Exclusion clauses 97supplied to a consumer, and a consumer guarantee is given, the guarantee takes effect as a
contractual obligation under the conditions set out in the guarantee and associated adver-
tising. So the guarantee and associated advertising become terms of the contract. Before the
Regulations came into force, there was considerable doubt as to whether or not a consumer
could enforce a guarantee.
A ‘consumer’ is here defined as a natural person (and therefore not a company) who
is acting for purposes outside his trade, business or profession. A ‘consumer guarantee’ is
defined as any undertaking to a consumer, given without extra charge by a person acting in
the course of his business, to reimburse the price paid or to replace or handle consumer
goods in any way if they do not meet the specifications set out in the guarantee or in the
relevant advertising. This definition takes account of the fact that many guarantees do not
offer to refund the price. They might merely agree to repair the goods and might require the
consumer to pay costs such as postage and packing. So when goods bought by a consumer
are defective, the primary remedy will be under s. 14(2) of the SGA 1979. However, a
guarantee will be useful if the goods were of satisfactory quality when delivered but have
become defective within the guarantee period, or if the consumer cannot reject the goods on
account of having accepted them. The Regulations do not apply to contracts to provide
services. They do apply to contracts to supply goods, whether the supply is by way of sale,
lease, hire or hire-purchase.
Regulation 15(2) requires that the guarantee is written in plain, intelligible English and
that it contains a statement that the consumer has statutory rights which are not affected by
the guarantee. It also requires the guarantee to set out the essential particulars necessary for
making claims, including the length of the guarantee period, the name and address of the
guarantor and the countries in which the guarantee is effective. If the consumer requests a
copy of the guarantee from either the retailer or the person giving the guarantee, then a
copy must be supplied in writing. Trading standards officers can apply for injunctions to
enforce the Regulations.
Exclusion clauses
Exclusion clauses, or exemption clauses as they are sometimes known, are clauses which try
to exclude or limit one party’s liability. Usually, the liability in question will have arisen
as a result of an express or implied term of a contract. However, exclusion clauses can go
further and can exclude other types of liability, such as liability arising in tort.
We shall see that Parliament has restricted the effect of exclusion clauses. The following
case demonstrates how unfairly exclusion clauses could operate before Parliament intervened.
L’Estrange vGraucob (1934) (Court of Appeal)A café owner bought a cigarette vending machine and signed a sales agreement which
she did not read. A term of this agreement which was ‘in regrettably small print but quite
legible’, said that the machine did not need to work and that all statutory implied terms
were not to apply. The machine did not work. The café owner sued to get her money back,
claiming that s. 14(2) of the Sale of Goods Act had been breached.
HeldThe café owner failed, even though s. 14(2) of the Sale of Goods Act had clearly been
breached. The claimant had signed the agreement and so she was bound by it.