Name: Lin Zhenguan ID: 99200724 Date: 21/06/2013 Course: Marketing Tutor: Esther Chesterman Word count: 1492 words
Content
Trade Descriptions Act………………………………………………………………………..2
Introduction…………………………………………………………………………………………..2
Main points of the Trade Descriptions Act…………………………………………2
How Trade Descriptions Act is relevant to Holies Crisps…………………….3
How Holies crisps ensure compliance…………………………………………….....4
Breach of the Trade Descriptions Act…………………………………………………4 …show more content…
Consumer Credit Acts………………………………………………………………………….5
Introduction…………………………………………………………………………….…………5
Explanation of the Consumer Credit Acts……………………………..……………6
Protection the Consumer Credit Acts offers……………………………………….7
How a company can comply with the Acts…………………………………………8
The effect of Breach………………………………………………………………….…….…8
Bibliography………………………………………………………………………………..……10
Trade Descriptions Act 1968
Introduction
This report is divided into two parts; the first discusses the Trade Descriptions Act. Critically assessing the effect of the Trade Descriptions Act 1968 on a given business-Holies crisps Ltd and advising on compliance. The second part discusses the Consumer Credit Act.
“The Trade Descriptions Act, which came into effect on November 30th 1968, is involved with the description of goods and it is also concerned with the prices and services offered with particular goods. The legislation is a prominent part of the Department of Trade and Industry.” (Lecture Notes)
Main point of the Trade Descriptions Act
Three main points are the most important element of the Trade Descriptions Act. Primarily, products must be sold as described. It means what it says on the label must be true. For instance, Evian water stems from the Alps is labeled on each bottle. If it is not true, it means that it is in breach of the act. Secondly, products must be of satisfactory quality. Taking Starbucks as an example, it says that all the coffee beans are top quality, it needs to achieve this. A product must do what it says it can do, which is the last main point of the Act that products must be fit for purpose. Particularly, a phone company launches a new mobile with GPS system, it must have this function. As everything is developing, technology and manufacturing processes, which leads to the Act has been amended.
How Trade Descriptions Act is relevant to Holies Crisps
The Trade Descriptions Act
Holies Crisps
Products must be sold as described
“Holies Crisps is exposed hidden salt, fat and sugar in common snack foods.”(Camrevle)
Products must be of satisfactory quality
“It produces a range of top quality ‘hand-fried’ gourmet crisps.”(Camrevle)
Products must be fit for purpose
Holies Crisps produces health snack foods with less oil.
As can be seen in the table, there are three areas of the Act which are most relevant to Holies Crisps. According to the Act, it is the responsibility of Holies Crisps to tell the consumers that how the crisps are produced. The company must manufacture top quality crisps by hand-fried as it needs to be in compliance with the Act that products must be of satisfactory quality. Lastly, products must be fit for purpose is relevant to the company because it says they produce snack foods with less oil. In a word, it is crucial for company to comply with the Trade Descriptions Act.
How Holies crisps to ensure compliance
It is the obligation of the owner of Holies crisps to undertake all the responsibilities if the company breaches any legislation. Hence, the chairman ought to ensure all staff are aware of the Trade Descriptions Act. Before the staff enter the company, they should have a sufficient induction to know how they work. In the factories, line managers or team leaders must be trained and conscientious as they are responsible for regulating and monitoring the staff. Additionally, the company can spend some money training the staff, which not only can make them be conscious of the Act, but also enhance their ability. Particularly, according to Holies crisps` description that all the products are hand fried, thus, it needs to make sure that manufacturing meets the requirements of the description and scrutinize its suppliers compliance with the Act that it provides top quality of materials. “Trading Standards Office are involved in preventing, detecting and prosecuting offences, like scrutinizing weighing machines and food labels.”(Prospects) It is necessary for trading standards officers to prove the person whether knowingly or recklessly make a false statement. In a word, Holies crisps must check every single manufactured process to ensure compliance with the Trade Descriptions Act.
Breached the Trade Descriptions Act
If Holies Crisps breached the Act, consumers would complain to the local trading standards office. Originally, local trading standards officer investigates and gathers evidence, and then it is sent to the Crown Prosecution Service. Afterwards, the offence would be heard in the Magistrates Court. It can be divided into two situations. Firstly, manufacturer- Holies Crisps was guilty but not serious; the court can give the maximum penalty 5000 pounds per offence. However, if it was serious or Holies Crisps did not plead guilty, the case would be sent to Crown Court. In United Kingdom, there are diverse tribunals with different levels which have different judges. For instance, in Crown Court, the judge can give deterrent sentence, such as unlimited fine and custodial sentence that is up to 2 years in prison, even suspend a trade`s license that is issued by local council or government. If the case of Holies Crisps cannot be tackled in Crown Court, it would be sent to higher court until being addressed.
Consumer Credit Acts 1974
Introduction
“The Consumer Credit Act 1974 was gradually implemented over 11 years to redress inequality of bargaining between consumer debtors and business creditors.” (Consumer and commercial law textbook)
Explain the Consumer Credit Acts
Hire purchase
Hire goods for a fixed period of time by paying regular instalment of money.
Conditional Sale
Paying by instalments but must purchase in full at the end.
Credit Sale
Ownership passes immediately when payment instalments begin.
Loans
A creditor lends money to a debtor so they can buy goods.
They pay back the loan with interest.
Credit cards
A credit limit is given and the terms of charge and interest are agreed.
Trade Credit
Trader defers payment for goods or services. Not covered by the Consumer Credit Acts 1974.
Consumer Credit Acts 1974 consist of several types of Credit Transactions, including hire purchase, conditional sale and so on. In terms of agreements, one is “Credit Agreement that is an agreement where the creditor providers the debtors with credit. Exempt agreement, which contains mortgages and fixed sum agreements, is another agreement but not covered by the Consumer Credit Acts.”(Consumer and Commercial law textbook p146) Achieving requirements from Credit Regulations 2004 prevents to commit criminal offences. Several credit business activities will require a credit license and it is regulated by the office of Fair Trading. It is crucial to create a legal consumer credit agreement. According to the case of Dimond V Lovell, “they had a car accident. However, Lovell`s insurer refused to pay the hire charge when Dimond hired a new car because of the unenforceable agreement.” (Consumer and Commercial Law textbook …show more content…
p146)
Protection the Consumer Credit Acts offers
Cancelling a regulated agreement, termination and default are protected under the Consumer Credit Acts. To be more specific, consumers have the right to cancel a credit agreement. When the debtor created this consumer credit agreement, it must allow consumers to withdrawal. It protects consumers who signed an agreement by a debtor away from the trade premises, such as door-to-door salesmen. It must be terminated as it is illegal and it is a criminal offence under the Act.
Additionally, “the Act provides protection for the consumer in cases of breach of contract or misrepresentation where goods or services have been bought on credit. For example if the goods are faulty the consumer can claim against either the supplier or the provider of the finance or both.”(Consumercouncil N.D.) What is more, either debtors or creditor can terminate an agreement. If debtors give written notice and pay full cost, it can settle the agreement early. Creditors have the right settle early when the debtor is at fault. For instance, the case of Shine v General Guarantee corporation, S obtained a car under hire purchased, but the car had been totally submerged in water for 2 days, so he stopped paying the instalments and sought to rescind the contract. Importantly, a credit license is regulated by the Office of Fair Trading.
How a company can comply with the Acts
It is essential for an individual and a business to comply with Consumer Credit Act.
Basically, requiring a credit license from the Office of Fair Trading, “which means when a company lends money, provides goods or services on credit to consumers; it must be licensed by the Office of Fair Trading under the Consumer Credit Act 1974. Hence, it has an authority to suspend license or revoke.”(Office of Fair Trading) A typical case –Hare v. Schurek uses to convince. “The claimant was a car dealer who not always provides credit to his buyers and decided to supply a car to his friends. The question is whether the dealer needed a license. Finally, since the agreement is not made on the basis of business and is non-commercial, therefore, no credit license was required.” (Consumer and Commercial Law textbook p150) Secondly, creating a clear and legible advert with using plain language is necessary. Besides, advertising goods for credit cannot restrict consumers` options. Lastly, creating a consumer credit agreement must achieve the requirements, for instance, containing key financial information. Importantly, it is illegal to promote to minors credit agreements and canvas agreements of
premises.
The effect of Breach
There are two effects of termination and default. One is termination by the creditors, which usually only allowed to terminate when the debtor is at fault. If the debtor does make some mistakes, such as default on payments, the creditor will need to provide evidence. Particularly, “the creditor must send written notice to the debtor, explain the breach and tell them what they require to put it right. Besides, the creditor can state any fair compensation required but give at least 7days notice to comply.”(Lecture Notes) It is legal for creditors to take actions for arrears or damages, for instance, under section 93 which enables creditors get extra rate of interest in controlled. If it ended HP and CS agreement, the creditor can repossess goods. However, under section 90, they are not permitted to take anything that debtors make their living from. On the other hand, early settlement ended by the debtor. The debtor must give the notice and pay full cost to the creditor. Additionally, it is possible to compensate for any loss. In a word, it is legal to terminate the agreement and it has approaches to remedy damages or arrears.
Bibliography:
Lecture Notes “The Trade Descriptions Act”, N.D. Available at: http://www.camrevle.com/pluginfile.php/270708/mod_resource/content/1/Trade_Description_act.pptx?forcedownload=1 Accessed on: 10/04/2013
Lecture Notes “The Consumer Credit Acts”, N.D. Available at: http://www.camrevle.com/pluginfile.php/275149/mod_resource/content/1/The%20Consumer%20Credit%20Act.pptx?forcedownload=1 Accessed on: 09/05/2013
Camrevle “Case Study”, N.D. Available at: http://www.camrevle.com/pluginfile.php/271144/mod_resource/content/1/AB_marketing-Introduction_to_consumer_law_2.doc?forcedownload=1
Accessed on: 20/04/2013
Office of Fair Trading “Consumer Credit Acts” N.D. Available at: http://www.oft.gov.uk/about-the-oft/legal-powers/legal/cca/#.UYop16Vyj8c Accessed on: 08/05/2013
Prospects “Trading standard officer job description” N.D. Available at: http://www.prospects.ac.uk/trading_standards_officer_job_description.htm Accessed on: 08/05/2013
Consumer and Commercial Law textbook P146-150 Available at: http://www.camrevle.com/pluginfile.php/275152/mod_resource/content/1/20130425123930176.pdf?forcedownload=1 Accessed on: 08/05/2013
Consumer Council “Consumer Credit Act Factsheet” N.D. Available at: http://www.consumercouncil.org.uk/filestore/documents/home_economics_a_level_and_gcse/a_level_financial_management/Consumer_Credit_Act_Factsheet.pdf Accessed on: 10/06/2013