Understanding your marks: Problem question

Peter is a musician and makes copies of his own music which he sells via the internet. He needs a new machine to speed up the copying of his music. In February 2016, he contacts Music Copy Machines Ltd who recommends a machine which they claim is more than 10 times quicker than his old machine. Peter buys this machine for cash and takes it with him. When he tried it he found it to be no quicker than his old one. He also found that it started making loud grinding noises when it was being used.

Peter returns the machine to the store and asks for his money back. The store manager, Mr Grumpy, reminds him that the contract he signed contained a clause stating: “Music Copy Machines Ltd excludes all conditions relating to the quality or description of equipment purchased”. Peter tells him that when he signed it he wasn’t wearing his glasses and therefore didn’t read the clause. Mr Grumpy then pointed out that it was his company’s policy to post a copy of contracts to customers immediately following purchase and therefore Peter would have been aware of the clause from this. Peter says that he did receive a copy of the contract, containing this clause, and that although he read it, he didn’t appreciate its significance until now.

Advise Peter.

Sample answer

There are several issues to consider and I will deal with each of them in turn.

Has the clause been incorporated into the contract?

Only if the clause has been incorporated into the contract will it become a term of the contract. In this case, Peter signed the contract and, therefore, on the face of it, it has been properly incorporated. There is a general rule that provides that if a party to a contract signs it then he will be bound by its terms whether or not he has read them or understood them (L’Estrange v Graucob Ltd [1934] 2 KB 394). The “incorporation by signature” rule does not apply in cases where the seller has misrepresented the nature of the document that the buyer has signed (Curtis v Chemical Cleaning and Dyeing Co [1951] 1 KB 805) although this is not an issue in this case.

We are also told that a copy of the contract was posted to Peter immediately following purchase. As this came after the contract was entered into it is a post-contractual document and has no effect, whether or not Peter read it (Olley v Marlborough Court Ltd [1949] 1 KB 532; Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163).

What is the clause attempting to achieve?

The clause is attempting to exclude all conditions relating to the quality or description of the equipment purchased. As the date of the contract is after 1 October 2015, the Consumer Rights Act 2015 will apply provided the contract is between a ‘trader’ and a ‘consumer’. Although there is no doubt that Music Copy Machines Ltd is a trader as defined in s 2 of the CRA, Peter is not a consumer because he is not acting for purposes that are “wholly or mainly outside his trade, business, craft or profession” (s 2(2) CRA). For this reason, the CRA will not apply in this case but the Sale of Goods Act 1979 will.

The clause is attempting to exclude all conditions relating to the quality or description of the equipment purchased. In this case, the conditions will be those imposed by ss 13 and 14 of the SGA 1979. The conditions as to quality and fitness for purpose contained in s 14 will only be implied if the seller has sold the goods in the course of a business but the condition as to description contained in s 13 will apply irrespective of the status of the seller.

As the clause is attempting to exclude all such liability the courts may well treat it as a particularly onerous clause and will require a greater degree of notice to be given. Unless such specific notice has been given they will not be incorporated and therefore will not have contractual effect (Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989] QB 433). The so-called “red hand” test from Spurling Ltd v Bradshaw [1956] 1 WLR 461 might also be relevant here.

Are the sellers able to exclude their liability?

As Peter is not a consumer, the sellers will be able to exclude liability for the implied terms but only if reasonable. Terms which may be excluded or restricted only if reasonable are subject to s 11(1) UCTA which lays down guidance as to the meaning of reasonableness for these purposes. It is for the party claiming that the term satisfies the requirement of reasonableness to show that it does (s 11(5) UCTA)). Under s 11(1) UCTA the court should ask itself whether the term is “a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made.” It is also necessary to consider the guidelines for the application of reasonableness in Schedule 2 of UCTA.

Feedback

This is generally a reasonable answer although rather too brief. The answer clearly demonstrates the student’s understanding of the issues and is reasonably well written. The analysis of the CRA and SGA was impressive as was the advice that the contract would be governed by the SGA.

More specifically:

The answer needed a strong introduction and conclusion. You should set out what the issues are and then proceed to answer them. At the end of your answer, you should provide a brief conclusion.
The answer should also have referred to misrepresentation and pointed out that the seller’s exclusion clause will not exclude any liability for misrepresentation. The student should have referred to the principle in Andrews Bros (Bournemouth) Ltd v Singer & Co Ltd [1934] 1KB 17.
The sentence “the so-called ‘red hand’ test from Spurling Ltd v Bradshaw [1956] 1 WLR 461 might also be relevant here” was too vague. The student should have explained why it might have been relevant and explain the principle from that case.
Overall, this was a reasonable but rather brief answer to the question.