Do warranties or guarantees have any value to consumers?

By Mrs Arbitrator

Despite what many consumers mistakenly believe, warranties and guarantees are not the ‘be all and end all’ when it comes to exercising your rights in relation to faulty goods.  The reason being that The Consumer Rights Act 2015, or The Sale of Goods Act 1979 which preceded it, trump the protection offered by warranties or guarantees in most circumstances.  The only real benefits of a warranty or guarantee is where accidental damage is covered, the ability to approach the manufacturer direct, or in cases where a brand-new replacement item would be offered in exchange.  That said, the fact that I was able to rely upon the guarantee in this case enabled me to offer the consumer a far better remedy than she might have received otherwise, given the fact that the guarantee was for a 20-year period.

When writing an arbitration, it is incumbent on me to ensure that full consideration is given to all submissions, in order to afford the parties every opportunity to present their case concisely, and to the best of their abilities.   Each arbitration is approached in a meticulous fashion, with the starting point determining: i) the crux of the complaint; ii) the desired resolution; iii) the relevant laws (and their application); iv) the burden of proof; v) evidence (or balance of probability, in its absence); and vi) available remedy.

I must also consider that many consumers may not have any knowledge of legal process and, therefore, in order that they are not unfairly prejudiced, within my remit as Arbitrator I am able to pose further questions of both parties, or make recommendations/suggestions for further evidence, where I deem fit.  Indeed, the Consumer Rights Act 2015 (the current law protecting the interests of consumers), provides that where there is a lack of clarity, the consumer should be given the ‘benefit of the doubt’.

I should also clarify that the fact that the Arbitrator finds in favour of one party, does not imply that the other party is telling an untruth – it merely means that the evidence and submissions of the successful party are preferred.

CASE STUDY

The consumer purchased two luxury chairs from the retailer’s showroom which came with the benefit of up to a 20-year Guarantee. After two years of use, the consumer noticed an issue with the mechanisms of both chairs and approached the retailer for a refund. The retailer proposed a chargeable visit from its technician to determine whether or not there was a manufacturing fault, but the consumer was dissatisfied with the outcome of the retailer’s inspection report and decided to commission her own independent inspection.  Her own inspection uncovered a multitude of failings with the chairs and the inspector advised that a repair would not be a cost-effective solution.  Upon the retailer being provided with a copy of the independent inspection, its own inspector agreed with the findings, and a partial refund was offered to the consumer on the basis that the consumer had owned the chairs for two years.  The consumer was unhappy with the proposal and wished to receive a full refund to enable her to purchase replacements elsewhere.

The consumer’s purchase was covered by The Consumer Rights Act 2015.  The Act states that goods must be: i) fit for purpose; ii) of satisfactory quality; and iii) as described.  Under the Act, if goods turn out not to be of ‘satisfactory quality’ (i.e. faulty), the retailer is entitled to make a deduction for use when goods are more than six months old. As the consumer raised her complaint after two years, the retailer was entitled to provide either a repair, a replacement or a partial refund, taking account of the ‘unspent’ use. In order to calculate the deduction for use, consideration is given to the price paid, the life expectancy, and the length of time the consumer had the goods before the fault occurred.

In this particular matter, the retailer’s proposed partial refund was calculated on the basis of the chairs having an anticipated life expectancy of 6 years; Accordingly, as she had only had the benefit of two years’ use, she was offered a refund equating to the remaining four years unspent use.

The consumer was disappointed as she believed that the guarantee would provide 20 years’ protection and, as the chairs had not lasted 20 years, she considered she was entitled to a full refund on this basis.

The consumer provided a copy of the guarantee for my consideration. The guarantee did not specifically advise what remedy would be offered in the event of it being exercised and I therefore had to approach this decision, taking into account what the ‘average’ consumer would understand it to represent.

The guarantee provided cover for up to 12 months for upholstery related issues, and cover for up to 20 years for what it described as ‘frame’ issues; However, no specific explanation was given as to what ‘frame’ comprised and I therefore understood this to represent any ‘non-upholstery’ issues.

I therefore had to consider what the ‘average’ consumer would understand the guarantee to mean, in addition to what the ‘average’ consumer would understand from having been presented with the 20-year guarantee.  In giving consideration to representations made on the guarantee, I did not consider it unreasonable that the ‘average’ consumer would understand this to mean: i) that were the goods to fail, they would be provided with a remedy; and ii) that a 20-year guarantee would imply that the goods had an anticipated lifespan of 20 years. Were this not the case, I considered that a consumer could essentially have a valid case for potentially having been mis-sold.

In taking into account the anticipated lifespan of 20 years, I determined the consumer was entitled to a partial refund equating to 9/10 of the purchase price (the unspent use), and that the original guarantee would continue (until its expiration), were the retailer to provide a repair or a replacement.

As it was accepted by the parties that the chairs were indeed faulty, in addition to the partial refund, I determined that the retailer should also provide a refund to the consumer not only of its own inspection fee, but also the inspection which she commissioned independently.