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The supply of goods and services |
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(j)â Enforcement
Where there has been a breach of the information and complaints requirements of the 2009 Regulations, or where a service provider has breached the prohibition in regulation 30(2) not to discriminate against an individual service recipient on the basis of his place of residence, the injured recipient can enforce the provisions and seek redress. This right of action exists irrespective of whether the service was a business-to-business transaction or a business-to-consumer transaction.
In addition, where the service recipients are consumers, enforcement bodies such as the Office of Fair Trading and Trading Standards Departments can use their enforcement powers under Part 8 of the Enterprise Act 2000. This option is restricted, however, to situations where the breach has affected, or has the potential to affect, the collective interests of consumers. It is not intended for use in an individual complaint unless there is also the potential for it to affect the collective interests of consumers.
Q7 Analyse how the introduction of the Provision of Services Regulations 2009 has improved the position of service recipients.
4â Supply of Goods and Services Act 1982
(a)â Introduction
While the Provision of Services Regulations 2009 deal with the provision of information to prospective service recipients, the Supply of Goods and Services Act 1982 deals with the quality and fitness of the service provided. The Act was passed some ninety years after the Sale of Goods Act 1893 and brings together implied conditions about description and quality for contracts other than sale and three implied terms specifically addressing the issue of services.
The 1982 Act’s genesis lay in the report by the National Consumer Council entitled Service Please: Services and the Law, A Consumer View. The Act came hot on the heels of the report and was perceived as being a temporary measure, since at the same time as passing the statute, the government referred the question of implied terms in services to the Law Commission, who published a report in 1986.25 In the event, the Law Commission did not recommend any changes on the grounds that its report came too soon after the passage of the 1982 Act and that more time was needed to ascertain whether the Act would achieve its purpose or would require amendment.
(b)â Implied conditions under Part I
Prior to the 1982 Act, implied terms for services emanated from the common law and the Act did not seek to alter the law as it stood, but rather to codify
25Law Commission, Law of Contract: Implied Terms in Contracts for the Supply of Services (Report No. 156 1986).
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4â Supply of Goods and Services Act 1982 |
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it. Hence, the substance of the law was unchanged and pre-existing case law |
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remains relevant. Part I of the 1982 Act implies conditions about title, descrip- |
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tion, satisfactory quality, fitness for purpose and sample into contracts that |
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involve the passage of title or possession, as the case may be, in contracts other |
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than sale or hire-purchase.26 Thus, sections 1–6 deal with contracts for the |
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transfer of goods, such as barter, while sections 6–10 deal with contracts of hire |
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in which the possession of the goods passes but the property in them does not. |
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These provisions closely echo those in sections 12–15 of the Sale of Goods Act |
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1979 and there is accordingly no need to consider them further here except to |
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note that the list of factors to be found in section 14(2B) of the 1979 Act relating |
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to quality has not been adopted in the 1982 Act. Nonetheless, given the basic |
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similarity of the provisions, it is a reasonable presumption that judicial deci- |
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sions under sections 12–15 of the Sale of Goods Act 1979 will be equally applic- |
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able in decisions under Part I of the 1982 Act. As with the sale of goods, the |
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implied conditions in Part I of the 1982 Act cannot be excluded against a per- |
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son dealing as a consumer but, with the exception of the condition relating to |
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title, can be excluded against a non-consumer purchaser to the extent that the |
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exclusion is reasonable.27 |
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Q8 Compare the implied conditions in Part I of the 1982 Act with those con- |
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tained in sections 12–15 of the Sale of Goods Act 1979. |
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(c)â Common law approach |
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The common law approach to liability for services is based in negligence and |
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hence the need to demonstrate a duty of care owed by the supplier of the service |
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to the consumer, a breach of that duty and resultant damage. It is not merely the |
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existence of the duty but also the standard of care to be exercised by the sup- |
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plier that is pertinent. All service providers must exercise reasonable care and |
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skill irrespective of whether or not they are a professional, or are employed, or |
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volunteer to perform that service. |
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The standard of care required increases with the professed expertise of the |
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supplier. Thus, a doctor must exercise the medical skills appropriate to a doctor |
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of his standing, a lawyer the legal skills appropriate to his place in the profes- |
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sion, etc., which will far exceed the level of skill to be expected of the ‘man on |
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the Clapham omnibus’ were he to be faced with the task.28 |
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26 |
The implied conditions regarding description, quality, etc, in hire-purchase contracts are |
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governed by Supply of Goods (Implied Terms) Act 1973, ss.8–11. |
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27 |
Unfair Contract Terms Act 1977, s.7. |
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28 |
See the dicta of Lord Denning MR in Greaves & Co. (Contractors) Ltd v. Baynham Meikle and |
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Partners [1975] 3 All ER 99. However, an error of judgement will not necessarily amount to |
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negligence, as in Whitehouse v. Jordan [1981] 1 All ER 267, in which a surgeon was held not |
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liable for brain damage caused to a new-born baby by a forceps delivery. Although the decision |
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to deliver the child in that way may have been an error of judgement, the decision was not |
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unreasonable and hence did not constitute negligence. |
156 |
The supply of goods and services |
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That said, the requirement that the supplier demonstrates an appropriate level of skill does not equate with a guarantee that he will achieve the desired result. In the much quoted dicta of Lord Denning regarding the employment of a professional man:
The law does not usually imply a warranty that he will achieve the desired result, but only a term that he will use reasonable care and skill. The surgeon does not warrant that he will cure the patient. Nor does the solicitor warrant that he will win the case. But, when a dentist agrees to make a set of false teeth for a patient, there is an implied warranty that they will fit his gums.29
This distinction seems rational. It is perfectly reasonable to expect a lawyer or a financial adviser to exercise their professional care and skill when advising their clients, though with no guarantee as to the outcome of the case or the performance of the investment; however, if the consumer has employed a heating contractor to instal central heating or a garage to repair a car, it is reasonable to expect not only that the work will be done professionally but also that the desired result will be achieved in that the central heating works, as does the car. The item produced must be fit for its purpose.
Q9 Review the main requirements of the law of negligence as they apply to services.
(d)â Implied terms
In transposing the previous common law into statutory form, the 1982 Act introduced three statutory implied terms, namely, that the supplier will carry out the service with reasonable care and skill; that the service will be carried out within a reasonable time; and that a reasonable charge will be paid for the service. It is important to note that, unlike the statutory provisions relating to goods,30 these implied terms are not specified as either conditions or warranties. They are statutory innominate terms. As such, the remedy for breach of one of these terms is dependent on the facts of the case and the view of the court as to the severity of the breach. The remedy is dependent on the effect of the breach rather than on its nature. While a breach of condition gives a right of rescission and a breach of warranty only sounds in damages, an innominate term gives the court the flexibility to award whichever remedy is appropriate. This seems eminently sensible in respect of services
29Per Lord Denning MR in Greaves & Co. Contractors Ltd v. Baynham, Meikle & Partners [1975] 3 All ER 99, 103, in which the defendant was employed to design a factory, the floor of which would need to be able to support the weight of fork-lift trucks moving barrels of oil. In the event, the floor cracked due to the vibration caused by the trucks when moving around. The defendant was found liable for the damage.
30Sale of Goods Act 1979, ss.12–15; Supply of Goods (Implied Terms) Act 1973, ss.7–10; and Supply of Goods and Services Act 1982, Part I.
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4â Supply of Goods and Services Act 1982 |
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where the types of service can be so varied and where, unlike strict liability, |
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the culpability of the service provider is a factor in the decision of the court. |
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It would, in practice, have been virtually impossible to introduce strict liability |
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in respect of services. |
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The implied terms in sections 13–15 of the 1982 Act are not exhaustive as |
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to the duties imposed on the supplier of services. Section 16 expressly pro- |
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vides that nothing in the Act prejudices any other rule of law which may either |
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impose a stricter duty on a supplier31 or imply other non-inconsistent duties |
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into contracts for services.32 |
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(e)â Implied term re care and skill |
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Section 13 of the 1982 Act provides that in a contract for the supply of a service |
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where the supplier is acting in the course of a business, there is an implied term |
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that the supplier will carry out the service with reasonable care and skill. The |
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resonance with the duty of care in negligence is obvious and intentionally so, |
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for, as discussed above, section 13 is essentially a statutory contractual adoption |
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of the law of negligence with all of the relevant case law being equally applic- |
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able.33 However, for section 13 to apply there must have been a contract for the |
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supply of the service so it is of no effect where the service has been provided |
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on a voluntary or non-contractual basis. Further, the contract must have been |
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made in the course of a business. This requirement would be construed in line |
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with the decision in Stevenson v. Rogers,34 a sale of goods case, in which it was |
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held that any contract entered into by a business is deemed to be in the course |
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of a business, a much less stringent requirement than the criminal law counter- |
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part, which requires that the action was an integral part of the business.35 This |
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leaves the court in the same position as under section 14 of the Sale of Goods |
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Act 1979 in having to decide on the facts whether or not a particular contract |
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was entered into as part of a business, and raises the issue of a hobbyist, such as |
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an amateur painter or photographer, and at what point the hobbyist steps over |
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the boundary and becomes a business. |
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The business requirement means that the injured claimant has to decide |
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which of three claims he should pursue. If he has a contract with a supplier |
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who is in the course of a business, he can sue under section 13 of the 1982 Act, |
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enforce any express provisions of the contract and claim in negligence. If his |
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contract is with a non-business supplier, he cannot sue under the 1982 Act but |
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31 |
Supply of Goods and Services Act 1982, s.16(3)(a). |
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32 |
Ibid. s.16(3)(b). |
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33 |
For a case decided under the 1982 Act see Wilson v. Best Travel Ltd [1993] 1 All ER 353, in |
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which a holiday company was held not liable under s.13 when a customer was injured by falling |
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through a glass patio door at a hotel advertised in the defendant’s brochure. The defendant had |
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inspected the hotel and confirmed that the glass satisfied the current Greek safety standards. |
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34 |
[1999] 1 All ER 613. |
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35 |
Havering London Borough Council v. Stevenson [1970] 3 All ER 609; Davies v. Sumner [1984] 3 |
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All ER 831. |
158 The supply of goods and services
can still enforce the express provisions of the contract and sue in negligence. Finally, if he does not have a contract with the supplier, he will be restricted to a claim in negligence. In practice, claims under the 1982 Act and in negligence are likely to result in the same outcome, though different limitation periods will apply.
Many service contracts actually involve performance by more than one person.36 Thus building a house will involve brick-layers, plumbers, electricians, etc., while the provision of a package holiday will typically involve the main holiday company, a transport company whether it be an airline for a holiday overseas or a rail or coach company for a holiday in the United Kingdom, and hoteliers. In the first example, it may be that all of the different tradesmen are employed by the main contractor, in which case he will be liable for the quality of the work that they do. However, it is possible that the tradesmen are all selfemployed and are sub-contracted by the main building contractor. The issue then arises as to whether the main contractor is liable for their work or whether the injured customer would have to sue the sub-contractors directly if the performance does not reach the correct standard. Equally, in the holiday example, it is probable that the hotelier, and perhaps the transport company, are independent sub-contractors rather than employees of the main holiday company. So, who does the customer sue if the airline or the hotelier does not perform the contract with appropriate care and skill?
The answer is likely to depend on the contractual relationship between the main contractor and the sub-contractor, with the key issue being whether the main contractor is acting as the agent of the sub-contractor. If he is, the normal rules of agency dictate that the role of the agent is to bring about a contract between the principal and the third party. In the example given above of building a house, this would mean that the main contractor is setting up contracts between the various tradesmen and the house purchaser. Equally, in the holiday example, the holiday company as the main contractor would be setting up a contract between the hotelier and the holiday-maker. If that is the case, then agency dictates that, having set up the contracts, the agent drops out of the scene leaving the principal and the third party with a binding contract upon which they can sue and be sued. Thus, if the service was not performed with reasonable care and skill, the customer would have to sue the sub-contractor directly, with the problems that might be involved in so doing, particularly in the holiday scenario where the hotelier might be elsewhere in the European Union37 or even outside the EU, when the difficulties of enforcing a legal action may be immense and well beyond the ability of the average holiday-maker. It is far more beneficial to the customer and, in practice, more likely that the main contractor is not acting as the agent of the sub-contractor and that he has simply sub-contracted the
36Not all contracts for services can be sub-contracted. Some contracts necessarily require personal performance by the service provider, e.g., painting a portrait or performing in a concert.
37Although the consumer would be able to enforce any legal judgment in that situation.
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4â Supply of Goods and Services Act 1982 |
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performance of part of the work for which he has contracted, so that while he has delegated the work, he remains legally responsible for it.
While section 13 lays down the general duty to be imposed on the supplier of services, section 12(2) of the 1982 Act gives the Secretary of State the authority to exclude identified suppliers from the provisions of sections 13–15. There are three relevant Statutory Instruments providing exemptions for advocates, in court or before any tribunal or inquiry and the preliminary work directly affecting the conduct of the hearing;38 and company directors when acting in that capacity;39 for building society directors and management committee members of industrial and provident societies;40 and for arbitrators (including umpires) when acting as such.41 These exclusions apply in contract only and liability in negligence remains. Of particular note in this regard is the position of barristers and solicitor advocates. Contractual liability has never been an issue with respect to barristers as they do not contract with the person whom they represent in court. The contract is between the client and the solicitor, with the latter then retaining the services of the barrister. There remains the issue of the liability of a barrister in negligence. The traditional view was that no liability was possible as a barrister has ‘an overriding duty to the court’42 and that he must be free to pursue that duty without fear of legal liability. Lord Reid opined that:
it is in the public interest to retain the existing immunity of barristers from action by clients for professional negligence, at least so far as it relates to their work in conducting litigation.43
However, this approach was turned on its head in Arthur JS Hall & Co. v. Simons,44 which overruled Rondel v. Worsley. In the rare situation of the House of Lords overruling one of its previous decisions, their Lordships held that public policy no longer justified the exemption and that we should ‘bring to an end an anomalous exception to the basic premise that there should be a remedy for a wrong’.45 Thus, advocates, including both barristers and solicitor advocates, are now liable in negligence in the same way as other professionals such as doctors.
Service sectors that have caused particular problems may attract additional statutory control, this being expressly permitted under section 16(3) of the 1982 Act. One of the most notable examples is package holidays, which have always prompted a significant number of complaints, perhaps because a holiday is one of the most expensive and eagerly anticipated purchases by the average consumer in any year. Having saved all year for their two weeks in the sun, consumer expectations may be high and thus disappointment is both more
38Supply of Services (Exclusion of Implied Terms) Order 1982, SI 1982/1771, reg. 2.
39Ibid.
40Supply of Services (Exclusion of Implied Terms) Order 1983, SI 1983/902, reg. 2.
41Supply of Services (Exclusion of Implied Terms) Order 1985, SI 1985/1, reg. 2.
42Per Lord Reid in Rondel v. Worsley [1967] 3 All ER 993, 998.
43 [1967] 3 All ER 993,1000.â 44â [2000] 3 All ER 673.â 45â Ibid. 683 per Lord Steyn.
160 |
The supply of goods and services |
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immediate and more keenly felt should the holiday not provide all it promised. Lord Denning MR in Jackson v. Horizon Holidays Ltd46 opined that:
People look forward to a holiday. They expect the promises to be fulfilled. When it fails they are greatly disappointed and upset. It is difficult to assess in terms of money; but it is the task of the judges to do the best they can.
It is unsurprising, therefore, that, in addition to the 1982 Act, consumers are now protected by the Package Travel, Package Holidays and Package Tours Regulations 1992,47 although it should be remembered that these Regulations give effect to Council Directive 90/314/EEC and therefore did not originate in the United Kingdom. The regulations provide civil liability for misleading descriptions of holidays,48 and incorrect price information, and provide for arrangements to be made in the event of the non-provision of a significant proportion of the services49 and compensation for a failure to provide proper performance of the service.50 In addition, they also impose criminal liability for a failure to provide the required information about the holiday in a ‘legible, comprehensive and accurate manner’.51
Q10 Analyse the relationship between the implied term of care and skill under section 13 and the law of negligence.
(f)â Implied term re time for performance
The time for performance of a service can be dictated by the terms of the contract, where both parties make time of the essence. If there is an express term as to time, any failure by the service provider to meet that requirement will lay him open to a claim for compensation. In the absence of such a contractual term, section 14 of the 1982 Act steps into the breach. As with section 13, it only applies when the supplier is acting in the course of a business. Further, it only applies when the contract has not stipulated the time for performance or indicated the mechanism by which the time for performance can be calculated, and when there is no previous course of dealings between the parties that could be used to determine the time of performance. Thus, it acts to fill a contractual vacuum. When it does apply, it requires that the service will be carried out within a reasonable time, which will be a question of fact. This term has been adopted from the previous common law rules and requires both that the service will be started within a reasonable time and that it will be completed within a reasonable time. It is not sufficient merely to begin the service within a reasonable time but then be dilatory about completion. The test is objective, with the outcome dependent upon how long a provider of a similar service
46 |
[1975] 3 All ER 92, CA.â 47â SI 1992/3288. |
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48 |
Ibid. reg. 4.â |
49â Ibid. reg. 14. |
50 |
Ibid. reg. 15.â |
51â Ibid. reg. 5. |
161 |
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4â Supply of Goods and Services Act 1982 |
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might reasonably expect to take to do the work at hand. The opinion of an inde- |
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pendent expert may be needed, particularly if the service is one such as car |
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repairs, which may be beyond the knowledge of the average customer. A lead- |
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ing example of the section in practice was the decision in Charnock v. Liverpool |
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Corporation,52 in which the Court of Appeal held a garage liable for taking eight |
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weeks to repair a car when a reasonable period would have been five weeks. |
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Q11 Consider the factors to be taken into account when deciding whether a |
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service has been provided within a reasonable time. |
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(g)â Implied term re consideration |
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Unless the services have been provided free of charge, the customer will be |
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expected to pay for them. This is dealt with in section 15, the only one of the |
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three implied terms that does not contain a business requirement. It imposes |
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a duty on all customers under service contracts, irrespective of whether they |
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or the supplier are in business, to pay a reasonable charge for the services |
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provided. As with section 14, this term only applies in a contractual vacuum, |
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i.e., when the contract is silent as to the price, there is no contractually agreed |
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method for calculating it and no previous course of dealings that can be relied |
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upon. What is reasonable is, of course, a question of fact. Given the importance |
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of price in any contract, the parties are unlikely not to have given any thought |
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to it, unless the contract has come about because of an emergency, such as a |
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car breaking down at the side of the road or a water pipe bursting and flooding |
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the premises. Therein lies one of the concerns about price. In an emergency |
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situation, the customer may not have the opportunity to look around to find |
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a reasonable price and may, in all innocence, pay an extortionate price for |
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the services that are provided. However, having paid the bill he will have no |
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redress, for the payment will constitute an agreement that the sum paid is the |
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contract price and, in the absence of duress, the customer has no remedy. The |
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law does not protect customers from bad bargains– caveat emptor rules. |
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The other issue with price is the old chestnut about estimates and quota- |
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tions. Opinions may vary as to the meaning of the terms. The Vehicle Body |
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Repair Association in their Code of Practice53 defined an estimate as being |
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the ‘anticipated cost for the work being requested’ while a quotation is ‘an |
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all-inclusive fixed cost for carrying out the work as described and may not |
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be increased’. This accords with the generally held view that an estimate may |
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be adjusted depending upon the work actually done while a quotation is a |
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fixed contractual price. It has been suggested that an unrealistically low esti- |
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mate might be an unfair commercial practice under the Unfair Commercial |
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52 |
[1968] 3 All ER 473. See also Rickards v. Oppenheim [1950] 1 All ER 420. |
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53 |
Quoted in I. Ramsay, Consumer Law and Policy: Texts and Materials on Regulating Consumer |
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Markets (2nd edn, Hart Publishing, Oxford, 2007) 679. |
162 |
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The supply of goods and services |
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Practices Directive,54 it having |
been construed as a misleading action under |
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regulation 5 of the Consumer Protection from Unfair Trading Regulations 2008.55 |
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Q12 Consider whether the implied terms of care and skill, time for |
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performance |
and consideration together provide a suitable level of protection |
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for the users of services.
(h)â Exclusion of liability
In the same way that a distinction has been drawn between the strict liability provisions in Part I of the 1982 Act governing the quality of goods and the fault liability in sections 13–15, a similar dichotomy exists in relation to the ability of the supplier to exclude liability. Liability under Part I cannot be excluded against a buyer dealing as a consumer, while it can be excluded against a person not dealing as a consumer to the extent that the exclusion is reasonable.56 By contrast, liability under sections 13–15 is subject to the main provisions of the Unfair Contract Terms Act 1977, which apply irrespective of the nature of the buyer and instead relate to the type of damage suffered as a result of the breach. This brings exclusion under section 13 in contract in line with exclusion for negligence in tort, which two actions may arise from the same incident and in respect of which two legal claims may be pursued. It is logical that the same approach should be adopted as regards exclusion for both of these potential liabilities. Thus, liability for death and personal injury arising from negligence cannot be excluded by any contract term or notice given to persons generally or to a particular person.57 It follows that any attempt to use a term in a contract for services will be void to the extent that it seeks to exclude liability for death or personal injury. It would be valid, however, to exclude liability for damage to property to the extent that the exclusion is reasonable within the terms of the Unfair Contract Terms Act 1977.58 Other exclusions can be agreed between the contracting parties by express agreement or by their course of dealings, or by such usage as binds them both, although such exclusion clauses cannot offend against the 1977 Act.59 Further, an express term will not negate one of the implied terms in sections 13–15 unless it is inconsistent with it.60
Q13 Consider how the provisions of the Unfair Contract Terms Act 1977 impact upon liability for a breach of sections 13–15 of the Supply of Goods and Services Act 1982.
54 |
Ibid. 669.â |
55â SI 2008/1277. |
56 |
Unfair Contract Terms Act 1977, s.7. |
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57 |
Ibid. s.2.â |
58â Ibid. s.11. |
59Ibid. s.16(1). See Eagle Star Life Assurance Co. Ltd v. Griggs, Independent, 20 October 1997, in which an express provision that the quality of the supply was to be judged by the supplier negated the implied term.
60Unfair Contract Terms Act 1977, s.16(2).
163 |
4â Supply of Goods and Services Act 1982 |
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(i)â Codes of practice
While additional statutory controls to regulate services are an option, alternative non-statutory mechanisms may also prove helpful. The Office of Fair Trading (OFT) considered the introduction of a general duty to trade fairly61 but nothing ever came of it. Equally, the use of written assurances by traders who engaged in unfair practices proved to be ineffective. Arguably of more interest is that some service industries strive to be self-regulatory through the use of codes of practice, efficient self-regulation often being viewed as preferable to statutory control. One of the most prominent codes of practice is the Association of British Travel Agents (ABTA) Code, which regulates the holiday industry. Codes of practice typically include a requirement that signatories to the code62 must act in a professional manner and exercise care and skill in their dealings and, additionally, will often provide for a dispute resolution system should the service provider fail to meet the legitimate expected standard. This is intended to provide consumers of services with a second source of protection and guarantee of the quality of services, and with a second avenue for compensation in the event of an unsatisfactory service. Sadly, this has not always proven to be the case. There are inherent weaknesses with codes of practice, of which the most obvious is that such a code only regulates traders who are members of the particular organisation and does not impact on those traders who are not a party to the code. In practice, it may well be the latter who cause problems within any particular industry but who fall outside the voluntary selfregulation promulgated by a code.
Codes of practice have therefore suffered from a poor image, although this hopefully will be improved by the criteria now set out by the OFT for Codes to be included in the Consumer Codes Approval Scheme. The core criteria for approval are stringent and include a commitment to provide customers with adequate information about goods and services; the use of clear and fair contracts; the protection of deposits or prepayments; and low cost, independent dispute resolution if a complaint is not dealt with satisfactorily.63 In practice, service providers governed by OFT approved codes are likely to be providing a good quality service. While the OFT has invited many sectors to participate in the Consumer Codes Approval Scheme, relatively few codes of practice have met the standards to be OFT approved.64
61Office of Fair Trading, A General Duty to Trade Fairly, Discussion Paper (London, 1986); Office of Fair Trading, Trading Malpractices: A Report by the Director General of Fair Trading (London, 1990).
62It is an unfair commercial practice for a trader to claim that he is a signatory to a code of conduct when he is not, see SI 2008/1277, Sch.. 1 para. 1.
63See ‘OFT Approved Codes Explained’ at www.oft.gov.uk.
64Currently there are ten approved Codes: Bosch Car Service, British Association of Removers Ltd (BAR), British Healthcare Trades Association, Carpet Foundation, Debt Managers Standards Association (DEMSA), Direct Selling Association (DSA), Institute of Profesional Will Writers, Motor Codes Ltd (New Car Code), The Property Ombudsman Ltd (Sales) and Vehicle Builders and Repairers Association Ltd (VBRA), see ‘OFT Approved Codes Explained’ at www.oft.gov.