by Alan Moyles, Jan 2010
Solicitors
The general perception amongst customers regarding the legal position on refunds and returning products is somewhat coloured by the fact that some retailers operate a no quibbles refund/return policy and many customers assume that this applies to all retailers. This is not the case, if a retailer decides to offer its customers a no quibbles refund/return policy, that is their decision and such a retailer will be, within reason, bound by it.
Retailers who do not offer such a policy are bound by the provisions of the Sale of Goods and Supply of Services Act, 1980, the act provides that goods must be (i) of merchantable quality (ii) fit for its normal purpose and be reasonably durable and (iii) as described, whether on packaging or as orally described by a salesperson. This means that if a product is faulty then the customer is entitled to a refund, a replacement or to have the product repaired. This is a statutory right and a retailer is not able contract out of these rights, signs such as “No Refunds” or “No Exchanges” cannot deny a customer their rights. However, this only applies if the product is faulty, a customer who wants a different colour or style, has no right to a refund etc, unless the retailer decides to operate such a policy. A customer equally has no entitlement if the fault results from misuse, or should have been seen on examination or was pointed out by the retailer.
Customers who purchase items at a sale discount enjoy the same statutory protections as those bought at full price, although a retailer is free to restrict its own refund/return policy to full price items only. A particular issue can arise on sale items which are genuinely faulty and the customer is demanding a replacement. Under the 1980 Act, a customer is entitled to a refund, a replacement or a repair, if a repair or replacement of the faulty product is not practicable, the customer is only entitled to a refund of the actual sale discount price they paid.
A difficulty can arise when a customer without a receipt seeks to get a refund or replace a product. The basic position is that the onus lies with the customer to establish that they purchased the item from the specific retailer. However, if the item was from a retailer who only sells their own branded products or from a retailer who has exclusive rights to a certain product, the lack of a receipt may not prove fatal to the customers claim for redress. An element of practicality on behalf of the retailer could save the expense and inconvenience of legal proceedings if the customer was determined to take matters that far.
Gift vouchers are a popular present, however their use can cause difficulties for retailers if they are not administered properly. The main source of contention with gift vouchers is their expiration date. It often happens that a gift voucher can be left at the bottom of a drawer for over a year and when the holder attempts to use it they are told that it is no longer valid. If a gift voucher clearly states that it is valid only for a certain period of time, then a retailer is perfectly correct in refusing to accept it outside this time period, although a time period of less than one year would probably be considered unreasonably short. Angst can be created when a gift voucher is silent as to its expiration date and a retailer claims that it is no longer valid. A general rule of thumb would be for a retailer to act reasonably, taking into account the value of the voucher and the type of product it was for. A gift voucher issued by a retailer which had gone out of business would not have to be honoured by a successor entity, unless the successor made a point of claiming that pre-existing contracts would be honoured. A customer in those circumstances would be an unsecured creditor against the earlier entity. There is no obligation to satisfy a lost gift voucher, unless the customer could demonstrate compellingly of its existence.
If a gift voucher states that no change will be given, this is acceptable as the customer is made aware that they must use up the full amount or risk losing some of the value of the voucher. The potential hitch occurs where the voucher is silent on the topic of change, if this were the case it would be unreasonable not to give change, whether vouchers, store credit or cash. A customer who received change in the form of vouchers or store credit would have no cause for complaint. Credit card type vouchers, where the customer is given a specific amount to spend in an outlet, are better at eliminating the problem of change, than traditional vouchers which are a set amount.
http://www.accesslegal.ie/a_Moyles.php
Commercial Agents and Distributors
Manufacturers of certain goods, particularly clothing and cosmetics, who do not have the resources or the inclination to sell their goods directly, can appoint someone to either sell their goods directly to the public for them or arrange for sales through third parties. The manufacturer, usually referred to as the principal, can appoint an agent or distributor to facilitate the sale of its goods in a particular market. Although an agent and a distributor can appear to be similar, there is a marked difference between them in terms of legal rights and obligations and for any person considering becoming one it would be advisable to be fully aware of the implications.
Commercial Agent
A commercial agent is one who concludes sales between a principal and customers and earns a commission depending on the volume of the goods sold. The agent does not buy the goods from the principal and re-sell them on to customers, but facilitates and arranges sales between the principal and the customer. An agent is not responsible for the quality of the goods and any loss suffered due to non-payment for the goods is borne by the principal, however the success or failure of a particular product can to a large degree depend on the agent, as usually the promotion of the product is their responsibility.
Most commercial agencies are covered by the European Communities (Commercial Agents) Regulations 1994, which set out the relationship between the principal and the agent (to be covered by the Regulations the agreement has to be in writing), a commercial agent is defined as:
“a self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods on behalf of another person”
The Regulations set out the duties of both parties; the principal must act dutifully and in good faith, provide the agent with the necessary information to assist the agent perform its tasks, inform the agent if it is expected that there will be a reduction in transactions and advise the agent of the principal’s acceptance, rejection or any non-compliance with any transaction arranged by the agent. The agent must; act in good faith, negotiate and conclude transactions it is responsible for, provide the principal with all necessary information and comply with reasonable instructions given by the principal.
The main responsibility of the principal is to pay to the agent the commission generated from sales. The parties are free to determine the level of commission the agent is to receive, however if the agreement between them is silent on commission levels, the agent shall be entitled to such remuneration as is customarily paid for such a transaction or if there is no such customary practice in place, to receive reasonable remuneration.
One of the main sources of friction between agents and principals is the payment of commission on transactions where the agent may not have had any direct participation, this can arise when an agent enjoys an exclusive right to a specific geographical area or group of customers and they contact the principal directly. Under the Regulations an agent is entitled to commission on (i) a transaction the agent concluded (ii) the transaction is concluded with a third party whom the agent previously acquired as a customer, or (iii) transactions derived from an area or a group of customers that the agent enjoys exclusive rights to.
Commission is due to the agent when the customer has made payment for the goods as per the contract, or would have if a delay is caused by the principal. The right to commission extends after the agency has ended, if the transaction is mainly attributed to the agent and was entered into within a reasonable period after the agency ended or the order was placed before the agency was terminated. An agent’s right to commission for a particular transaction can be extinguished if the contract between the customer and the principal will not proceed and the principal was not the cause of the failure.
The term of the agency agreement is a matter for the parties to decide, where the agreement is for an indefinite period it can be terminated by notice from either party, or without notice if one party fails to carry out their obligations. An agent is entitled to compensation upon the termination of the agency, generally the level of compensation is set at an amount equivalent to two years commission.
Non-competition clauses in an agreement are designed to protect the principal from a scenario where an agent is privy to commercially sensitive information about the principal’s product, customers, marketing strategy or pricing structure and the agent uses this information to sell a rival product. Against this an agent has an entitlement to earn a living and cannot be stopped indefinitely from dealing in a product which would be a competitor to the principal. Non-competition clauses, preventing the agent competing with the principal after the agency has been terminated are valid, provided they are a maximum of two years, and cover the same goods, area and customers as covered by the agency agreement. However each particular case would need to be judged on its own merits, the effectiveness of a non-competition clause depends to a large extent on the type of product and market involved. For example, an agent dealing with highly specialised medical equipment, for which there are a limited number of potential customers, would have a non-competition clause enforced against it more readily than an agent dealing in leather goods for which there is a large pool of potential customers.
————————————
Distribution Agreements by Alan Moyles, Jan 2010
http://www.accesslegal.ie/a_Moyles.php
A distributor will generally purchase goods from the principal for resale to the public, which can mean that the distributor may be legally liable to its customers for any problems with the goods. Unlike agency agreements, there are no specific regulations or legal provisions which apply to distribution agreements, the parties are free to set their own terms concerning the rights and obligations of both parties. The parties are equally free to set the payment and termination provisions, a retailer may have to pay cash on delivery or be granted 30, 60 or 90 days credit, depending on the arrangements agreed between the parties. If a retailer is not paying for goods supplied within the agreed time, the distributor can take legal proceedings against the retailer for recovery of sums due.
Frequently, in the current climate, a distributor can supply goods to a retailer only to find that the retailer has been placed into liquidation before the goods supplied have been paid for. In such an eventuality the only real protection available to the distributor is to have retention of title over the goods supplied, this means that the distributor retains ownership in the goods until they have been paid for. If the retailer goes in liquidation the distributor has the legal right to get back any goods which have not been sold. Retention of title works best with finished goods which are readily identifiable, rather than raw materials which have to be combined with other products to make the finished article. If the goods have been sold or there is no retention of title, a distributor will have to join the queue of the other unsecured creditors of the retailer. A retention of title clause is pretty straight forward and can be readily placed into the contract documents.
There are three main types of distribution agreements; exclusive distribution, there is only one entity entitled to sell the product in a defined area; non-exclusive distribution, several entities may sell the product in a particular area; selective distribution, entities which reach certain technical or professional requirements may sell the particular product.
The main terms to include in a distribution agreement are (i) territory/exclusivity, will the distributor have exclusive rights to sell the product in a particular area (ii) minimum quantities, will the distributor have to purchase a minimum amount of the product (iii) basis of supply, will the principal deliver the goods to the distributor (iv) price and payment, has the distributor the freedom to set the retail price of the goods or is it set by the principal and when does the distributor have to pay for the goods (v) marketing, who is responsible (vi) intellectual property, will any separate licensing agreements need to be put in place (vii) warranties and liabilities, to what extent shall the principal attempt to pass liability for the goods on to the distributor (viii) duration and termination, how long run will the agreement run for and under what circumstances can the agreement be terminated.
http://www.accesslegal.ie/a_Moyles.php
