ONE

Perspectives

1.1 WHO IS A CONSUMER?

In a book on consumer protection law, it is appropriate to consider at the outset who it is the law
purports to protect. In a literal sense,a consumer is 'one who purchases goods or services'
(Longman Dictionary of the English Language,2nd ed. (Harlow: Longman, 1991)). This would
include any user of goods or services supplied by another, with the result that a construction
company purchasing building materials for use in the construction of a consumer protection law,
the term 'consumer' has a narrower meaning which is based on the capacity in which the
consumer and the supplier of the goods or services supplied have acted.
The traditional view of a consumer, or at least that given by the thrust of modern cońsumer
protection legislation, is of an individual dealing with a commercial enterprise.However,the term
'consumer' can also be used to describe a person who makes use of the services provided by
public-sector bodies or privatised monopolies subject to public control or scrutiny. On this
basis,consumer protection law would also cover complaints by individuals about the services
provided by railways, water authorities,electricity com-panies and gas suppliers. Furthermore, in
what remains of the public sector,the consumer might also have reason to complain about the
way in which he or she has been dealt with by the Department of Social Security or may have a
legitimate complaint about service received in hospital. It may also be argued that a tenant's
complaint about the way in which he or she has been treated by a landlord should be regarded
as an aspect of consumer protection law. Indeed, the American guru of consumerism,Ralph
Nader, has taken the view that the term 'consumer' should be equated with the word 'citizen'
and that consumer protection law should be regarded as an aspect of the protection of civic
rights.
Various statutes which purport to protect consumer interests contain relevant, but limited
definitions. For the most part, a direct definition of the
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2
term 'consumer' is not provided. Instead,Parliament has chosen to define phrases such as 'acting in the course of a business' or 'dealing as a consumer'.The effect of these definitions is
that a person who acts in the course of a business must act or refrain from acting in a particular manner detrimental to consumer interests. Likewise, if a person deals as a consumer,
the supplier of goods or services may be subject to obligations which would not otherwise be imposed or the consumer may have entitlements not conferred on others.The European
dimension must not be forgotten since there is now an increasing number of regulatory requirements which have resulted from European Union attempts at harmonisation of laws in
favour of consumers.As will be seen below, legislation based upon European initiatives tends to concentrate on the protection of individual, natural persons rather than the wider range
of protected species covered by purely domestic legislation.
A difficulty presented by some of the domestic statutory definitions of the word 'consumer' is that they emanate from statutes which impose criminal liability. In contrast, others
are to be found in Acts concerned with civil law liability. It may be that civil and criminal law provide different emphases.In particular, despite the fact that consumer protection
legislation creates what can be described as merely 'regulatory offences', the imposition of criminal liability is not lightly undertaken, and it may be that the law adopts a more generous
attitude towards the defendant in cases which involve the imposi-tion of criminal liability. If this is so, a single test may not be appropriate,since different standards could be expected of
statutory provisions which create civil rights and obligations. However, the judicial approach to the definition of the terms 'dealing as a consumer' and 'acting in the course of a business'
appear to bear remarkable similarities, regardless of the context in which the particular statutory provision operates.
In general, a consumer transaction involves three elements. First,the consumer must be an individual or other protected person who does not act in a business capacity. Secondly
the supplier must act in a business capacity and finally the goods or services supplied must be intended for private,not business use.
1.1.1 Individual not acting in a business capacity
The standard perception of a consumer is of an individual purchaser of goods or services and in most instances this will be the case. Indeed, most of the provisions of the Consumer
Credit Act, 1974 (CCA) only apply where the debtor is an individual. But the definition of an individual in s. 189(1)of that Act is drafted widely, with the result that a business debtor may
still be protected by the Act. In particular, while a company is not an individual,a partnership or other unincorporated body of persons is regarded as an individual for the purposes of
that Act. In contrast, there are some provisions which apply only to individuals. For example, the Unfair Terms in Consumer Contracts Regulations 1994 (SI 1994/3159) only apply in
favour of a 'natural person' who acts for purposes which are outside his business (reg. 2(1)).
Generally,a consumer is regarded as a non-business purchaser of goods or services, but the difficulty is to decide when a purchaser acts in a business
Perspectives
3

be regarded as a consumer (Unfair Contract Terms Act 1977,s.12(2)).The Unfair

Contract Terms Act 1977, s. 12(1)(a) provides that a person deals as a consumer if
the other party to the contract is unable to prove (s.12(3))that he neither makes
the contract in the course of a business nor holds himself out as doing so. The
difficulty here is to determine when a person purchases in the course of a
business or holds himself out as doing so.
In a broad sense, every time a company enters into a contract, it does so in
the course of its business because if this were not the case, the transaction would
be ultra vires (R&B Customs Brokers Co. Ltd v United Dominions Trust Ltd [1988] 1
All ER 847,853 per Dillon LJ). Thus, it could be argued that where a company
which runs a grocer's shop buys a new delivery van,it acts in the course of a
business (ibid.).
An alternative view is thata company can be a 'consumer' purchaser where
the purchase is not for some definite business purpose and is one which is not
rcgularly madc by that company. In R& B Customs Brokers Co. Ltd v Price (1989)
52 MLR 245) the plaintiff, a company carrying on the business of a freight
forwarding agent, purchased a car for both business use and for the private usc of
its directors. It was alleged that, as the roof leaked,the defendant was in breach
of the implied term in the Sale of Goods Act 1979,s.14(3), that the car would be-
fit for the purpose for which it was intended,namely,driving in English weather
conditions.The defendant finance com-pany sought to rely on an exclusion clause
in the contract, which would only protect it if the buyer did not deal as a
consumer, since liability for breach of the implied terms in s. 14 cannot be
excluded when dealing with a consumer (Unfair Contract Terms Act 1977,s.6(2)
and see chapter 12).The Court of Appeal held that since the purchase of the car
was only incidental to the business of a freight forwarding agent,the particular
transaction could not be said to have been entered into as an integral part of the
business carried on by the plaintiff as there was no degree of regularity in the
type of purchase concerned. It therefore followed that the company had
purchased as a consumer and the Unfair Contract Terms Act
1977,s.6(2),prevented the exclusion clause from taking efect (see also Rasbora
Ltd v fCL Marine Ltd [1977]1 Lloyd's Rep. 645 and Peter Symmons & Co. v Cook
(1981)131 NLJ.758.) The view expressed by Dillon LJ was that:

...there are some transactions which are clearly integral parts of the businesses
concerned, and these should be held to have been carried out in the course of
those businesses; this would cover apart from much else,the instance of a one-off
adventure in the nature of trade where the transaction itself would constitute a
trade or business.There are other transactions, however such as the purchase of
the car in the present case,which are at the highest only incidental to the carrying
on of the relevant they are an integral part of the business carried on and so
entered into in the course of a business ([1988] 1 All ER 847 at 854).
4
Perspectives

The decision of the Court of Appeal may be criticised on a number of grounds. First, the interpretation of the
Unfair Contract Terms Act 1977,is interpreted literally, it distinguishes between a business purchaser and a for which
the goods are required. The distinction between the two ap-proaches is one which was referred to by the Law
Commission in its report which led to the enactment of the Unfair Contract Terms Act 1977 (Law Com.No.
24(1969)paras 90-5). The Commission concluded that legisla-tion should impose an absolute prohibition on
exclusions of liability for breach of the terms implied by what is now the Sale of Goods Act 1979 in consumer sales in
the strict sense and that exclusions in contracts entered into by'business consumers' should be subject to a
reasonableness test.
The second ground for criticism is that the reason for the ban on the use of exclusion clauses in consumer
contracts is that the consumer is weak in terms of bargaining power, however, the same cannot be said of 'business
consumers'. Dillon LJ in R& B Customs Brokers Co.Ltd v United Dominions Trust Ltd considered, obiter,that had the
purchase been in the course of a business,the exclusion clause would have satisfied the reasonableness test because
the company was 'ex hypothesi dealing in the course of a business'([1988]1 All ER 847 at 855) and one of the
directors was not devoid of commercial experience (ibid.). It seems strange that where two business contractors are
of broadly similar bargaining strength, one of them is entitled to the protection of a blanket prohibition on the use of
exclusion clauses.
of a business,there is a strong argument that it held itself out as acting in the course of a business (see Brown
[1988] JBL 386,394).The company made the contract in its corporate name and in a section of the contractual
document headed 'Business Details' the nature of the company's business,the number of years trading and the
number of company employees had been stated. It is suggested that these matters taken togetherpoint to a
purchase in the course of a business or at least one made by an organisation holding itself out as a business rather
than one made by a consumer devoid of commercial experience.
1.1.2 Supplier acting in the course of a business
The second distinguishing feature of a consumer transaction is that the supplier of the goods or services contracted
for acts in the course of a business. This requirement is to be found in both legislation imposing criminal sanctions
(for example, the Trade Descriptions Act 1968,s.1(1);Unsolicited Goods and Services Act 1971,s. 2;Business
Advertisements (Disclosure) Order 1977 (SI 1977/1918), art. 2(1)) and provisions relating to civil redress in consumer
transactions (Unfair Contract Terms Act 1977,s. 12(1)(b); Sale of Goods Act 1979,s.14(2)and(3)).
The interpretation of the phrase 'in the course of a business'in this context is in relation to the Sale of Goods Act
1979 and the Trade Descriptions Act 1968.
Perspectives
5

So far as the Sale of Goods Act 1979 is concerned, the implied terms of ftness and quality in s. 14(2) and (3) apply only where the seller sells the goods in the course of a business. It is-clear that
for these purposes a person who sells by way of trade can be regardcd as a business seller despite not habitually trading in goods of the type in question (Ashington Piggeries Ltd v Christopher Hill Ltd
[1972] AC 441,494 per Lord Wilberforce;see also Final Report of the Committee on Consumer Protection (Molony Committee)(Cmnd 1781,1962), para. 443). Accordingly, for the purposes of this
Act,the sale of stock-in-trade or other irregular sales by a trade seller will be regarded as sales in the course of a business and the implied terms in s. 14will apply to the transaction.Thus in Ashington
Piggeries Ltd v Christopher Hill Lid,Lord Wilberforce observed of the Sale.of Goods Act 1893,s.14(1)(which is now the Sale of Goods Act 1979,s. 14(3)) and s. 14(2), that:
:..it is in the course of the seller's business to supply goods if he agrees either generally, or in a partiçular case, to supply the goods when ordered,and... a seller deals in goods of that description
if his business is such that he is willing to accept orders for them. I cannot comprehend the rationale of holding that the subsections do not apply if the seller is dealing in the goods for the first time.
([1972]AC 441 at 494)
In contrast with this approach, it has been held, in the precise circumstan-ces set out by Lord Wilberforce, that a person charged with the commission of an offence under the Trade Descriptions
Act 1968,s. 1, cannot be said to disposes of stock-in-trade. In Devlin v Hall [1990] RTR 320 a taxi proprietor had been operating in business for some months and subsequently sold one of his cars,
subject to an incorrect mileage recording. Despite thefact that there was evidence that he had also sold other cas on two or three occasions in the subsequent two years, it was considered that the
defendant had not acted in the course of a business oir the first occasion; since at the time that transaction was entered into there was no regularity in the number of sales made. The unfortunate
effect of this decision is that if the same approach were to be applied to the Sale of Goods Act 1979, the consumer purchaser would have no remedy in respect of a breach of the implied terms of
satisfactory quality and fitness for purpose, since these terms are only implied where the seller sells in the course of a business.
The approach in Devlin v Hall is identical to that adopted in R&B Customs Brokers Co. Ltd v United Dominions Trust Ltd [1988] 1 All ER 847 in relation to 'business consumers'. In Davies v Sumner
[1984] 1 WLR 1301 the defendant,a professional courier, sold the car he used in his work. Contrary to the provisions of the Trade Descriptions Act 1968, s. 1(1)(a),he sold the car subject to a false
statement of the mileage it had covered. It was held by the House of Lords that the defendant had not sold the car in the course of on by the defendant. While the defendant did operate a business,
the business was that of delivering parcels ctc., not selling cars. Furthermore,it was held
6
Perspectives

that in order to achieve the status of a sale in the course of a business,the regularity.Thus the renewal of
hire cars every two years by a car-hire firm can constitute a sale in the course of a business since the
required degree of regularity is established (Havering London Borough Council v Stevenson [1970]a
doctor for both private and professional purposes does not possess the necessary element of regularity to
allow for a conviction under the Trade Descriptions Act 1968 (Davies v Sumner [1984] 1 WLR 405,410 per
Robert.Goff LJ; see also Devlin v Hall [1990] RTR 320). It has even been held that a postman who
renovates, regularly advertises and resells cars does not sell in the course of a business, if the work is
performed by way of a hobby (Blakemore v Bellamy [1983] RTR 303). The one exception to this approach
arises where an isolated transaction is carried out with a view to profit (Davies v Sumner [1984] 1 WLR
1301, 1305 per Lord Keith of Kinkel). Thus a person who arranges for the publication of a book of poems,
supplies copies of the book to public libraries and subsequently demands payment can be said to have
demanded payment in the course of a trade or busincss for the purposes of the Unsolicited Goods and
Services Act 1971, s.2(1) (Eiman v Waltham Forest London Borough Council (1982) 90 ITSA Monthly
Revicw 204). Similarl in Corfield v Sevenways Garage Ltd [1985] RTR 109 the defendants regularly sold
petrol from a filling station,but on the occasion under consideration had purchased a second-hand car at
an auction. The ca had been lent to someone else and while it was under that person's control.the
speedometer was broken and subsequently replaced. The defendants wert not told of this.The
defendants checked the car, carried out some repairs anc decided to display it for sale, not realisingthat
the mileage reading displayec was inaccurate, thereby exposing them to liability for a breach of the Trad
Descriptions Act 1968, s.1.Despite the fact that selling cars was no regarded as a normal part of the
defendants' day-to-day business,this sal was regarded as part of that business since it was clearly entered
into with:view to making a profit.
The approach adopted in relation to the Trade Descriptions Act 1968 an other penal legislation
favours the seller to a greater extent than the approacl adopted in relation to the Sale of Goods Act 1979.
This may be justified or the ground that in cases of doubt a penal provision should be construed ir favour
of the defendant. However,·there may be a danger that, in the interest of consistency, the same approach
may be adopted in relation to the Sale o Goods Act 1979. This danger may already be real following the
applicatior B Customs Brokers Co. Ltd v United Dominions Trust Ltd.It would b undesirable in the extreme
if the implied terms in the Sale of Goods Ac 1979,s.14, were held not to apply to one-off sales by trade
sellers. In an case,there are other reasons why total consistency in relation to all of th statutory provisions
that contain the phrase 'selling in the course of business' is impossible to achieve. In particular, the Unfair
Contract Term Act 1977 has a further requirement that the goods purchased.byth
Perspectives
7

consumer should be of a type ordinarily supplied for private use or consump-

tion,whereas no such restriction applies to the Sale of Goods Act 1979.between the
definition of a sale in the course of a business and a purchase in the course of a
business.
Paradoxically,while the penal legislation referred to above adopts an a degree
of regularity before it can be said that there has been a supply in the course of a
business, there have been occasions when individual employees have been
successfully prosecuted under, for example, the Trade Descriptions Act 1968. The
way in which this strange result may obtain is a consequence of the wording of
what may be referred to as a bypass procedure which comes into play when the
statutory defences are pleaded in order to avoid conviction of a strict-liability
criminal offence (see further chapter 13).The general effect of these provisions is
that if a company is charged with the commission of an offence under the 1968
Act, it may plead that the commission of the offence is due to the act or default of
another person and that the body charged with the offence has acted with due
diligence and has taken reasonable precautions to avoid the commission of such
offence (Trade Descriptions Act 1968s, 24(1)). The Trade Descriptions Act
1968,s.23, provides that the person whose act or default is alleged to be
responsible for the commission of the offence may be proceeded against whether
or not proceedings against the other person are brought. For the purposes of
section 23, it is clear that the 'other person' does not need to be someone who
acts in the course of a business. Thus in Olgiersson v Kitching [1986] 1 All ER 746
the private owner of a car was responsible for turning back the mileage reading on
a car which he subsequently sold to a car dealer. In proceedings under the Trade
Descriptions Act 1968, s. 1, the dealer pleaded the act or default of the private
owner, who was subsequently successfully prosecuted under s. 23.Similarly, it
would be possible for a corporate employer to point to the default of a junior
employee in order to escape liability, with the result that the individual employee
might face the prospect of a fine under the Trade Descriptions Act 1968 (see, e.g.,
Whitehead v Collett [1975]Crim LR 53).
In terms of general policy, it would seem to be highly undesirable that a penal
statutory provision should be used in this way to make scapegoats of private
individuals when the purpose of such legislation is to improve trading standards.In
this regard, it is interesting to note that some more recent legislation contains
language which would deny the liability of the employee or the private individual in
Olgiersson v Kitching. The Consumer Protection Act 1987,s.39(1), provides a
defence similar to that in the Trade Descrip-tions Act 1968, s. 24(1), but in the
corresponding bypass provision in s. 40(1)of the 1987 Act, it is provided that the
person proceeded against must be Warwickshire County Council v Johnson [1993]
1 All ER 299 the defendant was the branch manager of a Dixons electrical store
who had displayed a notice to the effect that Dixons would beat any price for
televisions,hi-fi and video recorders by £20 'on the spor' but failed to honour
thepledge,thereby
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8

committing an offence under the Consumer Protection Act 1987, s. 20. It was accepted that Dixons were able to rely on the statutory
due diligence defence under s. 40(1) of the 1987 Act, but the enforcement authority decided to prosecute the manager under the
bypass procedure. In reaching the conclusion that the prosecuton should fail, the House of Lords held that the intention of Parliament
was clearly that individuals should not be prosecuted since the view had been expressed in Parliamentary debate that the inclusion of
the words 'in the course of any business of his' should be taken to mean 'any business of which the defendant is either the owner,or in
which he has a controlling interest' (at p. 304 per Lord Roskill).
In terms of policy, this would appear to be a more sensible position to adopt, in relation to junior employees, since theré seems to
be little purpose in prosecuting such persons with little or no interest in the advancement of the employer's business and who have
little or no control over the manner in which that business is run. However, it may be questionable not to allow the prosecution of
more sénior employees such as the defendant in Warwickshire County Council v Johnson since they have a greater interest in the way
the business is being run and have more control over the trading policy adopted in the branch for which they are responsible.However,
it will be seen that the decision in Warwickshire County Council v Johnson is consistent with the approach adopted by the House of
Lords in Tesco Supermarkets Ltd v Nattrass [1972] AC 153 in-which a distinction was drawn between the 'directing mind and will' of a
company, identifiable with the company itself, and lesser employees such as branch managers who are regarded as being separate
from the company (see further chapter 13).
1.1.3 Non-business and private use or consumption Some statutory provisions impose a further requirement on the definition of
a consumer transaction, namely, that the goods or services acquired should be intended for non-business or consumer use (Unfair
Contract Terms Act 1977,s.12(1)(c); Consumer Protection Act 1987, ss. 10(7) and 20(6))or that the transaction is entered into by a
person acting for purposes which are outside his business (Unfair Terms in Consumer Contracts Regulations 1994,reg. 2(1)). It is clear
that in order to satisfy this requirement, goods do not need to be exclusively used by consumers (the Unfair Contract Terms Act 1977,s.
12(1)(c), refers to goods of a type ordinarily supplied for private use or consumption). For example, it is possible that some goods could
be used for both business and consumer purposes, such as a car used by a doctor for his own domestic use and for the purposes of his
medical practice.Difficulties may arise where goods are of a type ordinarily purchased for private use or consumption but are in fact
put to business use. In such a case,s.12(1)(c)may indicate that the buyer deals as a consumer, but it is also the case that if the buyer
deals in such goods in the course of a business,the provisions of the Unfair Contract Terms Act 1977 in relation to consumer sales will
not apply. Thus, if a business purchases raw materials which might also be purchased by a consumer, but uses them in its
manufacturing process,clearly the purchase is not one made otherwise than in the course of a business.
9

Perspectives
Lesser problems arise in this respect under the Unfair Terms in Consumer Contracts
Regulations 1994 since reg. 2(1) requires a consumer not to act for business purposes when
entering the regulated transaction. Given the apparent subjectivity of this test, it should be
easier to look at the particular purpose for which goods or services have been acquired
without having to ascertain whether the goods etc. are ordinarily supplied for business
purposes or for consumption purposes.
The problem created by the Unfair Contract Terms Act 1977,s.12(1)(c),can also be
considered in reverse. Suppose a consumer purchases material ordinarily put to a business
use, such as a cement mixer. It may be that the consumer does not act in the course of a
business, but if s.12(1)(c) is not complied with, the buyer does not deal as a consumer. It may
be that what is ordinarily supplied for private use will need to be considered on a case-by-case
basis as consumer purchases change over a period of time.For example,the growth of the 'do
it yourself market may mean that articles which have been regarded, in the past, as the
subject of trade purchases may come to be regarded as items ordinarily supplied for private
use.
The word 'type' may also create difficulties if it requires the court to consider merely the
nature of the thing sold. For example, the purchase of a bale of peat from a garden centre
would be a consumer purchase, but could the same be said of a bulk purchase of, say, 500
bales? The thing sold in each case is the same, but the quantity sold may indicate that the
subject matter of the contract is being put to something other than a purely consumer use.
Similar, but not identical provisions are contained in the Consumer Protection Act
1987,s.20(6),in relation to the definition of a consumer for the purposes of the penal
provisions of the Act concerned with misleading pricing. For these purposes a consumer of
goods is one who 'might wish to be supplied with goods for his own private use or
consumption'(Consumer Protection Act 1987,s.20(6)(a)). This formulation avoids the
objectivity of the Unfair Contract Terms Act 1977 s. 12(1)(c), by concentrating on the use to
which the consumer might wish to put the goods. This may mean that the provisions of s. 20
apply to cases where the subject matter is capable of being put to private use, although this is
not in fact the case.A better formulation would have been 'might reasonably wish' (see R.
M.Merkin,Guide to the Consumer Protection Act 1987 (London: Financial
Training,1987),para.14.2).
In relation to misleading statements concerning the charge made for services,facilities or
accommodation, the essence of the definition of a consumer is that the service etc. is not
required for the purposes of a business (Consumer Protection Act 1987, s. 20(6)(b) and (c)).
Whether there is a difference between purchasing goods for private use and acquiring a
service for non-business use is not clear. However, it is likely that the two provisions will be
construed in a similar manner.
1.1.4 Non-contractual consumers
9

The foregoing discussion assumes that there is a consumer purchaser and a supplier who
contracts in the course of a business.While a consumer is often
10
Perspectives
a person who has entered into a contractual relationship with a supplier,it is also true that there are many non-contractual
consumers.
Until recently, the protection of such consumers was left largely to the tort of negligence in the form of the narrow rule in
Donoghue v Stevenson [1932]AC 562 (see chapter 5), but in recent years, the position of the non-contractual consumer has been
recoguised. In particular, the provisions of part I of the Consumer Protection Act 1987 seek to give such a person a remedy in
damages against the producer of a defective product.Other developments in the field of civil redress might have taken the position
of the non-contractual consumer to even greater heights, had the government been prepared to lend a Consumer Council (The
Consumer Guarantee (PD29/89) (1989)) to secure the enactment of legislation in respect of consumer guarantees commanded
considerablepublic support, but was ultimately defeated by government intervention. This may not be the end of the matter so far
as consumer guarantees are concerned, since there is now a European initiative aimed at introducing a Union-wide producers'
guarantee of the quality of goods put on to the consumer market (Green Paper on Guarantees for Consumer Goods and After-Sales
Service (COM (93) 509) and see further chapter 6).The premise which underlies this proposed intervention is that cross-border
shopping within the European Union can only flourish if consumers can be assured that they will enjoy the same guarantee and
after-sales service wherever they corresponding intention in relation to consumer services, apparently on the basis that services are
so dissimilar in nature as to be incapable of being subject to a common form of guarantee across the whole of the European Union.
Many statutory provisions creating criminal offences on the part of traders or providing for means of administrative control do not
require the formation of a contractual relationship. For example,some of the offences created by the Food Safety Act 1990,the
Consumer Protection Act 1987 and the Trade Descriptions Act 1968 may-be committed where there is no consumer purchase at all
or where the person harmed by an unsafe product is not the person who bought it from the retailer. The Director General of Fair
Trading practices and may recommend legislation, and it is clear from the definition of a consumer trade practice in the Fair Trading
Act 1973,s.13(1),that In. particular s. 13(1)(c), (d) and (e) refer to methods of sales promotion,salesmanship and packaging which
may affect more than just the immediate purchaser.
1.2 THE CONTEXT OF CONSUMER PROTECTION
1.2.1 Historical context
typical of the twentieth century, it is in fact the case that many of what we now regard as statutes with an emphasis on consumer
protection had their