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Shopper Strikes Landmark Blow for Consumer Rights

When a shopper bought a laptop computer on credit from a branch of PC World in 1998, he could not have imagined that the simple transaction would trigger a test case which, 15 years later, culminated in a Supreme Court ruling which significantly boosted consumer rights.

The man paid a £50 deposit for the £1,500 computer at PC World’s Aberdeen branch and entered into a debtor-creditor-supplier arrangement with a bank in respect of the balance. On taking the computer out of its box, he discovered that it did not include an internal modem and he swiftly returned it to the store.

PC world did not accept that he had validly rescinded the sale contract until a Scottish judge ruled as much in 2008. The £50 deposit was subsequently returned to him. However, in the interim, the bank had reported him as having defaulted on the loan to reference agencies, causing significant damage to his credit.

The man argued that that had caused him financial loss. However, after progressing through the Scottish legal system, his case failed before the Inner House of the Court of Session on the basis that Section 75 of the Consumer Credit Act 1974 did not entitle him to rescind the credit agreement.

The Supreme Court agreed that Section 75 did not avail him. However, it went on to rule that he had a common law entitlement to rescind the contract. In order to reflect the reality of such very common credit agreements, it was necessary to imply a term into them that they are conditional upon the survival of the original supply contract upon which they are based.

The Court ruled, “The debtor on rejecting the goods and thereby rescinding the supply agreement for breach of contract may also rescind the credit agreement by invoking this condition.” The man had given notice of rescission in early 1999 and was thus entitled to compensation of £8,000 to reflect the bank’s breach of duty in failing to secure the removal of the black mark from his credit rating for some years thereafter.