Verbal advice trumping standing corporate policy: which contract prevails?
<p>Meet Alice. Alice entered a branch of a corporate retail chain and had a verbal dialogue with the cashier before making a purchase. She asks the cashier at the till what the return policy is, and is advised that with the receipt and in saleable condition she can get a full refund within 15 days. She asks the cashier one more time just to double check and then proceeds with making her purchase.</p>
<p>The next day she brings her item back in pristine identical condition together with the receipt and is told by the customer service desk that the cashier whom she spoke with had been mistaken and shows her a printed copy of the company's standing return policies which states that items must be defective for a return to be granted.</p>
<p>Alice is understandably a bit frustrated as she had even double checked with the cashier and everything to avoid any misunderstanding. Let us suppose just for evidentiary simplicity's sake, that Alice had even recorded the dialogue, or had subject access requested the audio-bearing CCTV footage to demonstrate her point.</p>
<p>Yet it would seem that the online and printed policy notwithstanding, she had actually entered into a verbal contract with the cashier as an official representative of the company.</p>
<p>Which &quot;contract&quot; would legally prevail, and why?</p>
<p>England and Wales specified, all jurisdictions welcome.</p>

<p>This hypothetical case will be highly fact-specific and ultimately, only really answerable by the decision of a court as it will depend on the persuasiveness of arguments advanced by both sides. However, an attempt to address the question in terms of existing, known statutory and case law has been made.</p>
<h2>The default position of in-person non-defective returns in law</h2>
<p>The default position in law for the return of non-defective purchases made in person is that the retailer is not obliged to accept the return. The retailer is only required to accept the return if:</p>
<ol>
<li>It was made online or the customer did not have a chance to inspect the item before purchasing it. The customer has up to 14 days to return the item for any or no reason under <a href="https://www.legislation.gov.uk/uksi/2013/3134/part/3" rel="nofollow noreferrer">Part 3 of the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013</a></li>
<li>The customer has the right to return the item according to <a href="https://www.legislation.gov.uk/ukpga/2015/15/section/20/enacted" rel="nofollow noreferrer">Section 20 of the Consumer Rights Act 2015</a></li>
</ol>
<p>The retailer may choose to have a more generous, extensive returns policy but that is not required by law.</p>
<h3>Does Alice have a statutory right to return the item?</h3>
<p>No. She did not purchase it online and she was able to inspect it as she made the purchase in-store. The item appears to conform to the contract in terms of quality, being as described, non-defective, etc. Therefore Part 3 of the Regulations does not apply and she does not seem to have the right to return under Section 20 of the Act.</p>
<h2>What was the contract?</h2>
<p>The contract appears to be the following:</p>
<ol>
<li>The price set out as part of the invitation to treat</li>
<li>All of the implied terms as required by the Consumer Rights Act 2015 (such as the item to be of sufficient quality, fit for purpose, and so on)</li>
</ol>
<h3>Does the verbal dialogue amount to a term or representation?</h3>
<p>The verbal dialogue is unlikely to amount to a term. This is because a term is a promise as to the truth of a statement. When considering whether the verbal dialogue amounts to a term, the Court will consider the following non-exhaustive factors:</p>
<ol>
<li>Whether the term was in writing</li>
<li>Is there any specialist skill or knowledge from one party?</li>
<li>Is there reliance or importance placed on the statement?</li>
<li>How long was the lapse of time between the statement and the contract being made?</li>
<li>Could the party relying on the statement have verified it?</li>
</ol>
<p>Taking each factor in turn:</p>
<ol>
<li><p>The term was not in writing. It was an oral exchange. The Court will examine the conduct of the parties from start to end of the contract formation. The parol evidence rule (the rule that excludes other documents and oral agreements, instead preferring to focus solely on the written agreement)  can be circumvented on this basis per <em>J. Evans &amp; Son (Portsmouth) Ltd v Andrea Merzario</em> [1976] 1 WLR 1078.</p>
</li>
<li><p>There may be some specialist knowledge involved. Alice could argue that the cashier would be expected to be familiar with the store's return policy whereas Alice wouldn't. The store could try and rely on <em>Oscar Whell Ltd v Williams</em> [1957] 1 WLR 370 which held that the seller had no specialist knowledge and so the statement did not form a contractual term. In contrast, Alice could try and rely on <em>Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd</em> [1965] 1 WLR 623 which held that the position one party (being a car dealer) was in conveyed specialist knowledge that the other party lacked. On the basis that the returns policy was available at the customer service desk and readable by anyone without any specialist knowledge or training, it seems likely that the Court would hold that no specialist knowledge was possessed.</p>
</li>
<li><p>There may be some reliance or importance placed on the statement. This is a two-part test: is the statement so important that Alice would not have entered the contract if the statement had never been made, and separately, is the importance of the statement clear to the cashier at the time the statement was made, either expressly or by conduct? Part 1 will be up for Alice to demonstrate, while part 2 will probably be &quot;no&quot; because the cashier is not taking personal responsibility for the statement, arguably simply relaying (mistakenly) what they believed the policy was (per <em>Pritchard v Cook &amp; Red Ltd</em> unreported, 4 June 1998).</p>
</li>
<li><p>There would only have been a few seconds or minutes between the cashier making the statement and the conclusion of the contract. While the presumption is that the greater the time between the statement and the conclusion of the contract, the less likely it is held to be a term, per <em>Inntrepreneur Pub Co v East Crown Ltd</em> [2000] 2 Lloyd’s Rep 611, it is not clear on the facts that the statement necessarily became a term.</p>
</li>
<li><p>It is arguable that Alice could have verified the statement by checking the returns policy herself or double-checking with another member of staff or the customer service desk.</p>
</li>
</ol>
<p>On consideration of the factors above, it is unlikely that the statement would form a term of the contract. It is possible that the Court would hold the statement is a representation, but it is fact-specific.</p>
<h3>What is the effect of the statement being a representation?</h3>
<p>The statement does not form a contractual term, so it is not possible for Alice to bring a claim for breach of contract. It may be possible for Alice to claim for misrepresentation.</p>
<p>She might be able to claim for:</p>
<ol>
<li>Negligent misstatement or</li>
<li>Negligent misrepresentation contrary to <a href="https://www.legislation.gov.uk/ukpga/1967/7/section/2" rel="nofollow noreferrer">S2(1) of the Misrepresentation Act 1967</a></li>
<li>Fraudulent misrepresentation</li>
</ol>
<h4>Negligent misstatement</h4>
<p>This claim would require the existence of a &quot;special relationship&quot; between the cashier and Alice, per <em>Hedley Byrne &amp; Co Ltd v Heller &amp; Partners Ltd</em> [1964] AC 465. In this case, it is unlikely Alice will be able to establish the existence of a &quot;special relationship&quot; as she is transacting with a general cashier rather than, e.g. a specialist expert. Since there is no &quot;special relationship&quot;, this claim would fail.</p>
<h4>Negligent misrepresentation</h4>
<p>This claim would be likely to succeed, provided Alice can demonstrate some form of loss (e.g. the loss of the right to return the item), unless the cashier can prove on the balance of probabilities that they had reasonable grounds to believe, and did believe (up until the contract was made) that the facts represented were true.</p>
<h4>Fraudulent misrepresentation</h4>
<p>This would require clear evidence of fraud per <em>Smith New Court Ltd v Scrimgeour Vickers (Asset Management) Ltd</em> [1996] UKHL 3. There is no evidence of fraud on the facts, so this claim is unlikely to succeed.</p>
<h3>Likelihood of success and available remedies</h3>
<p>It is likely that Alice would prevail by making the case that the statement was a misrepresentation contrary to S2(1) of the Misrepresentation Act 1967.</p>
<p>If the item was worth more than £100 and less than £30,000 and she paid for it on a credit card, the most expedient way would be to do a Section 75 (Consumer Credit Act 1975) chargeback against the credit card provider.</p>
<p>Alternatively, if she proceeded with her S2(1) Misrepresentation Act 1967 claim,  she is likely to get damages rather than recission under S2(2) of the Act, which would operate to put her back into the position she was in prior to buying the item. In other words, she would get a full refund.</p>
<p>Whether it is <em>worth</em> her pursuing all this is another matter entirely. Upon reflection around actual/apparent authority, I have decided that is an interesting tangent but the answer can be best tackled by reference to existing contract law (and the question of actual/apparent authority is likely to be answered in the negative).</p>

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