SCS refusing to cancel order but didn't say at point of sale.

the_lunatic_is_in_my_head

A_Geordie said:

 Having said that, I am happy to correct myself and clarify that in my opinion the OP does not have the right to rescind the contract i.e. void the contract and obtain a full refund, but they do have an arguable right to terminate the contract by giving reasonable notice as they did with the result that they would lose the £700 deposit as per my earlier post.

Given that you are suggesting in the above statement that the OP is in breach of contract, I presume you are taking the position that the OP has no implied right of termination? Because there would be no breach of contract if the OP exercised an implied right of termination, which is essentially a termination for convenience. 

A lot of the legal language from the cases goes right over my head but I think I understand your point, my question would be, what is the £700 for exactly? 

I don't think anyone can force the OP to pay the rest of the bill and take possession of the sofa (a court might award specific performance but it's more likely to be costs or loss of profit as damages due to a breach rather than order someone to buy a sofa right?) 

But as those costs/loss of profits are damages resulting from a breach and if, as you say, there is no breach, what is advanced payment of £700 actually defined as/for?

Also what if there was no payment, a nominal sum paid of say £1, or the full sum paid? 

Grumpy_chap

A_Geordie said:

Given that you are suggesting in the above statement that the OP is in breach of contract, I presume you are taking the position that the OP has no implied right of termination? Because there would be no breach of contract if the OP exercised an implied right of termination, which is essentially a termination for convenience. 

I am not sure that I understand the comments you are making with regard to an "implied right of termination".  If the parties have a right to terminate, then the other party (which did not exercise the termination) must have a right to some remedy.  Otherwise, the whole idea of a contract would be pointless.  If the contract sets out the rights and remedies for termination, then that is what applies.  If the contract is silent on the matter of termination, but one party terminates in any case, then the remedy for "termination" must be the same as the remedy for breach of contract.

I think, also, for the majority of consumer contracts, the idea of termination is largely moot as the contract is executed and fulfilled in short order.
Termination is far more relevant in the case of contracts with a long period for performance, perhaps why you were more easily able to locate B2B examples cited upthread.  A train company with a 25-year franchise agreement to operate services between A to Z will have some process for termination by either party with remedies set out.  
Consumer contracts do not have this type of longevity.

The sort of cases where a consumer contract would have rights of termination are in the areas of motor finance (where VT is a specifically specified right), mobile phone contract, employment contract.

In the case of termination of an order for a sofa, as the unilateral act of the consumer, the retailer must be entitled to some remedy.  It would not simply put each part to the state they would be had the contract never been formed.  A typical remedy the retailer could claim would be loss of profit.  This may or may not equal the deposit value.  Either way, this remedy for the retailer seems to be little different to the remedy the retailer would have for breach of contract by the consumer.   Obviously, a different scenario if the contract includes a termination clause.

It seems difficult to bring a meaningful difference in definition between the term you are fond of "common law implied right of termination" and the more simple term "breach of contract".

A_Geordie

Grumpy_chap said:

I am not sure that I understand the comments you are making with regard to an "implied right of termination".  

An implied right of termination simply means a right of termination that isn't stated in the contract. Rights can be implied by law such as the Consumer Rights Act or in other instances such as the examples given in the court cases I referenced. For termination, the implied right can be termination for convenience or for breach. For this particular topic of discussion, I am strictly talking about the OP having an implied right to terminate for convenience by giving reasonable notice. 

If the parties have a right to terminate, then the other party (which did not exercise the termination) must have a right to some remedy.

By remedy, I am going to assume you mean compensation of some kind. Not every termination right attracts an automatic remedy for the non-terminating party. For example, there is a common law right that a contract can be terminated where it is impossible for one party to perform its obligations under the contract. The consequence is that the contract comes to an end and both parties are discharged from future obligations. There is no compensation awarded to the innocent party in that situation. The same applies where a consumer cancels a contract under the CCRs within the prescribed 14 day window, there is no remedy for the retailer in the form of compensation.

Otherwise, the whole idea of a contract would be pointless.

I don't get this logic. The fundamental principle of contract law is that the parties are free to negotiate and agree whatever contract terms they like, and it can be in written or unwritten form. The lack of agreement on certain rights and remedies does not make a contract pointless. Sure, it might be a bad bargain for one side for having failed to negotiate what it wants, but it's definitely not pointless.

If the contract sets out the rights and remedies for termination, then that is what applies.

That's correct, and the keyword here is if. The OP is claiming that no T&Cs were mentioned at the point of sale and was only presented with a blank screen containing a signature box. So from the OP's point of view, there were no agreed terms on rights and remedies for termination.

If the contract is silent on the matter of termination, but one party terminates in any case, then the remedy for "termination" must be the same as the remedy for breach of contract.

In my view, this is wrong for the reason I have at the beginning of my post. If the contract is silent on termination and one party exercises a right to terminate the contract by giving reasonable notice, this would be construed as termination for convenience, not breach of contract. I am not aware of any case law that backs up your theory although if you have any authority behind that proposition, then please share and will happily read it.

However, if a party seeks to terminate the contract but somehow gets it wrong, either because they didn't give reasonable notice or there was no right in the first place to terminate (for example, the parties agreed there was no right of termination), then that would likely amount to a wrongful termination and that would a breach of contract entitling the innocent party to seek compensation.

I think, also, for the majority of consumer contracts, the idea of termination is largely moot as the contract is executed and fulfilled in short order.

I agree that termination is moot if the contract has been performed, since the contract would be viewed as terminated already due to the fulfilment and performance of both sides. However, for the purposes of this thread, neither side has fulfilled all of their obligations, so I am not sure what this comment is supposed to add to the discussion.

Termination is far more relevant in the case of contracts with a long period for performance, perhaps why you were more easily able to locate B2B examples cited upthread.  A train company with a 25-year franchise agreement to operate services between A to Z will have some process for termination by either party with remedies set out.  Consumer contracts do not have this type of longevity.

Again, I'm failing to see the relevance of the above statement in the context of this thread. Termination is absolutely relevant in any contract and for any length of time whether its contracts for supply of goods, hire or services. A lot of case law revolves around B2B usually because they have the financial means to pursue or defend it when compared to the number of consumers who have the same financial backing. If a court is willing to imply a right of termination in a B2B contract, then they are invariably going to find the same in a B2C where the bargaining powers are normally one-sided, unless there are good reasons not to. 

The sort of cases where a consumer contract would have rights of termination are in the areas of motor finance (where VT is a specifically specified right), mobile phone contract, employment contract.

Consumers can have termination rights in any contract they enter into and are not limited to specific types of contracts you mentioned. Dog walking, house sitting, garden maintenance and other similar contracts are instances where termination rights can exists for consumers both in written and unwritten agreements.

It would not simply put each part to the state they would be had the contract never been formed.

Although I've said it in other posts and clarified my views but to be absolutely clear, I accept that if the OP terminates by giving reasonable notice, they would not be entitled to be put in a position as if the contract had never been formed so I'm not sure why you would keep referring to this point. I do wonder if you are getting confused on the different ways of ending a contract and available remedies. Generally speaking, there are two primary methods which can end a contract:

Termination: When a contract is terminated, it comes to an end at a particular point in time as dictated by the party terminating the contract. Different methods of termination exist such as convenience, breach, illegality, repudiation, impossibility etc.

Rescission: The contract is deemed void, never performed or existed. Sometimes you may see or hear the latin phrase void ab initio. Like termination, there various ways in which a party may rescind a contract including misrepresentation, mistake, undue influence and fraud.

It's important to know that rescinding a contract is not the same as termination and the remedies are different too. The usual remedy for rescission puts the parties in the position before the contract was entered into and so this would ordinarily mean that anything paid under the contract is refunded in full. Where goods are involved they would be returned in the same condition but if it is not possible there would be compensation in lieu. 

For termination, compensation is not automatic. This is because it depends on various factors such as the reason why the contract was terminate and if there were any terms of the contract that explained what happens on termination. If the contract is silent, then there would typically be no compensation as a remedy. The non-terminating party would be entitled to retain any monies already paid under the contract to cover costs including any sums due up to the date of termination. Generally any excess monies over and above costs incurred are returned back to the buyer (but excluding any deposits) but again, it depends on the reason for termination and whether case law has decided if compensation exists for that method of termination. 

It seems difficult to bring a meaningful difference in definition between the term you are fond of "common law implied right of termination" and the more simple term "breach of contract"

This statement seems to give me the impression that you consider the OP's notice to terminate the contract as a breach either because they don't have a right to terminate or for some other reason but, nevertheless entitling SCS to a remedy by way of compensation. That's a perfectly sensible thing to say if it is indeed your view of things, but I just can't accept your rationale because it doesn't make sense and is not a reflection of the legal position.

Apologies in advance for the rather lengthy post.

A_Geordie

the_lunatic_is_in_my_head said:

A lot of the legal language from the cases goes right over my head but I think I understand your point, my question would be, what is the £700 for exactly? 

The £700 according to the OP is a deposit. Under common law principles, a deposit is a security or guarantee from the buyer that it is committed to performing their end of the bargain, notwithstanding any termination right. so if a buyer terminates the contract early for convenience, they forfeit their deposit. This is how the courts have determined deposit payments. 

I don't think anyone can force the OP to pay the rest of the bill and take possession of the sofa (a court might award specific performance but it's more likely to be costs or loss of profit as damages due to a breach rather than order someone to buy a sofa right?) 

You are assuming there is a breach of contract by the OP and if that is the case, then a court would probably award damages in lieu of specific performance. Having said that, the Consumer Rights Act does give the retailer a statutory right to deliver the goods under s28(2) if the retailer wanted to rely on that. Not sure I have seen that every argued before so it would be interesting to see if a court would order specific performance under s28(2). 

Also what if there was no payment, a nominal sum paid of say £1, or the full sum paid? 

Assuming the contract was terminated for convenience then: 

No payment = contract ends on the date given, future obligations to pay/perform are discharged.

Nominal sum = depends on whether this sum was a deposit, in which case the buyer would forfeit that amount. If the sum was a part payment then the answer is it depends. The courts distinguish a part payment from a deposit in that it is not a security or guarantee from the buyer to perform their end of the bargain, rather it is what it says on the tin, a part payment towards the contract price.

The buyer could demand the return of the part payment but whether the sum could be returned in full depends on when the contract was terminated. Take for example, if the contract was agreed on Monday but terminated on Tuesday, there's a good chance nothing has happened in those 24 hours and therefore no cost/expense incurred by the retailer so the part payment should be returned. However, if the contract is terminated 3 weeks later and the retailer has incurred costs or expenses during that period, then the retailer could argue that any part payment should be deducted to account for those costs/expenses up to 100% of the part payment, and a court is likely to agree.

Full sum paid = same principle as nominal sum paid. 

the_lunatic_is_in_my_head

A_Geordie said:

the_lunatic_is_in_my_head said:

A lot of the legal language from the cases goes right over my head but I think I understand your point, my question would be, what is the £700 for exactly? 

The £700 according to the OP is a deposit. Under common law principles, a deposit is a security or guarantee from the buyer that it is committed to performing their end of the bargain, notwithstanding any termination right. so if a buyer terminates the contract early for convenience, they forfeit their deposit. This is how the courts have determined deposit payments. 

I don't think anyone can force the OP to pay the rest of the bill and take possession of the sofa (a court might award specific performance but it's more likely to be costs or loss of profit as damages due to a breach rather than order someone to buy a sofa right?) 

You are assuming there is a breach of contract by the OP and if that is the case, then a court would probably award damages in lieu of specific performance. Having said that, the Consumer Rights Act does give the retailer a statutory right to deliver the goods under s28(2) if the retailer wanted to rely on that. Not sure I have seen that every argued before so it would be interesting to see if a court would order specific performance under s28(2). 

Also what if there was no payment, a nominal sum paid of say £1, or the full sum paid? 

Assuming the contract was terminated for convenience then: 

No payment = contract ends on the date given, future obligations to pay/perform are discharged.

Nominal sum = depends on whether this sum was a deposit, in which case the buyer would forfeit that amount. If the sum was a part payment then the answer is it depends. The courts distinguish a part payment from a deposit in that it is not a security or guarantee from the buyer to perform their end of the bargain, rather it is what it says on the tin, a part payment towards the contract price.

The buyer could demand the return of the part payment but whether the sum could be returned in full depends on when the contract was terminated. Take for example, if the contract was agreed on Monday but terminated on Tuesday, there's a good chance nothing has happened in those 24 hours and therefore no cost/expense incurred by the retailer so the part payment should be returned. .

Full sum paid = same principle as nominal sum paid. 

Thanks, following 99% of what you say

Just regarding the deposit, it was my understanding that a true deposit was a small holding sum that would be lost if the agreement doesn’t go ahead.

Maybe £700 on a yacht would be a true deposit but in OP’s case for a sofa that has to be an advanced payment (or part payment by your wording)?

However, if the contract is terminated 3 weeks later and the retailer has incurred costs or expenses during that period, then the retailer could argue that any part payment should be deducted to account for those costs/expenses up to 100% of the part payment, and a court is likely to agree

How does this differ from damages and why does the other party get to keep an advanced payment as costs but not claim any costs if no payment is made? 

A_Geordie

The court will assume that if something is called a deposit, then the parties intended it to be a deposit and that will be forfeited if the buyer terminates, unless there is evidence to show that it isn't a deposit or that the deposit should be treated differently if the contract is terminated. The burden would be on the buyer to show this and that could be in the form of an email between the buyer/retailer to say that the deposit will be refunded if the buyer exercises their right to terminate.

However, if the contract is terminated 3 weeks later and the retailer has incurred costs or expenses during that period, then the retailer could argue that any part payment should be deducted to account for those costs/expenses up to 100% of the part payment, and a court is likely to agree

How does this differ from damages and why does the other party get to keep an advanced payment as costs but not claim any costs if no payment is made?

Havin re-read what I've said, you have made a valid point. It is possible a retailer could claim costs in the scenario of non-payment under the same principles as the nominal sum. 

The example I gave was intended to be basic and I'm trying to avoid getting too technical because there is not always a consistent answer on how contractual payments are interpreted. A retailer may argue that the costs/expenses incurred should be awarded on the basis of quantum meruit, which means to be paid reasonably fin carrying out their obligations under the contract, which in this example, would be costs/expenses before the termination occurred.

Damages usually arise where one party fails to perform their end of the bargain, so if there was no payment made under the contract and the retailer incurred costs in performing their obligations under the contract, the retailer could be entitled to be reimbursed under the quantum meruit principle. If the buyer refused to pay, then damages would arise as a result of the failure to pay and will be the financial equivalent of those costs incurred.

the_lunatic_is_in_my_head

A_Geordie said:

The court will assume that if something is called a deposit, then the parties intended it to be a deposit and that will be forfeited if the buyer terminates, unless there is evidence to show that it isn't a deposit or that the deposit should be treated differently if the contract is terminated. The burden would be on the buyer to show this and that could be in the form of an email between the buyer/retailer to say that the deposit will be refunded if the buyer exercises their right to terminate.

I understand we are talking termination for convenience but just to draw a parallel here with damages on this deposit point.

The CRA says terms that

A term which has the object or effect of permitting the trader to

retain sums paid by the consumer where the consumer decides

not to conclude or perform the contract, without providing for the

consumer to receive compensation of an equivalent amount from

the trader where the trader is the party cancelling the contract.

May be tested for fairness, the CMA goes on to say

Alternatively, there may be no objection to a prepayment which is set low

enough that it merely reflects the ordinary expenses necessarily entailed

for the trader. A genuine ‘deposit’– which is a reservation fee not an

advance payment – may legitimately be kept in full, as payment for the

reservation. But such a deposit will not normally be more than a small

percentage of the price. A larger prepayment is necessarily more likely to

give rise to fairness issues, for instance being seen as a disguised penalty 
(see paragraph 5.14.9) or even as undermining the consumer’s right of setoff (see paragraph 5.8.8).

Which appears to protect consumers from "deposits" that when retained may be viewed as a penalty. 

As an aside I would think £700 on the sofa might represent the traders loss of profit so deposit, advanced payment or whatever if it is a true pre-estimation of loss it doesn't matter what you call it. 

However as you've only mentioned costs and not loss of profit is it fair to draw from the above to argue that retaining the £700 (or £x as a "deposit" where x is significantly above costs") could be viewed as a penalty under termination for convenience? 

Jumblebumble

the_lunatic_is_in_my_head said:

A_Geordie said:

The court will assume that if something is called a deposit, then the parties intended it to be a deposit and that will be forfeited if the buyer terminates, unless there is evidence to show that it isn't a deposit or that the deposit should be treated differently if the contract is terminated. The burden would be on the buyer to show this and that could be in the form of an email between the buyer/retailer to say that the deposit will be refunded if the buyer exercises their right to terminate.

I understand we are talking termination for convenience but just to draw a parallel here with damages on this deposit point.

The CRA says terms that

A term which has the object or effect of permitting the trader to

retain sums paid by the consumer where the consumer decides

not to conclude or perform the contract, without providing for the

consumer to receive compensation of an equivalent amount from

the trader where the trader is the party cancelling the contract.

May be tested for fairness, the CMA goes on to say

Alternatively, there may be no objection to a prepayment which is set low

enough that it merely reflects the ordinary expenses necessarily entailed

for the trader. A genuine ‘deposit’– which is a reservation fee not an

advance payment – may legitimately be kept in full, as payment for the

reservation. But such a deposit will not normally be more than a small

percentage of the price. A larger prepayment is necessarily more likely to

give rise to fairness issues, for instance being seen as a disguised penalty 
(see paragraph 5.14.9) or even as undermining the consumer’s right of setoff (see paragraph 5.8.8).

Which appears to protect consumers from "deposits" that when retained may be viewed as a penalty. 

As an aside I would think £700 on the sofa might represent the traders loss of profit so deposit, advanced payment or whatever if it is a true pre-estimation of loss it doesn't matter what you call it. 

However as you've only mentioned costs and not loss of profit is it fair to draw from the above to argue that retaining the £700 (or £x as a "deposit" where x is significantly above costs") could be viewed as a penalty under termination for convenience? 

I have asked many times how come Hotels and airlines will not give any refund on non refundable flights/rooms if they have managed to resell the item but SCS are different
No one seems to know the answer

the_lunatic_is_in_my_head

Jumblebumble said:

I have asked many times how come Hotels and airlines will not give any refund on non refundable flights/rooms if they have managed to resell the item but SCS are different
No one seems to know the answer

@Jumblebumble

I have answered this before

Regarding airlines you can read what the CAA has to say:

https://www.caa.co.uk/publication/download/17375

Page 28 "Contract term: refunds of unpaid taxes, fees and charges"

It discusses the matter in some detail concluding airlines should not profit twice and refund aspects of the ticket price they don't suffer, such as taxes. They do discuss mitigating losses by reselling tickets although feel it may not be practical to monitor. 

Small CMA blog on holidays:

https://competitionandmarkets.blog.gov.uk/2019/06/27/holiday-deposits-and-cancellation-fees-are-you-being-treated-fairly/

and BBC news article:

https://www.bbc.co.uk/news/business-47949915

but both highly watered down which is why the in-depth guidance is the most suitable source to look at.

The CRA "grey list" is subject to interpretation and ultimately such things require a test case for law to be established, very large companies will push the boundary of what is acceptable if it is profitable and a lack of enforcement in such areas can lead to practices becoming normalised. 

The courier thread on here

https://forums.moneysavingexpert.com/discussion/6442661/couriers-lost-parcels-and-unfair-terms

Is a perfect example of this. 

A_Geordie

the_lunatic_is_in_my_head said:

I understand we are talking termination for convenience but just to draw a parallel here with damages on this deposit point.

Sure, a consumer has a right at any time to raise the unfair contract term argument, but that kind of argument is typically a last resort when you have nothing else to turn to. Its certainly not guaranteed and I've seen less success claims happen more often than successful ones. Also, you'll note the CMA does accept that a deposit may not be unfair if it is based on a percentage of the price.

I'm not going to go into the pros/cons of whether this could be considered unfair because there's a number of various factors to take into account and we don't have enough information to go off from the OP. However, based on what has been said, I would not be convinced that the refusal to refund any part of the deposit as being unfair, especially if the deposit is something like 10% and I presume SCS would be asking for something like this. This would be further supported by the fact that the courts have already ruled that a deposit is a form of security against the contract from the buyer so if the buyer wants to pull out, it is a price to pay for not committing to paying the full contract value.

As for claiming something to be a penalty clause/term (which is distinct from a term that is unfair), we have now moved away from the principle of pre-genuine estimate of loss as a result of Parking Eye v Beavis. The current test for determining a penalty clause is now comprised of two stages: (1) was there a legitimate business interest in requiring a deposit that amount and (2) is the deposit extravagant and unconscionable in light of that legitimate interest. In other words, is it all out of proportion when compared against the legitimate interest.

For loss of profit, I'm pretty certain there's authority on that point that confirms loss of profit is not available for termination for convenience, unless it is explicitly stated in the contract or if there is a breach.