Buying Empties - A legal guide incase it all goes wrong
The electronic failure of cartridges continues to be a thorn in the side of remanufacturers, big and small alike. This proverbial thorn is only exacerbated if the cartridges in question are ‘dead on arrival’ from a broker. This article will examine the legal standing of remanufacturers who experience this problem in England and Wales. Readers in other European Union countries can also benefit from this. Whilst the particular legislation and precedents will be different, the general rules will be the same, e.g. in the Republic of Ireland the Sale of Goods and Services Act 1980 works on many of the same principles as UK legislation.
The relevant legislation, for the UK, is the Sale of Goods Act 1979. The rather lengthy and at times confusing section 14 of the Act deals with quality and fitness of items purchased. It implies terms into a contract that may not have been expressed in any agreement to purchase. They are binding on all contracts of sale in the UK. Don’t worry if you are of the impression that no contract was agreed upon: as long as you have made a purchase then a contract of sale exists and something as simple as an invoice or receipt will act as proof of this.
Now, here comes the law (the relevant bits at least). If legislation in its raw form is of no interest then the following text can be skipped, as a summary will follow later in the article.
“14. Implied terms about quality or fitness
(2) 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.
(2A) For the purposes of this Act, goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances.
(2B) For the purposes of this Act, the quality of goods includes their state and condition and the following (among others) are in appropriate cases aspects of the quality of goods—
(a) fitness for all the purposes for which goods of the kind in question are commonly supplied,
(b) appearance and finish,
(c) freedom from minor defects,
(d) safety, and
(2C) The term implied by subsection (2) above does not extend to any matter making the quality of goods unsatisfactory—
(a) which is specifically drawn to the buyer's attention before the contract is made,
(b) where the buyer examines the goods before the contract is made, which that examination ought to reveal, or
(c) in the case of a contract for sale by sample, which would have been apparent on a reasonable examination of the sample.
(3) Where the seller sells goods in the course of a business and the buyer, expressly or by implication, makes known—
(a) to the seller, or
(b) where the purchase price of part of it is payable by instalments and the goods were previously sold by a credit-broker to the seller, to that credit-broker, any particular purpose for which the goods are being bought, there is an implied term that the goods supplied under the contract are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, on the skill or judgment of the seller or credit-broker.
(4) An implied term about quality or fitness for a particular purpose may be annexed to a contract of sale by usage.
If that made none or very little sense then never fear: it takes lawyers days to understand and master new legislation in its raw form. However the theory of the above is very simple. If an item is purchased and then found to be unfit for its intended purpose then the contract is breached and the buyer is entitled to a remedy. Of course individual cases are rarely as simple, given one or more complicating facts tend to rear their heads, usually at the behest of the seller.
Below is a selection of scenarios that could arise in the purchasing relationship between the aftermarket processor and the broker, or other suppliers of empties. It must be said that they are all theoretical scenarios designed in no way to question the integrity of any particular supplier. They all work with the opening assumption that cartridges were bought from an organisation or person trading in empties and are electronically dead.
1) A simple transaction has taken place where the supplier made no allusion to the possibility that some cartridges may be electronically dead either at the time of purchase or in their terms and conditions of sale.
This is perhaps the most straight forward scenario, from a legal point of view. The best way to describe its application would be through an actual piece of case law. In Godley v Perry, the court heard that a young boy purchased a catapult from the defendant, a newsagent, and later blinded himself in one eye due to a fault with the catapult. In brief, the court found the use of the catapult ‘normal’ and the catapult itself ‘unfit for purpose’, thus satisfying the requirements of section 14(3). Just as a side note the newsagent was also found to liable under section 14(2).
What does this mean for the aftermarket processor? If electronically dead cartridges have been purchased in keeping with the above scenario then the broker is liable under section 14. The recommendation would be to approach the broker, cite the Sale of Goods Act 1979 s14 and ask for a refund. If the broker refuses the request then consider the possibility of seeking action in court.
2) The broker, at the time of purchase or in the terms and conditions of sale, made it clear that some cartridges may be electronically faulty.
This scenario presents much more of a challenge. In accordance with subsection 2(c), the buyer is exempt from liability if he makes it clear that certain elements of the goods are unsatisfactory. In general theory this is a perfectly acceptable provision, i.e. purchasing a car with a faulty radio doesn’t render the car unusable but does cover the seller against any comeback regarding the said radio. However, in the context of this scenario the fact that the electronic element of the cartridge is unsatisfactory makes the entire cartridge unusable. We therefore must turn to the Unfair Contract Terms Act 1977. Section 6 of this act imposes a test of reasonableness to establish whether or not it is fair to introduce terms to exclude liability against faulty goods. The question of reasonableness is one of the great legal minefields and would require an article of its own and therefore will not be discussed at any great length here. However, it suffices to say that what constitutes a reasonable exclusion of liability is ultimately a question of common sense. If you have already purchased cartridges in accordance with this scenario and a good number of them are dead then the likelihood is that the term of the contract is unreasonable and therefore can’t be relied upon to exclude liability. This assumption is based on the House of Lords 1983 decision in George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd. In this case 30lbs of cabbage seed was purchased from the seller, who included a limitation clause in the invoice restricting their liability to replace or refund defective seed. The seed was planted and produced a useless crop. In brief, the House of Lords considered this unreasonable and therefore the seller could not rely on the limitation clause. However, be warned: this is a decision that only a court can make. Therefore if the broker is insistent on selling cartridges on the understanding that some may be electronically faulty and will not accept liability for them then the advice would be to stay clear, if at all possible.
3) The broker refuses to accept liability for dead cartridges, claiming he was unaware of their electronic integrity.
Under section 14(3) the buyer cannot rely on the protection of the Sale of Goods Act if it is unreasonable to rely on the skill and judgement of the seller. Again this provision throws up the term “reasonableness” as well as “skill and judgment.” Both of these terms would merit a separate discussion which will not be entered into here. However, once again, it is common sense that dictates it is reasonable to rely on the broker having the skill and knowledge of the item they trade in and therefore claiming they are unaware of, or unable to test, the electronical integrity of the cartridge should not suffice in excluding their liability. However, as before this is just an educated assumption as only a court can make a firm decision. If this scenario unveils itself in reality then consider approaching the broker and asking for an exchange or refund. If he is not responsive then action in court would be an option.
If the supplier expressed, at the time of sale, that the cartridges were pre tested and electronically sound then he would be, at the moment, in breach of the Trades Descriptions Act 1968. However, this particular piece of legislation is due a big makeover this year, to comply with the EU Unfair Commercial Practices Directive, so any further in depth discussion could quickly become redundant. If the claim that the cartridges were pre tested came after sale then this would have to be qualified, by the supplier, with evidence to form a successful defence.
4) The broker refuses to accept liability claiming that the cartridges electronically failed in transit or the buyers own processing has caused the electronic failure of the cartridges.
A broker may offer this excuse thinking that they can avoid liability for a fault developing after the items have left their care. Unfortunately, for the broker, it would be naïve to offer this excuse as it only acts to confirm liability. This is because section 2(B) in its definition of “quality” lists “durability” as an aspect of quality. It goes without saying that if a cartridge ‘dies’ in transit then its durability is less than satisfactory.
If the broker insists that it is the aftermarket processors own processes that have caused the electronic failure then it can become a more disputable point. Whilst the durability is still in question so is another factor outside of the broker’s control. This can therefore form a mitigating argument that will reduce the broker’s liability. Of course it could be that the aftermarket processor has done nothing to cause damage to the electronics. This means it all comes down to the proverbial ‘six of one, half a dozen of the other.’ This is not a favourable legal position to be in. Therefore the advice would be to electronically test the cartridges as soon as they arrive and report back any failure to the broker immediately. This makes it harder for the broker to claim a damaging process has taken place and therefore casts more doubt over the durability. Electronic testers are relatively inexpensive to purchase but priceless when in operation.
The first point of call in any dispute should always be the broker himself. However, as we have seen there is a good legal foundation in all of the above scenarios should court action have to be considered. Common sense should always be aforethought in these instances, i.e. if only 1% of the purchase is electronically dead the law is technically on the side of the buyer but common sense dictates that pursuing this relatively small loss with threats of legal action is perhaps not the best course to take.
The next time you make a purchase of empties consider using your credit card for payment. Credit card companies, generally speaking, offer protection against faulty goods and will refund you themselves. However, please do check with your own credit card company before doing this.
Also please be aware that this article offers no more than a commentary on the law as it stands at the moment. This article should not be cited as a legal authority, only statute and the common law can enjoy that privilege.
Article by Tim Parsons LLB