Background to Consumer law and the Consumer Credit Act
The Consumer Credit Act 1974 (CCA) is the statute that deals with regulated agreements, with the exception of certain exemptions. In the case of Sid is a debtor-creditor-supplier agreement. This is credit because it is monies paid to a supplier for the return of services, i.e. it is a financial accommodation under section 9(1).
Sid is an individual, i.e. he is not a company or other corporate body. The amount that is lent is under 25,000 therefore regulated by the CCA. It is not exempt e.g. gas, water, electricity hire; therefore it is a regulated agreement CCA. The debtor-creditor-supplier agreement is dealt with under section 12 of the CCA where such an agreement is defined as credit to enable the debtor to buy goods or services from the creditor or the creditor is a third party that enables the supplier to provide services to the debtor. This is a triangular transaction and the type of transaction is a loan; whereby the FC pays Ace and Ace supplies the services, but no ownership of goods/services is contained within this agreement. This form of credit agreement opens up to different periods of cancellation, depending where the credit agreement was signed. As long as Sid cancels within the specified period he can stop the credit; as well as ending the work with Ace. In respect to the agreement for the bed from Healthy Sleeping this is a different types of agreement because Sid and Healthy Sleeping is where the sale of goods occur, in this one XYZ has no role to play except extending credit for whatever purchases wanted within the specified credit limit. Yet there may be liability for XYZ to return the purchase price to Sid, under Consumer Credit laws. This is becoming stricter because of EU laws that are created to protect Consumer from negligent, reckless or fraudulent companies. This will be illustrated in the following discussion and will be referred to in the advice given to Sid in the three scenarios.
The latest EU regulation is ensuring the protection of the consumer under the Sale and the Supply of Goods to Consumer Regulations 2002 (SSGR). The focus of the SSGR is to make the consumer the King of the transaction and properly protected by the law. Therefore under any contract the consumer has extra protection in order to balance the playing field. A consumer under the SSGR is defined as:
“Consumer” means any natural person who, in the contracts covered by these Regulations, is acting for purposes which are outside his trade, business or profession.
As of yet these regulations are not in force in the UK, but are to be implanted soon in line with the EU Sale of Consumer Goods and Associated Guarantees Directives (1999/44/EC); however these directives do not provide protection through criminalization of vendors and aid to give a guide line to vendors of their responsibilities and duties in affording minimum protections to the consumer, which the Consumer Protection Act has done so.
Section 20 of the Consumer Protection Act 1987 (CPA) states it is an offence to supply and goods or services by indicating a misleading price. Again this needs to be in the course of a trade or a business; whereby some or all of the business’ consumers might reasonably be expected to rely and be misled by the given price; and the business owner does not take reasonable steps to prevent his customers from relying on the misleading information. The offence carries a fine only, however no action can be brought if 3 years have passed from the time of the offence and 1 year from the person bringing the prosecution discovered the offence had been committed. Therefore what this section means is that the person in control and/or owning the controlling interest can be brought up on charges ; this includes concession stands for retailers, i.e. if they allow a concessionary stand to trade they should ensure that there are no misleading prices. Under this section no actual consumer need be misled, rather the possibility of some or all consumers may be misled. Also in respect to consumers this means any type of consumer, any person who is not in the course of a similar trade or business that has dealings with the trader. This is a very broad act, whereby if there is any inclination of misleading prices then an offence will be made and prosecution ensued; however its sentencing on the end is a mere fine, which will provide to be a weak deterrent to large traders and those who are there to make a fast buck. Also the statute of limitations is so limited it means that if action is not taken quickly the dishonest trader will get away with their illegal actions. Therefore this points to the possibility for harsher sentences, i.e. imprisonment for re-offenders and the revocation of trading licenses. Under the SSGR this would be extended to any form of misrepresentation, such as fraudulently misrepresenting expertise and the ideal functionality of goods. In addition misrepresentation is dealt with under section 2 of the Sale of Goods Act. There are three types of misrepresentation, which are fraudulent, innocent but negligent an innocent but not negligent. In respect to misrepresentation the consumer has different methods to sue on the contract depending on the type of misrepresentation. In the case of Paul it is fraudulent misrepresentation because he purposely claimed that he had knowledge in the area, indicating intent, i.e. fraud. In this case Sid has the ability to sue for rescission and damages for deceit. In addition the bed not meeting the standards that Sid has asked for and Paul has indicated the bed can suffice, through he misrepresented expertise breaches section 14(3) of the Sale of Goods Act, i.e. a breach of the contract opening up further actions under contract law. There are some difficulties for Sid which are; the company has gone out of business, but it is possible to sue the owner if they can be found; Sid’s age and lack of resources make it difficult also, therefore this leaves the ability only to retain the money from the credit card company. Sid does have the ability to cancel his agreement with ACE and FC, as long as it is within a specified period. Sid can also use consumer credit law to protect himself and possibly claim their monies back from in the case of Healthy Sleeping misrepresentation, which lead to the sale of the bed.
Tags: consumer credit act, consumer credit act 1974, consumer credit laws, fraudulent companies
