Background

Consumer Protection Background

Until recent times, very little distinction was made between business to business contracts and business to customer or consumer contracts. The law requires that the terms of a contract should be upheld once formed or “agreed”. The law holds certainty to be  more important than fairness.

Over the last 40 years, there have been considerable legal reforms. Most have originated in European Union Directives which are designed to provide a common European level of consumer protection. In many cases, the legislation cannot be overridden by the terms of a contract.


Freedom of Contract

The principle of freedom of contract holds parties to contracts, irrespective of how unfair, one-sided or non-negotiable their terms and nature. Standard form contracts are commonly offered by traders on a take it or leave it basis. They may contain or incorporate terms and conditions, often in small print, which are very much one-sided, in favour of the business. They may contain terms which limit or virtually eliminate their liability for what would otherwise constitute a breach of contract.

Often the business might be a monopoly. All or most businesses in this sector may use similar terms so that that the customer may have no choice. Often the customer does not and could not know those terms, as they are in small print. Even if the customer was aware of the terms, he might not understand them or understand how they might apply.


Contra Proferentem Principle

Since long before the advent of modern consumer protection legislation, the courts have sought to interpret terms and conditions in standard form contracts, against the interests of the party which put them forward. This approach applies to both business to business contracts and business to consumer contracts. There are limits to the usefulness of this approach for the weaker party. If a term is clearly part of the contract and unambiguously applies, the courts must give effect to it.

Prior to the enactment of the substantial and largely EU derived consumer protection legislation over the last 40 years, the courts attempted to reduce the burden of onerous contracts on individuals when dealing with businesses.  Their efforts were concentrated in particular on standard forms containing exemptions from or limitations of liability, generally to the detriment of the consumer.

Under the contra proferentem principle, contracts drafted, proffered and put forward by the stronger party are generally interpreted in a manner contrary to its interests.  Where there is ambiguity, the interpretation which is more favourable to the individual/consumer is preferred.

This principle is most commonly applied to exemption and limitation of liability clauses, which seek to excuse the stronger party from liability that would otherwise exist under default contract law rules. The courts strain to interpret exemption clauses restrictively, so as to prevent the denial of common law rights which would arise on breach of contract.


Verbal Assurances Contradicting Written Terms

A defendant or its representative may give a verbal assurance in relation to a particular matter, which contradicts an exemption or limitation of liability clause. The courts sometimes find a collateral contract, in order to defeat and circumvent potentially harsh standard contractual terms.   Where the matter covered by the clause occurs, the collateral contract may be breached, which effectively avoids the exemption clause.

Alternatively, the contract may be rescinded for misrepresentation or there may be civil liability for negligent misrepresentation.  The Sale of Goods and Supply of Services Act 1980 gave enhanced rights to buyers of goods and services, to whom a misrepresentation has been made. There may be a right to damages for a careless and in some cases, an innocent misrepresentation. These enhanced rights do not apply in the case of other classes of contract.


Common Law Support for Weaker Party

Even before modern consumer protection legislation, the courts tried where possible, to interpret contracts in the interests of the weaker party. The contract is interpreted against the interests of the party who proffers it (contra proferentem). This principle commonly applied (and still applies) where the contract has been drafted by a business on its standard terms and conditions.

Where there is any ambiguity or doubt, the contra proferentum principle gives the consumer/customer the benefit of that doubt. Businesses commonly seek to limit or exclude their liability for breach of contract. The courts have evolved a number of principles which reduce the effectiveness of such clauses.

In some cases, exemption and limitation clauses have been deemed void as being inconsistent with the fundamental obligations of the contracting party. Where clauses give discretion to a business to act in such way as it sees fit, the courts have usually implied an obligation to act properly and in good faith. The Irish courts have implied in cases between monopoly suppliers and individuals, an obligation to act fairly and reasonably.


Public Monopoly Suppliers and Constitutional Fairness

In Ireland, the courts have applied principles of Constitutional fairness in the context of contracts by a public utility company.  Where the ESB sought to use its standard terms and conditions in a manner that was deemed unfair, the Supreme Court held that the power must be exercised in a reasonable manner after giving due notice to the consumer and giving him an opportunity to deal with the circumstances which had arisen, due to no fault of the customer. The court was influenced by the fact that the ESB was at that time, the monopoly provider of electricity service.

The courts emphasised that the terms and conditions were given on a “take it or leave it” basis.  Electricity was a practical necessity for most of the population and the consumer was in a position of weakness relative to the monopolistic supplier of a vital commodity.  Accordingly, public utility companies are in effect obliged to use their powers fairly and reasonably.


Other Monopolies

Later cases, involving other monopoly providers, including Telecom Eireann and the Voluntary Health-Insurance Board, have reaffirmed this principle.  In a case involving Telecom Eireann, the telecommunications scheme was interpreted as subject to an implied term that the power concerned should not be used without a demonstrable reason or cause for so doing.  This was so held, notwithstanding that Telecom Eireann had by that time, ceased to be a monopoly provider in the activity concerned.

Similar principles were applied to a contract in Voluntary Health Insurance’s standard terms. The court required substantive and in particular, procedural fairness in relation to matters which adversely affected the consumer.


Unfounded Demand Criminal

It is an offence for a person not having reasonable cause to so believe, to claim there is a right of payment in the course of any business or to make a demand for payment or assert that has a right to payment, where there is no such right.

A person not having reasonable cause to believe there is a right of payment in the course of any business, with a view to obtaining payment for what he knows is unsolicited goods or services provided, who threatens to bring any action, places or causes a person to be placed on list of defaulters or threaten to do so or invokes any collection procedures or threatens to do, is guilty of an offence.


Consumer Protection Laws

Consumer protection laws have been significantly enhanced over the last 40 years.  This has modified the traditional principle of “freedom of contract”, at least to some extent. Much of the legislation has come from European Union Directives, which have sought to harmonise consumer protection laws throughout the European Union. Some other consumer protection laws have been domestic. EU rules have been displacing domestic rules as they become wider in scope.

A fundamental aspect of almost all consumer protection laws is the concept of the “consumer”. A consumer is somebody acting outside of a business capacity. Consumer protection typically applies, when one party, whether it is a company, partnership or sole trader is acting in in the course of its business, dealing with another party who is a consumer. A consumer is usually defined as a natural person, not acting in the course of a business.  A consumer is, accordingly, a person acting in a personal, non-business capacity.


Definition of Consumer

There are differing definitions of what constitutes a “consumer” under various legislation. Where one party to a contract, typically the supplier, acts in the course of a business and the other party, typically the buyer of goods or services, does not act or claim to act in the course of a business, the latter is deemed a consumer. In some cases, the goods or services must be of a type ordinarily supplied for private use or consumption.

In some cases, a company can be a consumer and in other cases it must be a natural/living person. Under the Consumer Protection Code (relating to financial services), a consumer includes small businesses, corporate or personal with a turnover of less than €3,000,000 per annum. In other cases, a different category of small and medium-size businesses enjoys enhanced protections.


Consumer Bodies

The Consumer Information Act 1978 modernised the law in relation to misleading trade descriptions. It covered goods and services. Unlike the UK position, it did not provide a general prohibition on anti-unfair trading.

The office of the Director of Consumer Affairs was established in 1978 to look after the interests of consumers. The office was succeeded by the National Consumer Agency in 2007 and was reconstituted as the Competition and Consumer Protection Commission in 2014.

The Financial Services Ombudsman succeeded a number of non-statutory ombudsman in 2004. The office has substantial jurisdiction in disputes between financial services providers and customers/consumers.


Irish Consumer Legislation

A number of pieces of domestic legislation, responding to particular circumstances or EU driven Directives followed.  The Trading Stamps Act, the Pyramid Selling Acts, and The Misleading Advertisements Regulations, which criminalised misleading statements in advertisements, are discussed in other sections.

A number of voluntary codes have been promoted. The Advertising Standards Authority for Ireland publishes the ASAI Code which contains detailed provisions in relation to acceptable standards in advertisements. The Broadcasting Authority of Ireland also publishes a code on advertising standards.

The Consumer Creditor Act and the Consumer Protection Code provide detailed and prescriptive rules in relation to consumer credit. They set out general principles for advertisements of financial products. Certain detailed warnings and statements are required to be included with a prescribed degree of prominence.

The Consumer Protection Act 2007 implemented the EU Unfair Commercial Practices Directive. It replaced the Merchandise Marks Acts which was much narrower in scope and had become outdated.  The Directive provided for the modernisation and harmonisation of consumer protection legislation across the EU.

A Sales Law Review Group was established in 2008 and reported that at length in 2011.  The report on the legislation governing sales of goods and supply of services contains over a hundred recommendations for reform of the law.


Common EU Product Standards

In numerous areas, there are mandatory product standards. There are general product safety obligations. There is civil liability for injuries resulting from defective products. The misleading advertising regulations and the unfair commercial practices regulations seek to prevent abusive practices by businesses.

The requirement for common standards applies in the harmonised fields.  EU states may not impose more or less restrictive requirements and standards than provided in Directives. It is desirable in the interests of the single market to have harmonised standards of consumer protection across the EU.

Outside of the harmonised field, states may apply further and higher standards. Financial services and immovable property, for example, are subject to minimum standards, but individual EU states may provide higher standards.


References and Sources

Irish Texts

Consumer Law Rights & Regulation    Donnelly & White (2014)

Consumer Protection Act 2007 Annotated  Bird (2008)

Consumer Rights Long (2004)

Commercial & Consumer Law: Annotated Statutes O’Reilly, P (2000)

UK Texts

Consumer Sales Law: The Law Relating to Consumer Sales and Financing of Goods 3rd ed

John MacLeod, James Devenney (2019)

Electronic Consumer Contracts in the Conflict of Laws 2nd ed Zeng Sophia Tang (2018)

The Law of Consumer Redress in an Evolving Digital Market: Upgrading from Alternative to Online Dispute Resolution Pablo Cortes (2017)

Blackstone’s Statutes on Commercial & Consumer Law 2017-2018 Francis Rose

Consumer and Trading Standards: Law and Practice 2017 Bryan Lewin, Jonathan Kirk

Woodroffe and Lowe’s Consumer Law and Practice Woodroffe and Lowe’s Consumer Law and Practice 10th ed Geoffrey Woodroffe, Chris Willett, Christian Twigg-Flesner (2016)

Butterworths Trading and Consumer Law Looseleaf Annual Subscription Deborah L. Parry, Roland Rowell (2016)

Butterworths Commercial and Consumer Law Handbook 8th ed Richard B. Mawrey, Tobias Riley-Smith (2015

Consumer and Trading Standards: Law and Practice 4th ed

Legislation

Sale of Goods Act 1893 56 & 57

Sale of Goods and Supply of Services Act 1980

The 2011 Report of the Sales Law Review Group,

Consumer Protection Act 2007 19/2007

Competition and Consumer Protection Act 2014 29/2014

Orders Re Price Display (retained

Prices Act 1958.

Prices (Amendment) Act 1965

Prices (Amendment) Act1972

Orders made under Prices Acts 1958 and 1965 were carried over on repeal of the 1958 and 1965 Acts by 19/2007

Prices and Charges (Tax-inclusive Statements) Order 1973, S.I.

Charges (Hairdressing) Display Order 1976, S.I. No. 156 of 1976

Retail Prices (Food in Catering Establishments) Display Order 1984, S.I. No. 213 of 1984

Consumer Information (Advertisements) (Disclosure of Business Interest) Order 1984, S.I. No. 168 of 1984417

Consumer Information (Advertisements For Concert Or Theatre Performances) Order 1997, S.I. No. 103 of 1997

Retail Price (Diesel and Petrol) Display Order 1997, S.I. No. 178 of 1997

Retail Price (Beverages in Licensed Premises) Display Order 19/2007

Consumer Information Act Orders

Consumer Information (Advertisements For Airfares) Order 2000, S.I. No. 468 of 2000

Consumer Protection Act 2007 (Commencement) Order 2007,S.I. No. 178 of 2007

Consumer Protection Act 2007 (Establishment Day) Order 2007,S.I. No. 179 of 2007

Consumer Protection (Fixed Payment Notice) Regulations 2007,S.I. No. 689 of 2007

Consumer Protection Act 2007 (National Consumer Agency) Levy Regulations 2011, S.I. No. 560 of 2011

Consumer Protection (Consumer Information) (Articles of Precious Metals) Regulations 2012, S.I. No. 143 of 2012

Consumer Protection Act 2007 (National Consumer Agency) Levy Regulations 2012, S.I. No. 435 of 2012

Consumer Protection Act 2007 (National Consumer Agency) Levy Regulations 2013, S.I. No. 409 of 2013

Consumer Protection Act 2007 (National Consumer Agency) Levy Regulations 2014, S.I. No. 458 of 2014

Consumer Protection Act 2007 (Competition and Consumer Protection Commission) Levy Regulations 2015, S.I. No. 457 of 2015

European Communities (Cooperation Between National Authorities Responsible for the

Enforcement of Consumer Protection Laws) Regulations 2006, S.I. No. 290 of 2006 [Minister

European Communities (Cooperation Between National Authorities Responsible for the

Enforcement of Consumer Protection Laws) (Amendment) Regulations 2008, S.I. No. 316 of 2008  European Communities (Single-Member Private Limited Companies)European Communities (Protection of Consumers in Respect of Contracts made by Means of Distance Communication) (Amendment) Regulations 2010, S.I. No. 370 of 2010

European Communities (Court Orders for the Protection of Consumer Interests) Regulations 2010, S.I. No. 555 of 2010

European Union (Protection of Consumers in respect of Timeshare, Long-term Holiday Product, Resale and Exchange Contracts) Regulations 2011, S.I. No. 73 of 2011

European Communities (Cooperation between National Authorities Responsible for the Enforcement of Consumer Protection Laws) (Amendment) Regulations 2012, S.I. No. 485 of 2012 [

European Union (Public Limited Companies) (Directive 2012/ European Communities (Cooperation between National Authorities Responsible for the Enforcement of Consumer Protection Laws) (Amendment) Regulations 2013, S.I. No. 122 of 2013

European Communities (Unfair Terms in Consumer Contracts) (Amendment) Regulations 2013, S.I. No. 160 of 2013

European Communities (Cooperation between National Authorities Responsible for the Enforcement of Consumer Protection Laws) (Amendment) (No. 2) Regulations 2013, S.I. No. 200 of 2013

European Union (Consumer  nformation, Cancellation and Other Rights) Regulations 2013, S.I. No. 484 of 2013

European Union (Consumer Information, Cancellation and Other Rights) (Amendment) Regulations 2014, S.I. No. 250 of 2014

European Communities (Unfair Terms in Consumer Contracts) (Amendment) Regulations 2014, S.I. No. 336 of 2014

European Union (Protection of Consumers in respect of Timeshare, Long-term Holiday Product, Resale and Exchange Contracts) (Amendment) Regulations 2014

European Union (Alternative Dispute Resolution for Consumer Disputes) Regulations 2015, S.I. No. 343 of 2015

European Union (Alternative Dispute Resolution for Consumer Disputes) (No. 2) Regulations

2015, S.I. No. 368 of 2015

European Union (Traded Companies — Corporate Governance Statements) Regulations 2015, S.I. No. 423 of 2015

European Union (Online Dispute Resolution for Consumer Disputes) Regulations 2015, S.I. No. 500 of 2015

European Union (Online Dispute Resolution for Consumer Disputes) Regulations 2016, S.I. No. 32 of 2016

European Union (Consumer Information, Cancellation and Other Rights) (Amendment) Regulations 2016, S.I. No. 336 of 2016

Competition and Consumer Protection Act 2014 (Commencement) Order 2014, S.I. No. 366 of 2014

Competition and Consumer Protection Act 2014 (Establishment Day) Order 2014, S.I. No. 367 of 2014

Consumer Protection Act 2007 (Grocery Goods Undertakings) Regulations 2016, S.I. No. 35 of 2016

Consumer Protection Act 2007 (Competition and Consumer Protection Commission) Levy Regulations 2016, S.I. No. 479 of

2016

District Court (Consumer Protection Act 2007) Rules 2009, S.I. No. 106 of 2009

European Communities (Unfair Terms in Consumer Contracts) Regulations 1995, S.I. No. 27 of 1995 [

European Communities (Unfair Terms in Consumer Contracts) (Amendment) Regulations 2000, S.I. No. 307 of 2000

European Communities (Certain Aspects of the Sale of Consumer Goods and Associated Guarantees) Regulations 2003, S.I. No. 11 of 2003

European Communities (Protection of Consumers in Respect of Contracts Made by Means of Distance Communication) (Amendment) Regulations 2005, S.I. No. 71 of 2005

European Communities (International Financial  European Communities (Cooperation Between National Authorities Responsible for the Enforcement of Consumer Protection Laws) Regulations 2006, S.I. No. 290 of 2006

European Communities (Distance Marketing of Consumer Financial Services) Regulations 2004, S.I. No. 853 of 2004

Circuit Court Rules (Consumer Protection Act 2007) 2008, S.I. No. 585 of 2008

European Communities (Court Orders for the Protection of Consumer Interests) Regulations 2010, S.I. No. 555 of 2010

European Communities (Unfair Terms in Consumer Contracts) Amendment) Regulations 2013, S.I. No. 160 of 2013

European Union (Consumer Information, Cancellation and Other Rights) Regulations 2013, S.I. No. 484 of 2013

European Union (Consumer Information, Cancellation and Other Rights) (Amendment) Regulations 2014, S.I. No. 250 of 2014

European Communities (Unfair Terms in Consumer Contracts) (Amendment) Regulations 2014, S.I. No. 336 of 2014

European Union (Alternative Dispute Resolution for Consumer Disputes) Regulations 2015, S.I. No. 343 of 2015

European Union (Alternative Dispute Resolution for Consumer Disputes) (No. 2) Regulations 2015, S.I. No. 368 of 2015

European Union (Online Dispute Resolution for Consumer Disputes) Regulations 2015, S.I. No. 500 of 2015

European Union (Online Dispute Resolution for Consumer Disputes) Regulations 2016, S.I. No. 32 of 2016

European Union (Consumer Information, Cancellation and Other Rights) (Amendment) Regulations 2016, S.I. No. 336 of 2016