Introduction

Part 4 looks at the tortious liability of traders and the rights of users in respect of product-related injuries. The law of tort is, of course, a far wider topic than liability for faulty products, encompassing negligence, trespass and defamation, amongst other areas. However, the parameters of tort as discussed here are limited to tortious liabilities and actions arising from the production of faulty products.

Part 4 is divided into two chapters, the first looking briefly at the law of negligence before moving on to consider the move towards strict product liability, initially in the United States and, since the 1970s, in Europe. This movement in Europe stemmed from three different sources: the United Kingdom, the Strasbourg Convention and, finally, the EC Directive which overtook both of the other two. The second chapter looks expressly at the regime of strict product liability under Part I of the Consumer Protection Act 1987, which gave effect to the EC Directive in the United Kingdom.

Introduction

If traders are to compete in a fair market, it is important to ensure that there are comprehensive and effective controls over both misleading and comparative advertising.

This chapter looks at the current controls over misleading advertising as it affects business purchasers and, also, at the latest legal controls over comparative advertising whereby traders are permitted to include reference to competitors in their advertisements subject to satisfying certain controls.

Section 2 includes a brief background to the issue of misleading and comparative advertising and details the genesis of the current provisions. Section 3 considers the controls over misleading advertisements including: the remit of the controls and the situations that they are designed to cover, and the definition of the phrase ‘misleading advertisements’ and the criteria upon which it depends.

Section 4 considers the new controls over comparative advertising and addresses: the remit of the controls and the criteria that must be satisfied if a comparative advertisement is to be legal. Section 5 considers the prohibition of misleading or comparative advertising by code owners.

Introduction

Standard trade terms have long been used by tradesmen to establish the duties of the buyer and seller. This chapter will examine two of the main standard trade terms in use in international trade, mainly CIF (cost, insurance, freight) and FOB (free on board). We will also examine variants of these terms, as well as the relevance of INCOTERMS, a series of commercial terms developed and published by the International Chamber of Commerce (ICC), which are widely used in international commercial transactions. First published in 1936, the latest set of these rules was published in 2010.

CIF contracts

As stated above, CIF contracts have long been part of the mainstream of international sales transactions. In Ross T Smyth & Co. Ltd v. TD Bailey, Son & Co. Ltd Lord Wright summarises the characteristics of a CIF contract as follows:

Introduction

The seventh part of this book deals with consumer credit and is divided into two chapters. The first chapter outlines how the relaxation of the consumer credit legislative frameworks resulted in an increase in the availability of ‘convenient credit’, which is defined as ‘credit that is granted by the creditor with little or no reference to the creditworthiness of the debtor’. This chapter identifies several problems that have arisen from access to ‘convenient credit’, including record levels of consumer debt, financial exclusion and over-indebtedness; an increase in irresponsible lending practices and ineffective legislative protection of consumers. These have contributed towards a dramatic U-turn by the government towards promoting access to ‘affordable credit’. Affordable credit contains five basic elements: access to loans that are simple and transparent; lenders that are sympathetic towards low income consumers’ circumstances; simple loan application procedures; small loans over a short period of time; and affordable repayments. Chapter 1 then identifies several government initiatives aimed at promoting access to affordable credit, including the creation of the Social Exclusion Unit, the promotion of credit unions, the development of the Saving Gateway and the Financial Inclusion Fund.

Introduction

This chapter analyses the policy behind the use of criminal law controls and, more latterly, civil law enforcement to control unfair trading practices which have a negative impact on the trading framework within which both business purchasers and consumer buyers acquire goods and services. It addresses the controls previously and currently in place that protect these two disparate groups of purchasers. It is structured as follows

Section 2 provides a background to this topic and looks at the way that the law has recently developed and the introduction of two new sets of Regulations, the Consumer Protection from Unfair Trading Regulations 2008 and the Business Protection from Misleading Marketing Regulations 2008.

Section 3 analyses the enforcement strategy that underpins the enforcement of both of these sets of Regulations, while Section 4 looks at the criminal law controls that are in place for both sets of Regulations. The first part of the section details the criminal law offences contained in the two sets of Regulations and identifies which offences require proof of mens rea and which are strict liability offences. The second part of the section considers the statutory defences that are open to someone charged with an offence contrary to either set of Regulations, with particular reference to the parameters of the due diligence defence and the defence of ‘innocent publication’. The section concludes by looking at the liability of ‘another person’ for offences against the Regulations.

Introduction

Part 5 concentrates on those aspects of the criminal law which provide the framework to the everyday trading environment. In practice, criminal law plays an important, but often under-valued, role in trading matters. The tendency is to concentrate on civil law controls and remedies for matters such as breaches of sale of goods and product liability without addressing the role that compliance with criminal law can play in preventing incidents arising. This part seeks to redress that balance somewhat.

Part 5 is divided into three chapters. The first deals with the policy that lies behind the repeal and amendment of so much of the pre-existing criminal trading law. Particular reference is made to the role that the European Union has played through the Unfair Commercial Practices Directive, which resulted in the passage of two sets of Regulations, the Consumer Protection from Unfair Trading Regulations 2008 and the Business Protection from Misleading Marketing Regulations 2008. The first chapter continues by looking at the offences created by the Regulations and the available defences thereto, most notably the due diligence defence.

Introduction

This chapter considers the provision of services by traders to both businesses and consumers. It looks at the information that must be provided to potential recipients of services and also the current statutory controls over the quality and fitness for purpose of services provided under a contract.

Section 2 looks at the background to the provision of services and the ambit and limitations to contracts for services.

Section 3 looks in detail at the Provision of Services Regulations 2009 which stipulate what information must be provided to potential recipients of services and the requirement for a suitable complaints system to be established, including authorisation schemes; the provision of information to service recipients; the definition of ‘service’; the definition of ‘provider’ and ‘recipient’; Part 2 of the 2009 Regulations; the information that must be provided under regulation 8; information to be provided on request; information regarding dispute resolution; complaints; and enforcement.

Section 4 looks in detail at the provisions of the Supply of Goods and Services Act 1982 incorporating the current implied conditions and terms relating to the provision of contracts for goods and services, including implied conditions under Part I of the 1982 Act; the common law approach; the implied terms regarding care and skill, time for performance and consideration; exclusion of liability; and Codes of Practice.

Introduction

This chapter begins by briefly highlighting and commenting on the importance of the recommendations of the Crowther Committee on Consumer Credit 1971 and how it influenced the enactment of the Consumer Credit Act (CCA) 1974. The second part of the chapter provides a general discussion of the aims and objectives of the CCA 1974 and comments on its scope and application. It then provides an overview of the interpretation of several important concepts and terms within the Act. The remainder of the chapter provides a detailed discussion of the Act’s main provisions and highlights the significant amendments introduced by the Consumer Credit Act (CCA) 2006. The latter part of the chapter considers the role and scope of the Financial Ombudsman Service (FOS), the increased enforcement powers of the Office of Fair Trading (OFT) and the impact of the Consumer Credit Directive.

Crowther Committee on Consumer Credit

The introduction of the CCA 1974 is associated with the recommendations of the Crowther Committee, which in 1968 was given the broad remit to investigate and explore all forms of credit. The Committee identified several weaknesses within the then-existing consumer credit legislative framework, and it recommended the introduction of two statutes, a Lending and Security Act and a Consumer Sale and Loan Act. The proposed Lending and Security Act would ‘apply to all credit transactions … it would deal not just with the rights of the parties under the loan contract, but also with registration of the security interest and conflicts between the secured party and any third party’. Macleod commented that this recommendation ‘would fuse together all the various existing forms of legislation relating to consumer credit into one rationally coherent enactment’. However, the proposal to implement a Lending and Security Act was not acted on due to its complex nature and high cost implications, and the recommendation to introduce a Consumer Sale and Loan Act resulted in the implementation of the CCA 1974 as the ‘basis of regulation for consumer credit’. It is important to note that the principal objective of the recommendations was to provide consumers with a higher level of protection, as discussed in Part 7 Chapter 1.

Introduction

Since the introduction of the first credit card in 1966, the influential recommendations of the Crowther Committee on Consumer Credit (1971) and the introduction of the Consumer Credit Act 1974, creditors now allow debtors to access credit twenty-four hours a day and 365 days a year. The number of creditors and credit products has grown at an unprecedented rate. The evolution of the credit market was hastened by the deregulation of consumer credit legislation in the 1980s and 1990s. This chapter outlines how the relaxation of the consumer credit legislative frameworks resulted in an increase in the availability of ‘convenient credit’, which is defined as ‘credit that is granted by the creditor with little or no reference to the creditworthiness of the debtor’. This chapter identifies several problems that have arisen from access to ‘convenient credit’ (record levels of consumer debt, financial exclusion and over-indebtedness, an increase in irresponsible lending practices and ineffective legislative protection of consumers), which has resulted in a dramatic U-turn by the government towards promoting access to ‘affordable credit’. Affordable credit comprises five basic elements: (i) access to loans that are simple and transparent; (ii) lenders that are sympathetic towards low income consumers’ circumstances; (iii) simple loan application procedures; (iv) small loans over a short period of time; and (v) affordable repayments. The chapter identifies several government initiatives aimed at promoting access to affordable credit, including the creation of the Social Exclusion Unit (SEU), the promotion of credit unions, the development of Saving Gateway and the Financial Inclusion Fund.

Introduction

Part 1 considers one of most important and traditional aspects of any commercial law undergraduate course, the law of agency. Chapter 1 begins by attempting to define the law of agency by providing several examples from commercial law scholars, illustrating the difficulty experienced by the courts in England and Wales in defining the term ‘agency’. The next part of the chapter deals with the nature and characteristics of agency, followed by a brief outline of the different types of agents that exist in the United Kingdom.

What is agency?

It is virtually impossible to provide a clear all-embracing definition of agency. Rather unsurprisingly this has resulted in many commentators arguing that the courts have given it an extremely broad and flexible interpretation. The breadth of the interpretation of the term ‘agency’ is illustrated by the following quotation from an article by Gorton:

Introduction

The purpose of this chapter is to provide a detailed overview of the law relating to banks. The chapter begins by attempting to answer what in theory should be a very simple question. What is a bank? However, it will become clear that this is quite a difficult question to answer. The chapter goes on to define a customer and then progresses to highlight the very complicated relationship between a bank and its customers. Particular attention is paid to the duties a bank owes to its customers, including the duty of confidentiality. The chapter also outlines the different types of bank accounts offered to customers and deals with some of the legal issues relating to cheques, e-banking and the regulation of bank accounts.

What is a bank?

The first question faced by students studying the law relating to banks is how do you define a bank? This is not an easy question to answer, a point raised by Wadsley and Penn, who took the view that:

Introduction

This chapter considers the issues surrounding the passage of property and risk in goods and the various rules that dictate when the title to the goods moves from the seller to the buyer, a factor that becomes crucial when determining who owns the goods if one of the parties becomes insolvent or the goods are damaged. Allied to this, the chapter also looks at the related topics of the delivery of and payment for goods.

Section 2 provides a background to the topic of the passage of property to goods and the related issue of the passage of risk which dictates who will have to bear the loss if the goods are damaged or destroyed.

Section 3 looks in detail at the rules relating to the passage of property to goods and the statutory rules that exist to determine when the title will pass if the contracting parties have not expressly agreed the matter in the contract. In particular, it looks at Sale of Goods Act 1979, section 17; the section 18 rules; section 19 on reservation of title clauses; and undivided shares in a bulk.

Section 4 considers the passage of risk to the goods and the relationship between the passage of property and the passage of risk.

Section 5 looks at the nemo dat exceptions, i.e., those situations in which a seller of goods who has no title to them can nonetheless pass a valid title to those goods to an innocent third party buyer. In particular, it looks at several of the recognised statutory nemo dat exceptions, namely, estoppel; mercantile agent; seller in possession; buyer in possession; Hire-Purchase Act 1964, s.27; voidable title; sale under court order; and market overt.

Introduction

The purpose of this chapter is to provide an overview of the legal obligations that an agent owes to his principal. These include, for example, the duty to carry out contractual obligations; the duty to obey the principal’s instructions; that the agent must not exceed his authority; the performance of contractual duties; that the agent must exercise due care and skill; the duty not to allow any conflict of interest; the fiduciary duties, not to take a bribe or make a secret profit; and the duty to account. The chapter then outlines the rights of an agent, before moving on to discuss the implications of a disclosed agency, a situation where the third party knows of the existence of the principal, and of an undisclosed agency, a situation where the agent acts for a principal who is not disclosed to the third party. Finally, the chapter deals with termination of the agency.

Duties of an agent

An agent acting for a principal is subject to a wide range of legal obligations, which are imposed either expressly within an agency agreement or impliedly. The duties owed by an agent to his principal have been classified into two very wide categories, those that arise from the contract between the two parties, and those that arise in equity, which has a strong influence over the duties of agents. The duties imposed on an agent were succinctly summarised in Armstrong v. Jackson by McCardie J, who stated: