|Article - Commercial Law|
Is a warranty a "relevant factor" for the Court to consider when deciding whether goods are of satisfactory quality?
Many consumers buying new goods will often be provided with a warranty guaranteeing the goods against defects within a certain period of time. Following the Sale and Supply of Goods to Consumers Regulations 2002, consumer guarantees are now legally enforceable despite the (arguable) lack of consideration. Problems do, however, arise with faulty goods: must the consumer accept warranty work under the terms of the warranty or can the consumer specifically enforce its contractual rights and implied terms?
Under the Sale of Goods Act 1979 (and similar legislation applying to other types of contracts like the Supply of Goods (Implied Terms) Act 1973 and the Supply of Goods and Services Act 1982), where the seller sells goods in the course of a business, there is an implied condition that they will be of satisfactory quality.
Section 14 of the Sale of Goods Act 1979 (which is mirrored in other legislation) states that:
In the Scottish decision of Lamarra v Capital Bank plc (2007) SC 95 (which involved a vehicle let under a hire purchase agreement which was therefore subject to the Supply of Goods (Implied Terms) Act 1973), the Sheriff Court decided that the vehicle did have a number of defects on delivery but it was of satisfactory quality because they were easy to rectify, covered by the warranty and did not affect the durability, longevity or value of the vehicle.
Mr Lamarra appealed to the Sheriff Principal, who revised the Sheriff's decision and decided that the Sheriff had wrongly decided that the warranty was a "relevant factor" when considering whether the vehicle was of satisfactory quality. The Sheriff Principal therefore overturned the Sheriff's judgment and decided that the vehicle was not of satisfactory quality because, in essence, the faults existed when the vehicle was supplied and it should be free from "minor defects". Upon appeal to the Court of Session, the finance company's appeal was dismissed and the Sheriff Principal's finding that the vehicle was unsatisfactory was upheld.
Whilst warranties play an important role in resolving many consumer complaints, they are (as Mustil LJ expressly said in Bernstein) additional rights and should not reduce the level of consumer protection. It therefore follows (particularly after Lamarra) that when considering whether goods are of satisfactory quality, a warranty and its ability to resolve an easily remediable complaint should not be considered.
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Article First Published: 21 October 2008
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