Caveat Emptor?

Case Facts

In 1998 Mr Durkin bought a laptop from DSG Retail Ltd, trading as PC World. The laptop was in a sealed box and he could not establish if it had an internal modem. He proceeded to purchase it, however, on the understanding that he could return it if it did not have such a modem. He paid £50 as a deposit and signed a credit agreement offered by HFC Bank plc for the remaining balance of the laptop, being £1,449.

Surprise surprise...the laptop did not have the modem. Mr Durkin tried to return the laptop, but PC World refused to accept it. Worse still, they refused to refund him his deposit or cancel his credit agreement. Understandably, Mr Durkin was not amused. He rejected the laptop, leaving it in the store and did not make payments in terms of his credit agreement. Later, he successfully raised a Small Claims Action for recovery of his deposit.

All's well that ends well, you might think...well, not so. Because Mr Durkin failed to make payments, HFC placed him on a credit blacklist. As a result, Mr Durkin could no longer open new credit accounts, enjoy zero rated interest rates and most importantly, could not purchase a house in Spain...

Once again, Mr Durkin was not amused. He complained repeatedly to HFC, advising he had rejected the laptop and that he was not going to honour his credit agreement. HFC did not budge and so Mr Durkin raised an action against both PC World and HFC for declarator that he was entitled to cancel the contract with PC World which, in turn, cancelled the credit agreement with HFC. He also sought damages in the sum of £250,000 from HFC for the misrepresentations they had made as to his credit rating.

Sheriff Court

The Sheriff decided that it was an express term of the contract that the laptop had an inbuilt modem and its absence placed PC World in breach of contract, entitling Mr Durkin to cancel. He also ruled that the contract between Mr Durkin and HFC was a debtor-creditor-supplier agreement in terms of s.12 of the Consumer Credit Act 1974. As such, given the material breach, the Sheriff decided that Mr Durkin was also entitled to cancel his contract with HFC in terms of s.75(1) of the Act. Furthermore, given HFC's actions in negligently placing Mr Durkin on a credit blacklist without first ascertaining the correct facts, the Court awarded damages of £116,674.

Court of Session Appeal

This time, PC World and HFC were not amused. The decision was appealed by Mr Durkin and cross-appealed by both defenders...