants to property other than real property (without success).

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Statutory exceptions

The Contracts (Rights of Third Parties) Act 1999 (UK) now provides some reform for this area of law which has been criticised by judges and academics as unfair in places. The act states:

1. - (1) Subject to the provisions of this Act, a person who is not a party to a contract (a "third party") may in his own right enforce a term of the contract if-
(a) the contract expressly provides that he may, or
(b) subject to subsection (2), the term purports to confer a benefit on him.
(2) Subsection (1)(b) does not apply if on a proper construction of the contract it appears that the parties did not intend the term to be enforceable by the third party.

This entails that a person who is named in the contract as a person authorised to enforce the contract or a person receiving a benefit from the contract may enforce the contract unless it appears that the parties intended that he may not.

The law has been welcomed by many as a relief from the strictness of the doctrine, however it may still prove ineffective in professionally drafted documents, as the provisions of this statute may be expressly excluded by the draftsmen.



TWEDDLE v ATKINSON (1861)1 B & S 393 (see Chapter 4 2.6) is usually cited as the case which first established the doctrine of privity of contract as part of English law. In reality the rule that consideration must move from the promisee is similar to, perhaps identical to, the privity rule


2.2 C OLLATERAL C ONTRACTS A collateral contract between A and C may come into existence dependent on a main contract between A and B: SHANKLIN PIER v DETEL PRODUCTS [1951] 2 KB. 854; [1951] 2 All ER 471; ANDREWS v HOPKINSON [1957] 1 QB 229; [1956] 3 All ER 422

2.3 A GENCY A person may negotiate as agent to bring his principal into contractual relations with a third party. It is the principal and not the agent who is the party to the contract

3. E XEMPTION C LAUSES AND T HIRD P ARTIES Despite the commercial inconvenience of the principle, the general rule is that until recently a third party could not take the benefit of an exemption clause. The problem commonly arose in a contract for the carriage of goods by sea, where the carrier sought to limit not only his own liability but the liability of others – for example, stevedores who unloaded the ship. The exemption clause would be stipulated for between parties of equal bargaining strength, yet it generally did not protect the third party. In ADLER v DICKSON (NO1) [1955] 1 QB 158; [1954] 3 All ER 397 a passenger injured on a ship’s gangplank successfully sued the servants of the company, which was itself protected by an exclusion clause, that did not, however, extend to its employees. In SCRUTTONS v MIDLAND SILICONES LTD [1962] AC 446; [1962] 1 All ER 1 HL a drum being unloaded from a ship by stevedores was dropped and some £593 of damage done when the contents were lost. The consignees sued the stevedores who claimed that their liability was limited to $500 relying on the bill of lading. This claim was rejected as there was no implied Chapter 5 SEMPLE PIGGOT ROCHEZ 3 contract with the stevedores 1 . They could not be protected by the limitation clause


Tweddle v. Atkinson 1861 fathers promise to pay son on marriage Dunlop v. Selfridge 1915 attempt to sue third party Beswick v. Beswick 1968 administratrix could sue Shanklin v. Detel Products 1951 collateral contract re paint warranty Andrews v. Hopkinson 1957 It’s a good little bus Jackson v. Horizon Holidays 1975 wife and children got damages



INFORMATION ASYMETTRY BETW Soltr AND consumer in respect of the law, and additional MISinformation from a professional soltr where the integrity and principle of noblesse oblige is sacrified on the alter of profit centre.


SEMPLE PIGGOT ROCHEZ 2

2. WHO IS A PARTY TO A

CONTRACT?

In order to enforce a contractual promise, a person at

common law must show that the promise was made to him

and that he provided consideration for it.

2.1 JOINT PROMISEES

There is authority for the proposition that, where a promise is

made to A and B jointly and only A supplies consideration for

the promise, then B can enforce the promise in his own right:

COULL’S v BAGOT’S TRUSTEE CO LTD (1969-70) 119 C.L.R. 469

(where A and B were husband and wife).

2.2 COLLATERAL CONTRACTS

A collateral contract between A and C may come into

existence dependent on a main contract between A and B:

SHANKLIN PIER v DETEL PRODUCTS [1951] 2 KB. 854; [1951] 2 All

ER 471; ANDREWS v HOPKINSON [1957] 1 QB 229; [1956] 3 All ER

422.

2.3 AGENCY

A person may negotiate as agent to bring his principal into

contractual relations with a third party. It is the principal and

not the agent who is the party to the contract.

3. EXEMPTION CLAUSES AND

THIRD PARTIES

Despite the commercial inconvenience of the principle, the

general rule is that until recently a third party could not take

the benefit of an exemption clause. The problem commonly

arose in a contract for the carriage of goods by sea, where the

carrier sought to limit not only his own liability but the liability

of others – for example, stevedores who unloaded the ship.

The exemption clause would be stipulated for between parties

of equal bargaining strength, yet it generally did not protect the

third party.

In ADLER v DICKSON (NO1) [1955] 1 QB 158; [1954] 3 All ER 397 a

passenger injured on a ship’s gangplank successfully sued the

servants of the company, which was itself protected by an

exclusion clause, that did not, however, extend to its

employees.

In SCRUTTONS v MIDLAND SILICONES LTD [1962] AC 446; [1962]

1 All ER 1 HL a drum being unloaded from a ship by stevedores

was dropped and some £593 of damage done when the

contents were lost. The consignees sued the stevedores who

claimed that their liability was limited to $500 relying on the bill

of lading. This claim was rejected as there was no implied


200