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Consumer v Lloyds TSB


Consumer Protection: the Sale of Goods Act and the Consumer Credit Act

A claim was brought by a consumer who had purchased an Arai motorcycle helmet from the motorcycle apparel supplier Hein Gericke, via a Lloyds TSB Bank plc credit card. The purchase was made in February of 2009 for £259.99. The date on which the purchase was made is of note.

Arai is a well-known helmet manufacturing brand. This brand is advertised, and known in the industry, as one of the best manufacturers in the market. Arai’s advertising states that you should “invest in an Arai”.

Unfortunately, the helmet developed faults and was returned for repair on four separate occasions over a 20 month period. At the end of the 20 month period the supplier (Hein Gericke) refused to accept the helmet back for any further repairs.

At this point the consumer sought the advice of our advocates. The helmet was returned to the supplier on the basis that it was now being rejected under section 14(2) of the Sale of Goods Act 1979 due to being of an unsatisfactory quality.

Section 14(2) states:

“Where the seller sells goods in the course of a business, there is an implied term that the goods supplied under the contract are of satisfactory quality.”

This section essentially means that whenever an item is purchased from a business, the item must be of a satisfactory quality. Satisfactory quality is defined as what a reasonable person would consider satisfactory in all of the circumstances (s. 14(2A Sale of Goods Act 1979).

The consumer was stating that the helmet would not, considering the 20 month period of repairs, be considered of a satisfactory quality by any reasonable person. In the circumstances, of being an expensive helmet made by a well-known manufacturer.

However, at this point in the legal process Hein Gericke appeared to be about to go into administration. As the supplier of the goods this meant trouble for the consumer. If the supplier was to go into administration the process of being reimbursed would be extremely slow and difficult. After consultation with our advocates, the consumer was advised to bring a claim under section 75(1) of the Consumer Credit Act 1974 against the Credit Card supplier, Lloyds TSB Bank plc.

Section 75(1) states:

“If the debtor under a debtor-creditor-supplier agreement falling within section 12(b) or (c) has, in relation to a transaction financed by the agreement, any claim against the supplier in respect of a misrepresentation or breach of contract, he shall have a like claim against the creditor, who, with the supplier, shall accordingly be jointly and severally liable to the debtor.”

This section of the act means that a person who purchased, via a credit card, any item where there is a breach of contract would be able to bring a claim against the credit card supplier. In this case the implied term under s. 14 of the Sale of Goods Act 1979 had been breached, and the Credit Card supplier was Lloyds TSB.

The consumer issued a claim against Lloyds TSB under s. 75 of the Consumer Credit Act 1974. This claim was issued in 2012. Three years after the purchase of the helmet from the supplier. The longevity of ownership was not a bar to the Claimant seeking to reject the goods, though it could have made the claim far more difficult, but on these facts the consumer was on solid ground.

Lloyds TSB’s solicitors served a defence on the Claimant. The solicitors in turn instructed a barrister who attended the trial hearing and submitted a skeleton argument that was entirely at odds with the defence previously entered by the solicitors. The Claimant was ambushed by this skeleton argument the evening before the trial, at 6pm. A skeleton argument is a legal argument that the advocate will make to the judge, it is a complex document that involves reference to both the law and the facts of the case.

Had the consumer been alone, this may have been an overwhelming experience. Presented with a 10 page document citing case law and judgments and statutes, mere hours before a trial. However, with experienced advocates standing with the consumer, this last minute skeleton argument could be dealt with in the appropriate way.

After representations form our advocate the District Judge in the case dismissed the skeleton argument due to its service the evening before the trial. The District Judge went on to make it clear to the parties that this case should never have reached trial. The goods were clearly not of a satisfactory quality. The District Judge gave directions for the parties to consider resolving the issue outside of the Court and adjourned for 30 minutes for the parties to talk.

Outside of the court, an agreement was reached, via a Consent Order (an Order of the Court, signed by a Judge) whereby the Defendant in the case (Lloyds TSB) paid the Claimant (the consumer) £550 as full and final settlement of the claim. This amount covered the court costs and the interest owed to the Claimant, as well as the original purchase price of the helmet. Three years after purchasing a helmet that was of an unsatisfactory quality, the consumer was reimbursed for the full purchase price.