FOOL'S EYE VIEW
Can't Get No Satisfaction

By Jane Mack (TMFJane)
May 20, 2002

Funnily enough, here at the Motley Fool, we generally believe that extended warranties on electrical goods and appliances aren't worth the moolah for the so-called "peace of mind" they're supposed to cater for. They can cost as much as a third of the purchase price of the appliance and are usually quite unnecessary. Your goods are most likely to go wrong in the first year when you're usually covered by the manufacturer's guarantee or else long after your extended warranty has run out. (In fact, the engineer who came to fix my lovely new range cooker three weeks after it was delivered confirmed this from his own experience of call-outs.)

Never lose sight of the fact that the insurance company behind any extended warranty scheme has worked out exactly what the actuarial risk is and, trust me, it'll certainly be in their favour and not yours! The best option is to self-insure by paying the required premiums into your own savings account so that you can afford to pay for any repairs and replacement items if and when the need occasionally arises.

You may have some protection under the Sale of Goods Act anyway. It's worth examining this in more detail using the example of one of our Fools, Dunx0, who posted on our message boards about exactly the sort of problem the SOG Act was designed to cover. His fridge-freezer went wrong shortly after the manufacturer's 12-month guarantee ran out and, as repairing it could prove rather expensive, he wanted to know what his rights are.

Section 14 of the 1979 Sale of Goods Act (as amended in 1994) states that goods supplied by a retailer must be of "satisfactory quality". It further states that goods are only of satisfactory quality 'if they meet the standard that a reasonable person would regard as satisfactory, taking account of the description of the goods, the price (if relevant) and all the other relevant circumstances'. The legal test of what is "satisfactory" is, therefore, down to a customer's reasonable expectations when buying the product.

The Act also includes a list of factors to be considered regarding the meaning of "quality" and these are:

a) fitness for all the purposes for which goods of that kind are commonly supplied;
b) appearance and finish;
c) freedom from minor defects;
d) safety; and
e) durability.

It's the durability question that could prove troublesome. How long would the imaginary "reasonable person" expect a brand new fridge-freezer to last? And who's liable - the retailer or the manufacturer?

Well, the answer to the second question is enshrined in the SOG Act. It's the retailer who's responsible (although a survey published last year in Which? magazine by the Consumer's Association revealed that a staggering 80% of the major UK chains they sent undercover shoppers to thought it wasn't their problem once the warranty had expired!). And I'm sure that we Fools (being the "reasonable" type of people that we are), can agree that an appliance such as a fridge-freezer should certainly last longer than 13 months or so - unless it's been seriously abused in some way, of course!

Unfortunately, there's no definition in law of how long a particular product should last - it's up to the buyer to persuade a court as to what a "reasonable person" would think is acceptable. And don't forget that price comes into it too. As Which? magazine pointed out, a £600 television might be expected to work for longer than 18 months, but would a £20 kettle?

So what should you do in such circumstances? Well, you can arm yourself with a number of weapons when approaching your retailer. The first is a copy of the relevant section of the Sale of Goods Act in case they try to foist responsibility on to the manufacturer. The second would be some sort of proof that it's reasonable to think it should have lasted longer than a year or two. You could do this by contacting the manufacturer and asking how long they think their product should last (get it in writing). You could also ask the electrical retailer's trade body, Retra, as they should have some idea too and it wouldn't hurt to get hold of the latest Appliance Reliability survey published annually by Which? either.

If the retailer accepts responsibility, you won't have an automatic right to a refund of your money under the law but they should certainly offer to repair it for free. They might even offer a replacement or a credit note.

However, if the retailer still refuses to accept liability in the face of such evidence, then contact Trading Standards via your local council - and prepare to sue in the Small Claims Court for compensation. This isn't as hard as it sounds and you can do it yourself quite easily and cheaply. Besides, it's quite probable the retailer will cough up once they realise you're serious. Check out this site for more information.

There is a more detailed review of how to make the Sale of Goods Act work for you here and, of course, you can discuss your rights on the Legal Issues board.

This article was originally published in June 2001.