When products are defective, it is important to know that store policies of refunds and replacements are often unlawful. Product liability law in England and Wales clearly states that the decision to demand a refund remains with the consumer.
Where a Defective Product is Bought by Description
Section 13 of the Sale of Goods Act 1979 implies a term into all contracts for sales of goods by description that the goods will correspond to that description. Because almost all goods and services purchased over the Internet are effectively sales of goods by description, this s. 13 now plays a major part in defective product law.
For example, an amplifier is advertised as working and in “as new condition”. If on delivery it is found to be severely battered, inoperable, or both, then s. 13 has been breached.
The 1979 Act states that s. 13 is a condition, meaning it is considered a major term in all affected legal contracts. When a condition is breached, the buyer gains a number of rights. They may reject the goods; have their money returned; and, where the breach has caused damage (e.g. a faulty washing machine causing water damage), claim damages. In addition, they may terminate the contract.
In the example above, the buyer may therefore choose to return the amplifier and have both the original cost of purchase and the cost of returning the defective product refunded. They are under no obligation to accept a replacement instead of a refund, and they may deem the contract closed.
Satisfactory Quality and Reasonable Fitness For Purpose
This statutory defence against loss from defective products is not limited to goods bought at a distance, however. Section 14 of the 1979 Act implies two further conditions into sale of goods contracts.
Section 14(2) requires that all goods purchased be of “satisfactory quality”. What this means will differ depending on the circumstances but in the amplifier example above, it would be reasonable to assume that an inoperable amplifier, or even a battered one, would not be satisfactory given the wording of the advert.
Meanwhile, section 14(3) requires that the goods be “reasonably fit” for any purpose “disclosed by the buyer to the seller”. In short, this requires that any goods sold on the basis that they will do a certain job must be able to do that job reasonably.
Acceptance and Loss of Rights
Because both parts of section 14 imply conditions, the buyer retains the right to reject on the grounds of product defect. However, it is possible to lose the right to reject the goods and terminate the contract if the goods are deemed to have been accepted.
What constitutes acceptance is a complex issue but defective product lawyers generally agree that a delay in reporting the unsatisfactory nature will constitute acceptance. Altering the goods so they cannot be returned in substantially the same state as they were received also constitutes acceptance.
Is a No Refunds Sign Enforceable?
Although their use is limited at best, some shops in England and Wales continue to display signs saying they will not give a refund under any circumstances. Some shops insist their returns policy allows only a replacement item or store credit. Any defective product lawyer will attest that the decision on whether to accept a refund or replacement item is the buyer's, not the seller's.
The Unfair Contract Terms Act 1977 governs the legality of exemption clauses. Section 6(2) states that these clauses, sometimes also known as exclusion clauses, are void where they contravene sections 13, 14 and 15 of the Sale of Goods Act 1979 and the buyer “deals as consumer”. This is regardless of whether the no refund notice is displayed prominently at the till or not.
The term “deals as consumer” simply limits the use of this section of the Act to people who are not purchasing goods and services as a business, while the seller is making the sale as a business. In short, goods bought in a personal capacity and for personal use will be goods bought while dealing as consumer.
The Sale of Goods Act 1979 and Unfair Contract Terms Act 1977 together create a legal right to a refund or replacement of faulty goods, or goods that do not meet agreed standards and requirements. This is regardless of whether the seller has a 'store policy' only offering replacements or store credits. The decision on whether to receive a refund or a replacement remains with the consumer and cannot be revoked.
Zoe Kirk-Robinson - Zoë Kirk-Robinson is a freelance writer/artist specialising in legal writing, internet technology and creative writing. She holds a ...
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