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R&B Custom Brokers Co Ltd v United Dominions Trust Ltd [1998] 1 WLR 321

Meaning of “consumer” and “in the course of business” in the Unfair Contract Terms Act 1977

Facts

The Claimant were a company engaged in activity as a shipping broker and freight forwarding agent. The company was however very small – comprised of just two individuals. The Claimant company purchased a second hand car from the Defendant. However, the car turned out to be in poor condition in that its roof leaked. This was argued to violate s.14(3) of the Sale of Goods Act 1979 on fitness for purpose. However, the contract for the purchase of the car included an exemption clause which sought to exclude liability under this requirement of the Sale of Goods Act 1979. The Claimant cited the Unfair Contract Terms Act 1977, specifically section 6 thereof, which stipulates that that requirement of the Sale of Goods Act 1979 cannot be excluded by any contractual term. However, the Defendant argued that as the Claimant was a company, they had entered into this contract in the course of business and not as consumer, meaning that they could not rely on the Unfair Contract Terms Act 1977.

Issues

The issue in this case was whether the purchase agreement as made in the course of a business and therefore whether the Claimant could rely on the Unfair Contract Terms Act 1977.

Held

It was held that in this instance the Claimant had entered into the contract as consumer. In order for the transaction to have been in the course of business for the purposes of s.12(1)(a) of the Unfair Contract Terms Act 1977, the activity covered by the contract would have to be central to the business in question which was not the case here (the Claimant’s business does not involve purchasing cars). Therefore, s.6 of the Act applies and the relevant provisions of the Sale of Goods Act 1979 remain mandatory – they cannot be excluded through the Defendant’s exclusion clause.


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