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Handset subsidy (free or very cheap) and Sale of Goods Act

Anonymous
Not applicable
I saw this question crop up in another thread (in another forum), and I thought it merits deeper discussion.

When we sign up to a new contract with a mobile network in a shop (i.e. NOT online or by phone) and they provide a handset for free or at very low cost, what is the legal situation regarding returns, exchanges and refunds?

I've read an argument that went something like this:
In the case of free subsidised handsets, the phone is actually not sold to the customer but provided as a 'gift' for signing up to the minimum-term contract, so the Sale of Goods Act doesn't apply - as a consequence, the customer's rights as to returns and exchanges if the handset is found to be faulty are severely limited or abolished.

Does the above hold any truth to it? Or was it just someone really misinformed or working for a network and wanting to strengthen their position with misleading information?
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Anonymous
Not applicable
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Interesting point. I'm sure some proper lawyers will contribute. In the meantime, some Contract Law concepts spring to mind.

In order for a contract to be deemed to exist, certain qualifications need to be met.

The parties involved must be "qualified" to enter into contracts. i.e. must be 18, or, in the case of a business, must be nominated as allowed by the company to enter into contracts on their behalf, otherwise they will be acting "ultra vires" (beyond their powers). And so on ...

A contract must involve "consideration". "Consideration" means something of value, usually money. In other words, one party is not doing something for the other party for nothing.

Which brings us to e.g. Carphone Warehouse. When they offer you a deal including a handset and airtime, what are they actually doing? Well, if you think of what actually happens, you receive your Airtime Contract from, and pay your Direct Debit to O2 (say). You get "The small print". So CPW is acting as agent for O2 in the sale of the Airtime Contract. The contract is with O2.

Talking about the (6 page) "Small Print", Terms & Conditions supplied by O2, you will see that the second half relates to handsets PROVIDED BY O2. This part of the Terms does not apply to handsets "sold" to you by a third party. For the Terms & Conditions relating to these handsets, you should see the Terms provided to you by e.g. CPW.

How e.g. CPW choose to subsidise the selling price of their handsets is up to them.

However, I don't know of any 3rd party who will give you a free handset on its own. They only supply the handset as PART of a "deal". So they are "selling" you a package, of which the handset is only a part. You agree to "Pay" for a package, not a handset only. HOW the payment for the package is made is another matter, e.g. by monthly payment only, or nothing for 6 months then a lump sum, or by initial payment followed by monthly payments. This is no different from e.g. buying a 3 piece suite from DFS. So going back to my definition of "consideration", there is definitely "consideration" involved, in return for the supply of "the package".

So the 3rd party is in a contract for the "package", not just the handset, and they make this very clear in their paperwork.

Thus they cannot say that the handset is a "gift". They require you to pay money, and in return they will ensure you receive the package, of which the handset is part.

So they are bound by the provisions of the Sale of Goods Act.

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Anonymous
Not applicable
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Oh, I just noticed, I missed something, concerning "consideration", which contract lawyers love.

"Adequacy" and "Sufficiency".

For a proper discussion of these terms, please do a Google search.

Basically, these 2 terms involve definitions of "enough", and relate to the "amount" of the "consideration".

So there must be "consideration" (payment of some kind) for a contract to be deemed to exist. But does it matter how much "consideration" there is? Does the amount of the "consideration" have to be "enough"?

The answer is yes (sort of). The "amount" of the "consideration" has to have enough value for a contract to exist (i.e. it has to have "worth"), but it does not have to be enough for the party receiving the "consideration" not to make a loss when they perform the service, or supply the product.

This gets to the heart of what a contract is, and is not.

It is an agreement where both parties agree to make a "bargain". It is not there to protect either party from making a "bad bargain".

It merely formailses the agreement between the parties concerned.

Clear?

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jonsie
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Clear?


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Anonymous
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lol

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perksie
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Yawn......sorry I fell asleep in the middle. grin grin

Very apt username too.

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Anonymous
Not applicable
Hehe, this does bring 'Law & Order' to mind, but it's very elaborate and thank you very much for this going into detail.

It's always useful to know the law in any dealings you have in your life, as such knowledge will usually make you aware of rights, opportunities or possibilities you never knew you had. It will also reveal dodgy application of the law by companies whom you may have grievances with, as well as arm you with an arson of defence in case such companies throw invalid legal arguments your way in the hope you will not be familiar with the concepts and give up wink
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Anonymous
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I couldn't agree more DonDino 2 3/4.



People selling you stuff usually haven't a clue about Sale of Goods etc, they are trained to sell boxes.

I used to be a Civil Engineer, and I loved it as a career. I had to study Contract Law as part of my qualification (but I have to admit, it WAS 1978, so my knowledge is old, like me).

This was not long after the other great Act of Parliament was brought in, in 1974, the Health And Safety At Work Act.

I mention this because this ticks me off even more than the garbage interpretations of the Sale of Goods Act. Whenever anyone is too stupid / lazy / malicious to do something they don't want to do, or don't want you to do, they say "Oh, you can't do that - Health and Safety". Rubbish! In my line we were trained in "Quantified Risk Assessment". This involves properly working out the statistical probability of something happening, and forecasting the severity of the consequences, if it does happen.

Without this kind of training, when anyone says you can't do something on the grounds of "Health and Safety", they don't know what they're talking about. Ask to see their risk assements of the hazards.



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Anonymous
Not applicable
I had a previous post removed... but to summarise it in a (hopefully) more compliant way. I've threatened action under Sale of Goods Act to O2 and was provided with a new phone. So this would concur with the points above.
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