To uphold the sanctity of contracts is doubtless a prime business of government, but it is no less its business to provide against contracts

being made, which, from the helplessness of one of the parties to them, instead of being a security for freedom becomes an instrument of disguised oppression. (T.H. Green, 1881) Critically evaluate this statement in relation to consumer protection statutes. Your answer should include practical examples to illustrate how these statutes protect consumers.

1. Introduction a. Contract The impression that there is only one single model of contract law that applies to all contracts underlies the 19th-century classical model of contract law. This model which has had a great impact on the development of the modern contract law was supported by the idea of freedom of dealing, sanctity of bargain and the emphasis of market intervention over government intervention (Oughton and Davis, 2000). The basis of this classical model of contractual relations is the freedom of contract. However, since the consumers do not have the same bargaining power of the multinational companies, numerous rules and acts has been enforced in the 20th century to address this shortcoming. At common law, several rules have been developed to ensure the consumer protection especially in the use of business of the standard form contract. However, the conflict between the consumer needs and the bedrocks of freedom of contract in the classical theory has slowed down the process of common law development (Oughton and Davis, 2000).

b. Unfair contract

The standard form contracts might work fairly especially in the cases where parties have equal bargaining strength and they are in the same area of business. However, in other cases they might function unfairly such as unnegotiated small clauses. The role of the court is ever more important in the cases of inequality of bargaining power. The desire to protect the weaker parties is embedded in several modern consumer protection initiatives, undue influence, rules of duress, restraint of trade and the control of exclusion clause (Oughton and Davis, 2000). A term is considered unfair if it is contrary to the necessities of good faith and leads to a significance imbalance for the parties. Examples of such terms can be when when a term excludes or limits the liability of the seller or supplier for the death or personal injury of the consumer. In any event, the inclusion of such a term in a consumer contract is already a criminal offence under existing legislation in the United Kingdom! (Davis, 1995).

2. Exclusion clauses

A term of contract intends to evade liability for breach of the contract is an exclusion clause and a limitation clause is the one that will reduce the damages in case of the breach of the contract. These terms can be unfair especially to the parties with less bargaining power which normally exists between providers of services and goods and consumers (Turner, 2009). In the older days, even in the cases that the statute intervened to endorse the consumer protection, such as the Sale of Goods Act 1983, the superior position of the seller was ordinarily maintained. In recent years, however, an overall trend towards the protection of consumers has experienced more effective statutory controls in the UK. In the case of a dispute over a contract term, the court will embark on the interpretation process. Nevertheless, in the case of exclusion (exemption) clauses, judicial liability is manifested in numerous approaches and rules such as contra proferentem. a. contra preferentem

The contra preferentem rule is a device that is basically hostile to ambiguities in a contract. The basic proposition is this. If a party wishes to secure an exemption from liability for contractual breaches by means of incorporation of an exclusion clause in the contract then the clause must be specific as to the circumstances in which the exemption is claimed otherwise the clause will fail (Turner, 2009). Andrews Bros (Bournemouth) Ltd v Singer & Co. (1934) A contract for the purchase of new Singer cars contained a clause excluding all conditions, warranties and liabilities implied by statute, common law or otherwise. One car delivered under the contract was strictly speaking a used car because a prospective purchaser had used it. The Court of Appeal held that the supply of new Singer cars was an express term of the contract. Since the exclusion clause applied to implied terms the contra preferentem rule would prevent it being used in relation to express terms. The inherent limitation in such an approach is that it invites redrafting by the proferens (or rather by their lawyer) to take account of the deficiency helpfully identified by the court.

3. Statutory and the control of exclusion clauses

Provisions created by statute or in regulations are clearly the most effective in controlling the operation of both exclusion and limitation clauses in contracts. This is not to say that the common law has no relevance. Quite simply, as we have seen, if an exclusion clause has not been successfully incorporated into a contract according to the normal rules then it will be inoperable anyway. There are two principal provisions provided by Parliament: the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contract Regulations 1994, and now the 1999 Regulations.

a. The Unfair Contract Term 1977

What the Act does try to achieve is to protect the consumer by removing some of the inequalities in bargaining strength. It does this by making certain exclusion clauses automatically invalid, by drawing a distinction between consumer dealings and inter-business dealings, and by introducing a test of reasonableness to apply in inter-business dealings and in certain other circumstances. As a result of this some of the problems caused by unequal bargaining strength are mitigated.

Smith v Eric S Bush (1990) Here, surveyors negligently carried out a building society valuation, and a defect was missed which later resulted in loss to the purchaser. The purchaser was obliged to pay for the valuation report. This and the mortgage application contained clauses excluding liability for the accuracy of the valuation report. The attempt to rely on the exclusion clause failed since the court was unwilling to accept that its inclusion was reasonable. Warren v Trueprint Ltd (1986) A contract contained a limitation clause where the defendants were responsible only for a replacement film and would only undertake further liability if a supplementary charge was paid. They were obliged to but were unable to show that this clause was reasonable when they lost a couples Silver Wedding snaps.

Remarks

The Unfair Contract Terms Act 1977 was a major breakthrough in the control of unfairly wide exemption, limitation and disclaimer clauses. However, it is neither logical in structure, nor always

consistent in approach. Moreover its name is a serious misnomer, being doubly misleading. First, the legislation has a wider sweep than merely the regulation of contractual exemptions. On the other hand, it has little to do with unfair terms as such, but only those terms which are unfair because they exempt too unreasonably or limit liability too severely. This Act exclude clauses with regards to penalties and some of its provision offers complete protection yet others are subject to the expert opinion to see if the term has been a reasonable term to be included. UCTA 1977 extends that of the liabilities arising only in the contracts and also includes the indirect liabilities resulting from negligence.

4. consumer protection statutes

Consumer protection is a general term and covers not only areas of contract law but of tort also. Product liability under the principle in Donoghue v Stevenson is as important to the consumer as are the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982.Contract actions under the two Acts are better for the person who has purchased goods or services because they are in effect strict liability and the full range of loss can be recovered. Two specific Acts which deal with product safety and misleading descriptions applied to goods respectively are the Consumer Protection Act 1987 and the Trade Descriptions Act 1968.

a. Sale of goods Act 1979

The consumers rights under the sales of Goods act 1979 comprise to buy goods that are:

as described of satisfactory quality, and fit for purpose

As described means that any goods you buy should match the description of the goods that the seller has given you. Descriptions can be both in written and verbal forms, which might include any descriptions on the packaging of the goods or any statements the salesperson has made verbally.

Re Moore & Co. and Landauer & Cos Arbitration (1921) A contract for a consignment of tinned fruit was described as being in cartons of 30 tins. When, on delivery, half of the cartons were of 24 tins there was a breach of this Act, even though the actual quantity of tins ordered was correct.

Of satisfactory quality All goods sold must be of satisfactory quality. This term only applies in relation to goods sold in the course of a business, which naturally excludes private sellers.

Bartlett v Sidney Marcus Ltd (1965) In this case a car was bought with a defective clutch. The sellers offered either to repair the clutch or to reduce the price by 25.The buyer accepted the price reduction but very soon had to replace the clutch, costing an extra 45. Lord Denning nevertheless rejected the buyers claim that the defect was more costly meant that it was not merchantable (satisfactory).

Fit for purpose Under the Sale of Goods Act, fitness for purpose is defined as fitness for all the purposes for which goods of the kind in question are commonly supplied. It also includes any purposes which the seller has said the goods have. So, if one were sold a spark plug, and were told that this spark plus is compatible with your car and it is in fact not compatible, then the seller will be liable Baldry v Marshall (1925) Here, the buyer claimed that a Bugatti car was not fit for the purpose. He had asked the seller to supply him with a fast, flexible and easily managed car that would be comfortable and suitable for ordinary touring purposes. The Bugatti that he was sold was not such a car. b. Supply of Goods and Services Act 1982

Since the Act covers situations where goods as well as services are provided certain of the terms mirror those in the Sale of Goods Act. There are also three further significant implied terms of particular relevance to the supply of services Implied term about time for performance where the time for the service to be carried out is not fixed . . . the supplier will carry out the service within a reasonable time Charnock v Liverpool Corporation (1968)

The defendant took eight weeks to repair a car when a competent repair should have taken only five weeks and so the defendant was in breach of the implied term. Implied term about consideration where the consideration for the service is not determined . . . the party contracting to with the supplier will pay a reasonable charge

5. Discussion 6. Conclusion

DAVIS, D. 1995. Unfair contracts: New European directive to deliver more power to the consumer's elbow? Computer Audit Update, 1995, 10-13. OUGHTON, D. W. & DAVIS, M. 2000. Sourcebook On Contract Law, Taylor & Francis. TURNER, C. 2009. Contract Law: Uk Edition, Trans-Atlantic Pubns.