In King v Black Horse Limited and another (full judgement available here) the point at issue was whether the hirer under a hire purchase agreement was entitled to rely upon his rejection of a motor vehicle when he continued to use it after rejection. Notably, the Court drew no distinction between a hire purchase contract and contract for sale of goods in this context.
The hirer contended that if post-rejection use extinguishes the consumer’s ability to enforce his or her rights, a considerable burden is created. The consumer may require to bear the cost of storing the vehicle. The consumer may have a continuing need for a vehicle and may have to hire or replace the vehicle in the interim, with no guarantee the price paid for the rejected vehicle will be returned. Moreover, the consumer risks harming their credit rating if a direct debit for future instalments under the agreement is cancelled.
This may be contrasted with the position of the trader who, comparatively, risks little. If the consumer succeeds, the vehicle will be returned to the trader and an appropriate deduction from the price paid may be applied for fair usage.
The decision
Finding in favour of the trader, the Court held that:
- The common law rule is clear: use of goods after rejection is prohibited.
- If the rejection is disputed by the seller and is awaiting a decision of a court “the goods must be treated as if in neutral custody” (Electric Construction Co v Hurry & Young (1897) applied).
- The rule is not derived from the concept of personal bar. It is, rather, a bar on the exercise of the remedies which flow from a valid rejection.
- However, personal bar may continue to have a role in circumstances where the rejection of the goods is in dispute – here rejection was unequivocal.
- The consumer’s ‘dilemma’ (i.e. the factors which may bear on the consumer’s decision to continue to use the vehicle in this instance) was not a relevant consideration for the Court.
Commentary
The decision serves as a clear warning to consumers: use goods post-rejection at your peril. The consumer’s ‘dilemma’ remains. Litigating consumer contract disputes can be a costly and risky affair – arguably disproportionately so for consumers.
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Article published on 24 February 2023.
