Couriers, lost parcels and unfair terms

Manxman_in_exile

I was looking for something in relation to another thread and found this.  I think I must originally have come across it in a link on Consumer Action Group.  (I can't find that link now so I'll have to cut and paste the text.  What follows is all I've found...)

It's a court judgment on the old chestnut of courier losing a parcel and what happens if the consumer hasn't opted to buy "extra insurance".

It's not going to create a binding precedent that has to be followed, but some posters here still might (or might not!) find the judgment a bit interesting.

(Apologies for the formating)


IN THE COUNTY COURT AT KINGSTON UPON THAMES Kingston upon Thames County Court and Family Court Hearing Centre St James Road Kingston-upon-Thames KT1 2AD

BEFORE: DEPUTY DISTRICT JUDGE LE BAS

BETWEEN: MARTIN TILLYER CLAIMANT

 - and -

PARCELHERO.COM LTD DEFENDANT

 Legal Representation Mr Martin Tillyer (Claimant), Litigant in Person; Mr McGeeghan (Director) on behalf of the Defendant 

 Judgment Judgment date: 25 May 2022

1. This is a claim arising out of a contractual dispute between the Claimant and the Defendant. The contract between the parties was for the Defendant to deliver a parcel on behalf of the Claimant to a third party.

2. The Claimant was presented with an option in the course of entering into that contract to “Cover your shipment” up to a specified value for an additional cost. That is clear from the Defendant’s evidence and it is not disputed between the parties. The Claimant elected not to take that option and therefore paid the Defendant what one might call the standard fee for that delivery. In the event, and regrettably, the parcel was not delivered, and that point is not disputed.

 3. The Defendant relies on its terms and conditions, which, on the face of it, were incorporated into the contract between the parties. Clause 16.7 of those terms and conditions purports to limit the Defendant’s liability in these circumstances to £50.

4. The question for the Court, in essence, today is whether the Defendant is entitled to rely upon that clause. To that end, one has to look at the Consumer Rights Act 2015, which is clearly applicable to the contract because the Defendant was clearly acting as a trader and the Claimant was clearly a consumer.

5. Section 57 of the Act deals with liability that cannot be excluded or restricted in the context of the performance of services. On the face of it, that would appear to offer some assistance to the Claimant because section 49 of the Act has the effect that every contract to supply a service is to be treated as including a term that the trader must perform the service with reasonable care and skill.

6. However, section 54 of the Act deals with the consumer’s rights in the event that there is a breach of section 49, and those automatic rights are set out at section 54(3), and they are to require either repeat performance or a price reduction, neither of which are particularly of assistance to the Claimant in this context. The Claimant is not prevented from seeking other damages by operation of section 54 but they do not automatically arise so the section 57 channel, if I may call it that, does not assist the Claimant in these circumstances. What is then left for the Court to consider are the provisions at Part 2 relating to unfair terms.

7. Section 62 of the Act provides that an unfair term of a consumer contract is not binding on the consumer. Subsection 4 of this section provides that: “A term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer.” Subsection 5 provides that: “Whether a term is fair is to be determined: (a) taking into account the nature of the subject matter of the contract, and (b) by reference to all the circumstances existing when the term was agreed and to all of the other terms of the contract or of any other contract on which it depends.” 

8. Section 63 of the Act provides examples of contract terms which may or must be regarded as unfair and one is then referred to Part 1 of Schedule 2 of the Act, which provides a list of examples. The second example therein provides as follows, and this is, as I say, in the context of a term which may be regarded as unfair: “A term which has the object or effect of inappropriately excluding or limiting the legal rights of the consumer in relation to the trader or another party in the event of total or partial non-performance or inadequate performance by the trader of any of the contractual obligations, including the option of offsetting a debt owed to the trader against any claim which the consumer may have against the trader.”

9. The context of the agreement between the parties was as follows. The contract was for the Defendant to arrange for the parcel to be taken from A to B and it is accepted that that was not performed such that, in fact, the parcel was lost. Ordinarily, the Defendant would therefore be liable for the value of the parcel and they would be in this case but for clause 16.7, to which I have already referred.

10. Having regard to the example term that I have referred to from Schedule 2, it is clear in this case that there was either non-performance or inadequate performance by the trader and so the question becomes whether there was an inappropriate limitation on the Claimant’s rights such that it can be said that section 62 of the Act is engaged.

11. On balance, I am satisfied that the clause in this context does amount to an inappropriate limitation of the Claimant’s rights for the following reasons. The offer of additional cover is, in the context of these agreements, misleading: the contract is for the, in this case, Defendant to arrange for the parcel to be taken from A to B. There must, in my view, in those circumstances, be a presumption that the paying party, in this case, the Claimant, will want those goods to be covered in the event that, as has happened in this case, the goods are ultimately lost. The option which, in this case, the Claimant was given in relation to purchasing additional cover is, to my mind, not sufficiently clear insofar as it is not expressly set out what is meant by the word cover in this context: it is not defined on that page.

12. Another relevant factor, to my mind, is the fact that, at least in this case, the Defendant was told the value of the goods and it seems to me, therefore, that taking all of that into account, it is right to say that the effect of clause 16.7 is that it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer because the Defendant can, in essence, not perform or inadequately perform with very limited exposure.

13. The position might be different if, for example, the Defendant had not been told the value of the parcel before quoting a price to the Claimant or, for example, the Defendant had provided their quote initially the other way round, such that the default position is that the goods are covered by the Defendant but that the consumer can elect to have that cover removed but I do not wish to speculate too far because neither of those factors are relevant to this case.

14. The starting point, it seems to me, is that financial responsibility for the loss of the goods should lie with the party that was responsible for losing the goods. Patently, in this context, that is not the Claimant and obviously, it is a matter for the Defendant company as to how they wish to deal with that liability vis a vis their suppliers but it seems to me that the balance of prejudice lies in favour of the consumer in this case, in view of the legislative provisions.

15. So, for those reasons, on balance, I am satisfied that it is appropriate to enter judgment for the Claimant. 

visidigi

Parcelhero are not a courier - they are nothing more than a reseller, in the same way a travel agent sells holidays/flights/hotels/car rental provided by someone else.

So the judgement here is against ParcelHero's terms, not the couriers terms.

the_lunatic_is_in_my_head

Manxman_in_exile said:

some posters here still might (or might not!) find the judgment a bit interesting.

Thanks @Manxman_in_exile

It is interesting not only to see a judgement on this issue in particular but also to see how the judge went through the relevant aspects of the legislation in a methodical manner interpreting them as written but the most interesting aspect is.... 

visidigi said:

Parcelhero are not a courier - they are nothing more than a reseller, in the same way a travel agent sells holidays/flights/hotels/car rental provided by someone else.

So the judgement here is against ParcelHero's terms, not the couriers terms.

.....There is a difference between a company acting as an agent for another and a company who uses a third party to fulfil their contractual obligations. 

 It doesn't matter whether Parcelhero are a courier or not, what matters is they formed a contract with the claimant to transport a parcel from A to B, and what is most important here is there was no sympathy to the fact that it was Yodel, DPD or whoever who actually lost the parcel, the view is clear that the actions of the 3rd party that Parcelhero opted to elect to perform their obligations under the contract were the responsibility of Parcelhero alone and had no bearing on the rights of the consumer to seek a remedy, or in this instance damages, for a breach of their contract with Parcelhero. 

As a side note, the T&Cs of Parcelhero mirror that of the couriers in general, particularly in terms of liability for loss and parcel cover, or what ever alterative it maybe labelled as. 

cannugec5

“14. The starting point, it seems to me, is that financial responsibility for the loss of the goods should lie with the party that was responsible for losing the goods. Patently, in this context, that is not the Claimant and obviously, it is a matter for the Defendant company as to how they wish to deal with that liability vis a vis their suppliers but it seems to me that the balance of prejudice lies in favour of the consumer in this case, in view of the legislative provisions.”

Which I guess is why the judge said this, above. 

It gives Parcelhero, as the defendant, the nod to discuss liability with their suppliers - who I’m presuming are the actual couriers. 

Undervalued

Remember this is a one off judgement by a member of the very lowest rank of the judiciary. It does not set any kind of binding precedent.

Also, as others have pointed out, it was against a parcel brokering service and not against the courier themselves.

I am not suggesting the judge was wrong (or right) in this case. 

However, looking at the wider issue, I had always understood that certainly the Royal mail, and maybe other couriers, could set tight compensation limits on their services and offer add on insurance for higher levels. Otherwise how is it viable to offer a service at all if there is unlimited liability?

Suppose a high end jeweller decides to send tens or hundreds of thousands of pounds of diamonds in a packet with a five quid next day courier. Are they really expected to accept almost unlimited liability?

High security courier services do exist but at vastly higher costs. Where do you draw the line?

outtatune

If people want courier companies to provide mandatory insurance against loss or damage, then they have to expect the costs of providing that insurance to be added to the costs of the service.

the_lunatic_is_in_my_head

Undervalued said:

Remember this is a one off judgement by a member of the very lowest rank of the judiciary. It does not set any kind of binding precedent.

Also, as others have pointed out, it was against a parcel brokering service and not against the courier themselves.

I am not suggesting the judge was wrong (or right) in this case. 

However, looking at the wider issue, I had always understood that certainly the Royal mail, and maybe other couriers, could set tight compensation limits on their services and offer add on insurance for higher levels. Otherwise how is it viable to offer a service at all if there is unlimited liability?

Suppose a high end jeweller decides to send tens or hundreds of thousands of pounds of diamonds in a packet with a five quid next day courier. Are they really expected to accept almost unlimited liability?

High security courier services do exist but at vastly higher costs. Where do you draw the line?

If you book with Royal Mail they don't ask you the value of the parcel, they merely state the compensation limit for each service and let you decide which service to pick.

Parcelhero specifically asks you to enter the value of the contents, in an attempt to sell you additional cover, the judgement is stating Pracelhero were aware of their potential liability at the time the contract was formed. 

You ask where the limit is, that is for Parcelhero to decide and should that limit be £50, £500 or £5000, when the consumer enters a value higher than the limit Pracelhero are willing to be liable for they have the opportunity to decline custom. 

Were the consumer to be mistaken or untruthful when entering the value I would expect that to count against the consumer in the event of a claim as the correct information wouldn't be known to both parties at the point the contract was formed.  

The judgement also notes that the consideration may have been different had Parcelhero automatically added their cover to the price but allowed the consumer to reduce the price by removing the cover. 

Manxman_in_exile

Undervalued said:

... Suppose a high end jeweller decides to send tens or hundreds of thousands of pounds of diamonds in a packet with a five quid next day courier. Are they really expected to accept almost unlimited liability?...

"12.  Another relevant factor, to my mind, is the fact that, at least in this case, the Defendant was told the value of the goods and it seems to me, therefore, that taking all of that into account, it is right to say that the effect of clause 16.7 is that it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer because the Defendant can, in essence, not perform or inadequately perform with very limited exposure.

13. The position might be different if, for example, the Defendant had not been told the value of the parcel before quoting a price to the Claimant..."

Manxman_in_exile

outtatune said:

If people want courier companies to provide mandatory insurance against loss or damage, then they have to expect the costs of providing that insurance to be added to the costs of the service.

Well of course.

One of the most prominent characteristics of today's consumer society is that so many people refuse to pay a price that covers the true economic costs of the goods or services they want to buy.  They want everything at the cheapest price possible and if that means that other people have to bear more than their fair share of losses then that's ok.

It's true that most people will benefit (to a relatively small extent) by paying a cheaper price than is economic because parcels etc don't usually get damaged or lost.  But the downside is that when they do get damaged or lost then those consumers have to bear a disproportionate and unfair share of the disadvantages of "cheaper" prices, because the provider of the service hasn't insured it properly - because they can't afford to because the prices they charge are too low.

If the prices for goods and services don't reflect the real economic costs of providing those goods and services we will (as a society) risk making the wrong choices about what to spend our money on.

Manxman_in_exile

Here's another from the same source



IN THE COUNTY COURT AT CENTRAL LONDON County Court at Central London, Thomas More Building Royal Courts of Justice Strand London WC2A 2LL

BEFORE: RECORDER SARAH LAMBERT QC

BETWEEN: PRESLAV FEDEV PENCHEV CLAIMANT

- and -

PARCEL2GO.COM LTD DEFENDANT

Legal Representation Mr Penchev (Claimant), Litigant in Person; Ms Chelsea Walton (Counsel) on behalf of the Defendant

Judgment date: 7 February 2022

Recorder Sarah Lambert QC:

1. This is a claim in relation to a non-delivered parcel. The Claimant booked a service that cost £7.79 on the Defendant’s website and accepted by clicking the terms and conditions that liability under the insurance that came with the delivery was limited to a value of £50. Options were given during the booking process to increase that cover. That would have incurred the further charge of £20 ex-VAT. The total for someone not paying VAT would therefore have been £27.79 for insured delivery. The Defendant company says it accepts that the parcel has not been delivered.

2. That is not contentious. The value is not in dispute and Parcel2Go Ltd accepts that the delivery was not conducted with reasonable care or skill, or in fact provided as it should have been, so those parts are not contentious. The contentious issue is whether or not the term which restricts liability for the value to £50 is fair and therefore can be upheld, or whether it is unfair within the meaning of the Consumer Rights Act 2015 such that Parcel2Go cannot rely upon it and the consumer is entitled to be compensated for the full value of his loss.

3. In these circumstances I find for Mr Penchev. It seems to me that it is impossible for it to be fair for the Defendant company to limit liability for something it is obliged to do. It is a matter of law that as the bailee of the product, it is not entitled to restrict its responsibility in the way that it has sought to do. I understand what has happened here commercially. The product in transit had to be insured.

 4. The delivery company is in effect attempting to pass on the cost of that insurance to the consumer, and when the consumer declines to pay what is essentially a necessary cost by way of an additional charge the Defendant company seeks not to be responsible for the full value. I find when considering whether that is fair or unfair between a consumer and a company here that it is unfair. It causes a significant imbalance in the parties’ rights to the detriment of the consumer.

5. It is also lacking in transparency, and it is not open to a courier company effectively to decide that it is able to fail to deliver a product and not provide compensation for that failure. The reality is that the true cost of the service is £27.79 and that ought to be clear. Now I understand this is not what the Defendant company wants to hear, and I understand the business model that is made, but on the facts here I am quite satisfied that it is unfair for a lost parcel of £450 to be compensated only to the tune of £50 in reliance upon a term which simply seeks to impose that on the customer.

6. Customers here are entitled to believe that their products will be safely delivered because that is what the company is promising. In similar way I know, because he has told us, that Mr Penchev has already refunded the ultimate consumer. He has not sought himself to say to the ultimate consumer: “Well, it was only insured for £50.”

7. That is neither here nor there in terms of his claim against this Defendant, but it indicates the way that things should be, which is the person who is responsible for the loss, unless it is reasonable to exclude or limit liability, must pay appropriate compensation. I am satisfied here that it was not reasonable to seek to limit liability to £50 and the Claimant is successful. 

8. The total judgment sum for the Claimant will be £654.

the_lunatic_is_in_my_head

Manxman_in_exile said:

outtatune said:

If people want courier companies to provide mandatory insurance against loss or damage, then they have to expect the costs of providing that insurance to be added to the costs of the service.

Well of course.

One of the most prominent characteristics of today's consumer society is that so many people refuse to pay a price that covers the true economic costs of the goods or services they want to buy.  They want everything at the cheapest price possible and if that means that other people have to bear more than their fair share of losses then that's ok.

It's true that most people will benefit (to a relatively small extent) by paying a cheaper price than is economic because parcels etc don't usually get damaged or lost.  But the downside is that when they do get damaged or lost then those consumers have to bear a disproportionate and unfair share of the disadvantages of "cheaper" prices, because the provider of the service hasn't insured it properly - because they can't afford to because the prices they charge are too low.

If the prices for goods and services don't reflect the real economic costs of providing those goods and services we will (as a society) risk making the wrong choices about what to spend our money on.

Is this always true though?

Supermarkets are sometimes afforded sympathy because they work on low margins but it's often missed they do so to cut out competition, increase market share and benefit from economies of scale, the big ones all price match each other any way so they could charge the same as Spar, Coop or other such "convenience stores" but then they'd lose business to those stores.

Is it our desire to pay less that makes the likes of Evri offer cheap prices for bad service or is it their desire to achieve market share and benefit from volume so they can then be in a position to stick two fingers up at those who experience bad service by having almost no customer service?

One reason Evri are cheap is because they choose to pay their staff a pittance, they could have chosen to pay hourly wages, holiday pay, sick pay and all that jazz, in comparison Royal Mail, who are one of the better couriers because they have traditional employees, are trying to do their best to lower their standards to compete. It's a wider question of what is allowed under law for those performing a job but does highlight the issue may be one more of companies having the opportunity to suffer loses to begin with and eventually creating a market where there is only a few companies all pandering to the lowest common denominator. 

There's no doubt we've become accustomed to low prices and the less we pay the better our wallet but on the flip side there are big advances to the major players in having low prices to retain their position. 

I'm of the opinion that 99% of what we buy we don't need, the entire system is designed to encourage us to spend (that's even the purpose of consumer rights) and if us demanding low prices was bad for business I don't think low prices would be around.