Consumer reforms in Jersey continue apace with the coming into force of the Supply of Goods and Services (Jersey) Regulations, 2010.

On 1 September 2009, Jersey brought into force the Supply of Goods and Services (Jersey) Law 2009 (the "Law"). This legislation which was hailed by its accompanying report as "probably the most significant advancement in providing clarity of consumer contractual rights in Jersey's history", continued the process of legislative reform in the field of consumer protection which has gathered pace since the "Review of Consumer Protection in Jersey" was published in 2001.

The Supply of Goods and Services (Jersey) Regulations, 2010 (the "Regulations"), which came into force on 27 January 2010, build on the Law and provide further safeguards for consumers and, in some cases, businesses.

The Law, which was discussed in detail in a previous issue of "Finance", implies warranties into contracts to provide goods or, services that require such contracts to be performed with a reasonable level of skill and care.

However, in keeping with the well established principle of Jersey law that parties to a contract are generally able to agree its terms, the Law leaves open the possibility that parties may amend or vary its provisions by agreement.

Exclusion Clauses

This ability to opt out of the Law, (pursuant to Article 91), gives rise to a risk that businesses may routinely exclude the protections guaranteed by the Law and in doing so could prevent the attempts of the legislature to ensure acceptable minimum standards of consumer protection.

In order to avert this danger and ensure that adequate consumer protection is achieved the Regulations, which have just been brought into force, broadly prohibit the unilateral exclusion of certain implied warranties by businesses when they are dealing with consumers. The Regulations demand that exclusion clauses in business to business contracts must always be fair and reasonable.

This approach is very much along similar lines to the English law position under the Unfair Contract Terms Act 1977, and reflects the stated intention of the Economic Development Committee to prohibit statutory rights being easily overridden by blanket exclusions.

Regulation 1 sets out the definition of "consumer" that is to be applied when interpreting the Regulations and, Regulation 2 goes on to provide that any attempts to avoid liabilities or obligations contained in a consumer contract will, at all times, be limited by what is fair and reasonable.

Regulation 3 expressly renders void attempts by sellers or suppliers of hire-purchase goods, to exclude or avoid warranties relating to goods title (Articles 21 and 32 of the Law) or disclosure of defects (Article 24). Similarly, suppliers cannot, under any circumstances, exclude their obligation to act with reasonable care and skill (Article 28). On the face of it, this last provision which relates to consumer and business to business agreements has alarmingly far reaching consequences as it appears to exclude the possibility of professional service providers such as accountants limiting their exposure to negligence claims.

Regulation 4 is only applicable to consumer contracts. It makes it impossible for sellers of goods or suppliers of services to exclude their liability for goods matching their description (Article 22), being of satisfactory quality (Article 23) or, matching a sample (Articles 25). These provisions are mirrored in respect of hire purchase contracts by Articles 33, 34 and 35 respectively.

Regulation 5 extends the safeguards provided by Regulation 4 (in respect of consumer contracts) to non-consumer contracts and provides that exclusion clauses which purport to restrict liability for goods matching their description, being of satisfactory quality or, matching a sample (Articles 22, 23 and 25 respectively) will have no effect if their terms are not "fair and reasonable".

Regulation 6 extends protections to consumers relying on manufacturers and distributors guarantees. Essentially, goods ordinarily supplied for private use and consumption are unable to exclude liability for defective consumer goods.

Fair and Reasonable

Regulations 7 and 8 put the onus on a party wishing to exclude statutory protections, to prove that either the terms are fair and reasonable, or that the other party is not contracting as a consumer. The emphasis is very much on ensuring a fair and reasonable level of protection in both consumer contracts and business to business contracts, where applicable.

Regulation 9 expressly excludes the statutory protections in relation to insurance contracts, contracts relating to intellectual property, contracts relating to the creation or termination of legal entities or contracts relating to the transfer of securities. In the majority of consumer contracts, as well as in many business to business contracts, the Regulations should provide greater protection and are to be welcomed. However, the potentially unlimited liability of suppliers arising from Regulation 3 is concerning. It would be more equitable if service providers were able to restrict their liability to what is fair and reasonable, and this provision should be given further consideration.

This article first appeared in the winter 2009/10 issue of Appleby Jersey's Finance newsletter.

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