Both the common law and statute make it too easy for buyers to reject goods. Critically discuss this statement.

(i) There are numerous buyers and sellers in the market, such that the activities of any one economic actor will have only a minimal impact on the output or price of the market;

(ii) There is free entry into and exit from the market;

(iii) The commodity sold in the market is homogeneous; that is, essentially the same product is sold by each seller in the particular market;

(iv) All economic actors in the market have perfect information about the nature and value of the commodities traded;

(v) All the costs of producing the commodity are borne by the producer and all the benefits of a commodity accrue to the consumer –that is, there are no externalities.

For those who support the idea of the perfect market, the markets are seen as efficient and effective tools for maximizing consumer welfare and interests. The expressions ‘free market economics’ and ‘free market economists’ are used in this context for want of a better term. It is recognized that this is not a perfectly homogeneous group. The perfect market only exists where the requirements have been expressed in Ramsay’s list are met, although we may still have competitive markets where not all those requirements are present. If there are numerous buyers and sellers competing with each other, it is faire that no individual trader should be able to influence price by varying output. 18 The simple market rule has been cleared that there is free entry into and exit from the market, which means that anyone who wishes to enter a particular market may do so, and also anyone who does not respond to or meet consumer’s demand will be forced to leave the market. In this sense, if the choices of consumers are fully meet their true wishes and real demands, it is very important that to make sure the consumers are having perfect information. In actual markets, we can be sure that only the parties related to a transaction are affected by that transaction, and so the price of the transaction reflects its value to these particular parties. Free market economics tells us that when all these ‘free-market’ requirements are met, then there is no need for the state to intervene. (Howell, & Weatherill, 2005) However, that does not mean that the state has no role in the free market. This approach, which is associated primarily with the Chicago School, makes assumptions about the ways in which markets operate. First, it assumes that individuals are rational maximisers of their own satisfaction. In other words, they know what they want, and will make logical, consistent choices in accordance with their wishes. Secondly, it assumes that by their choices, consumers influence producers and so dictate the way that the market operates. By making choices in accordance with their wishes, consumers send signals to traders. If traders do not respond to these wishes they will lose custom and, ultimately, be forced to exit the market. The consumer is therefore sovereign. (Cartwright, 2001)

However, as many people advocated that ‘free market’ is not realistic in practice. Currently, the markets in most countries are restricted by state laws, statutes, and even cultures. All consumers are equally faced with the same array of the power of suppliers. Individual consumers are relatively weak; they are individuals, while suppliers and manufacturers of goods and services these days more often than not a large corporations, even multi-national corporations. This power relationship often causes consumers to feel awed and intimidated when they wish to obtain resource against a supplier or manufacturer from whom they have acquired something which does not meet their expectations. The barriers facing them are immense. (Goldring, Maher, McKeough, & Pearson, 1998) Thus to talk about a ‘free market’ of equal individuals in this phenomenon is nonsense. In very few cases at all, the consumer can be said that they are equal to the supplier or the manufacturer. Besides, under the control of mass media by the suppliers and manufacturers, consumers can hardly get fully genuine information. Therefore, it makes little sense to assert that consumers are inevitably the best judges of their own wants and needs. Markets are seldom, if ever, ‘free’, not because that freedom is limited by government activity, but because of the activities of business organizations, especially by the powerful corporations. Information is power and consumers rarely have the opportunity to get the same information as suppliers and manufacturers. They cannot therefore compete as equal in the market. (Lowe & Woodroffe, 2004)

Consumer Protection

Legal rules and controls are one of the methods which can be used by the government of state. For the interests of the public as consumers, governments attempt to reduce the inequalities of markets that exist in ‘real life’, even if in very small dimensions. The power of the state, expressed through government rule-making and regulatory power, is a counter-force to the power of business organizations. Many of the requirements of legislation are often as simple as the principles and standards which would be observed by reputable business seeking to maintain their commercial reputations and clientele in any case. In absence of such practice of state power, the pressure of commercial operation may be enough to induce individual business organization to take action which does not meet those principles and standards, and which may have an adverse effect on consumers. (Cartwright, 2001)

Rules on the safety of products and making producers responsible for the harm caused by their products are justifiable in terms of public policy relating to health and safety. Although there are some debates about whether the right balance is being struck, some people doubt that such laws have a legitimate place in a modern market economy. The aspects that regarded to ensure the quality rather than the safety in particular clauses of law might be thought to be more controversial. Because all the consequences are usually less serious, many people might consider that consumers should be given more freedom to decide whether products and services provide the quality actually meet their desire or expectation. (Goldring, Maher, McKeough, & Pearson, 1998) In reality, there are few laws that obligate quality standards. The problems are especially in the food area where the temptation of passing off inferior products in ways that are hardly to be detected. For example, the manufacturers may increase their profit by reducing the content of meat in sausages. Besides, the standards in many specific areas are difficult to be observed. Like the example about the content of sausages, it may take a long time for consumers to realize that the quality of the product does match the description. Standard setting otherwise tends to be related to tangential matters such as ecological factors, rather than imposing minimum quality standards. Of course, there are numerous voluntary standards, such as BS standards, that could be made express terms of contracts and can be taken into account in assessing whether goods are satisfactory. (Howell, & Weatherill, 2005)

Historically, the common law approach was to place the liability on the buyer to look out for his interests by himself. This principle of caveat emptor is still reflected in section 14(1) of the Sale of Goods Act 1979 which states there is no implied term about the quality of fitness for purpose. (Goldring, Maher, McKeough, & Pearson, 1998) However, this is made subject to major exceptions set out in the Sale of Goods Act 1979 and the succeeding section or the Act and in other statutes. Lord Steyn has commented that the principle of caveat emptor has become the principle of caveat venditor. Why then has the implication of minimum contractual standards such as those requiring all goods sold to consumers to be satisfactory quality and fit for purpose come to be accepted as such a commonplace in our law?

One obvious explanation is the familiar theme running through consumer protection of the information inequality which places the consumer at a disadvantage position. The trader is better placed than the consumer to know the quality of the goods and services. Of course the producer is really the one who knows about the product, but as we shall see concerning quality defects, the private law places the obligations on the seller. Nevertheless it is not unrealistic to suggest that a trader who sells products has a greater obligation to inform himself of their quality than a consumer who is simply purchasing them to fulfil a particular need. (Goldring, Maher, McKeough, & Pearson, 1998) Indeed, in a world which consumers purchase an ever widening range of products and the diversity within product categories is become ever greater, it is harder to expect the consumer to look after his own interests: mobile phones and computers are just two examples that are now everyday products which present as a maze of confusing choice from many.

Right to reject goods

In order to implement the protection of consumer’s interests, buyers are entitled to reject goods under certain situation. If the goods are defective, in the sense of being unmerchantable, unfit for a particular purpose, or not in conformity with the description, there is a breach of a condition of the contract which will normally allow the consumer to reject the goods. This is not the effect of any statute, but is part of the common law relating to the breach of a term of a contract. The clauses of common law treat a breach of a term in a contract which is sufficiently important to be treated as a repudiation of the contract. The repudiation is expressed by the refusal to accept the goods. Thus it does not matter whether the contract is characterized as a sale of goods or as some other type of contract under which the supply of goods is part of the seller or supplier. (Goldring, Maher, McKeough, & Pearson, 1998)

On the other hand, even if buyers can reject the goods, they should require their money back provided they complain within "a reasonable time" (usually a short period). When a buyer is entitled to reject the goods, he must tell the retailer immediately. He is not obliged to send them back but must make them available for collection. However, most buyers would return goods they had themselves taken away to assist them convince the retailer their claim was legitimate and so speed things up. Where the buyer is not a consumer and the problem is a slight one (e.g. there is only a minor defect) then the goods cannot be rejected although compensation can be claimed. However, the Sale of Goods Act does not define what amounts to a "reasonable time" but buyers have to be given a reasonable time to examine the goods to see if they were satisfactory. Ultimately, the matter can only be decided by a court after taking into account all the circumstances. (Lowe & Woodroffe, 2004) An important factor might be that the buyer was not in a position to check the goods for a longer time after the sale than usual, because, for example, he was admitted to hospital immediately after he purchased them. In other words, consumers’ right of rejecting unsatisfying goods is not totally unlimited.

Conclusion

In most of countries, consumers have been protected by laws and the power of states. Although there is hardly agreement of the exact definition of ‘consumer’, efforts have been made by governments to establish variety of legal forms for buyers against the breach of suppliers and manufacturers. Along with the spread of globalization, ‘consumerism’ trend to give consumers more equality of power. However, in the phenomenon of ‘free market’, consumers may automatically be sovereign, because anyone, who does not respond consumer’s needs, will be forced to leave the market. But as many people asserted ‘free market’ is not achievable in real life. By the reason that consumers are placed in a disadvantage position in markets, there is not doubt that their rights should be protected by laws and statutes. Although current law and regulations only obligate the safety of goods, the quality standard of goods tends to be bound in the future. The most common and effective way for buyers protect themselves is to reject the defected goods. Nevertheless, buyers have to claim in a ‘reasonable time’ even if there are entitled to reject the goods.

References

Cartwright, P., (2001) CONSUMER PROTECTION AND THE CRIMINAL LAW: LAW, THEORY, AND POLICY IN THE U.K., Cambridge University Press: Cambridge.

Goldring, J., Maher, L.W., McKeough, J. & Pearson, G., (1998) CONSUMER PROTECTION LAW (5th ed.), The Federation Press: Annandale.

Howell, G. & Weatherill, S., (2005) CONSUMER PROTECTION LAW (2nd ed.), Ashgate Publishing Limited: Hants and Ashgate Publishing Company: Burlington.

Lowe, R. & Woodroffe, G., (2004) CONSUMER LAW AND PRACTICE (6th ed.), Sweet & Maxwell Limited: London.

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