Increasingly consumers are purchasing goods online. Prior to June 17 2014 if a supplier dispatched goods and the goods were lost, damaged or late in arriving, the consumer had no redress against the supplier or the carrier. (The fault lay with the carrier the supplier used – but the consumer was unable to sue the carrier as the contract for delivery was between the supplier and the carrier – stupid, I know, but that is just the way that the law works – who says anything about the law being fair or according to common sense.) This state of affairs was, not surprisingly, seen as unsatisfactory and section 5A of the Consumer Guarantees Act (“CGA”) has changed things for the better for consumers by introducing a delivery guarantee.
Now if the supplier is responsible for delivering or arranging the delivery of the goods (for example, a consumer buys a tablet online), the supplier is responsible for the delivery of the tablet. (Of course, if consumers are purchasing goods from private sellers the guarantee does not apply.) Almost all goods that a consumer purchases online from suppliers are covered by the CGA and thus the guarantee of the delivery of goods. The question is what is the supplier liable for?
Before looking at the supplier’s liability, the key to the guarantee is that the guarantee is that the goods will be received by the consumer:
- at a time, or within a period, agreed between the supplier and the consumer; or
- if no time or period has been agreed, within a reasonable time
Therefore, if a consumer needs goods to be delivered by a date or before a certain date and the supplier agrees to this, delivery after that date will breach the guarantee. If no date is agreed, the time is simply what would be considered “reasonable”.
The remedies for a breach of the guarantee for delivery of goods is different than the other guarantees under the CGA. Remedies are available in two situations only. First, if the failure is of a substantial character the consumer can reject the goods (s5(2)(a)) and obtain at the consumer’s choice either a refund of the purchase price of the goods (s23(1)(a)) or goods of the same type and of similar value to replace the rejected goods if those goods are reasonably available to the supplier as part of the supplier’s stock (s23(1)(b)). Section 21 defines failure of a substantial character as:
- a reasonable consumer who knew the full extent of the nature of the failure would not have acquired those goods
- the goods are significantly different from the description under which they were sold, or from the sample or demonstration model
- the goods are substantially unfit for the purpose they were supplied for and the goods cannot easily and within a reasonable time be remedied to make them fit for such purpose
- the goods are unsafe.
If the consumer’s tablet did not arrive, this would be a failure of a substantial character. The supplier would be required to refund the purchase price of the tablet or replace the table if the supplier had one in stock (the consumer has the choice of which option to take).
The second situation in which a remedy can be awarded is for consequential loss (under s 18(4)). Consequential loss is where the failure causes the consumer loss or damage that was reasonably forseeable. For example, say the consumer who had purchased the tablet intended to use that tablet to watch movies on flights, but because the consumer did not have the tablet she had to pay to watch movies on the flights the the supplier would be liable to refund the cost of purchasing the movies on the flights.
So far so good. The problem with the guarantee; however, is that often goods are damaged en route to consumer. The Select Committee on page 11 of its Commentary on the Consumer Law Reform Bill stated that:
“We recommend inserting into new clause 35A a new section 5A of
the Consumer Guarantees Act as a more precisely focused way of
increasing protection to consumers. This section would provide a
new delivery guarantee, to the effect that when a supplier delivered
or arranged delivery of goods to a consumer, the goods would have to
be received by the consumer when agreed (or in a reasonable time),
and the acceptable quality guarantee in section 6 of the Consumer
Guarantees Act would apply at and from the time when the goods
were actually received by the consumer.”
It is clear to me that the Select Committee by using the words “the acceptable quality guarantee in section 6 of the Consumer Guarantees Act would apply at and from the time when the goods were actually received by the consumer” that if the goods were damaged en route then to the consumer then the acceptable quality guarantee would be breached, the supplier would be liable, and the normal consequences under the CGA would flow.
The problem is that the actual wording of section 5A doesn’t make supplier liable for damage to goods only late or non delivery. But it seems absurd that the supplier would be liable for non or late delivery, but not for damage caused to the goods. The courts could use the purposive approach and the Select Committee’s observation to make the supplier liable for damage. On this reading, a tablet with a cracked screen would be a failure of a substantial character as no consumer would purchase a tablet with a cracked screen. With the tablet the consumer would have the choice of obtaining a refund for the purchase price of the tablet, or receive a replacement tablet (if the supplier still has one in stock).
The question, of course, is whether the courts will take a purposive view of the delivery guarantee. Not to impose liability on suppliers for damage caused en route to consumers would leave consumers relatively unprotected and would continue with the tradition of the law failing to accord with common sense.