The C Word

In our world, the C word has 12 letters: disgruntled customers use it a lot, but it has no place in a claim for a breach of contract. So if you have a customer who has been let down and is hinting at – or shouting about – compensation, this article will give you a better understanding of the customer’s rights and your own. The law offers you protection as well as your customer, so a good understanding can help to avoid unnecessary and often unpleasant confrontation.

Compensation is one of two terms that often get confused. It means a sum of money awarded to compensate for something which actually cannot be quantified. This usually means a payment awarded in an injury or libel claim. If you and I both break a leg due to someone’s negligence, the financial value of our suffering cannot be quantified. As I’m a wuss, I may suffer far more than you, but no-one can evaluate how much more that should entitle me to. In the same way, how do you quantify the damage that results from libel or defamation? Sometimes the figures awarded are vast and seem to bear no resemblance to reality. This may be one of the reasons customers think they are entitled to compensation, sometimes for the slightest inconveniences. Sadly, this confusion is not helped when some of the advisory websites don’t clarify the terms accurately, so, for example, the CAB website which suggests compensation is payable ‘if an item or product causes damage’.

What a customer is entitled to claim, if we are in breach of a contract of sale, is the reimbursement of any ’damages’. These are costs that the customer has to pay out directly because of the breach of contract and which a reasonable observer witnessing the contract being made would expect to be caused if that contract is breached. Let’s look at some examples.

Mr A places an order in good time for Christmas. Unfortunately the manufacturer’s order book had just filled up so delivery would not be till mid-January. It may be inconvenient for Mr A who wanted to have the suite in time for his Christmas celebrations, but the contract will still be fulfilled in reasonable time and Mr A will not suffer any financial loss, so there is no claim.

Mrs B’s furniture is delivered but unfortunately during the delivery her front door gets deeply scratched and she has to have it repaired. This is a definite loss for which you would be responsible, whether or not you could claim this from your insurance. If the door is not repaired it is likely to deteriorate because moisture will get into the scratch, so here damages would be payable and the only discussion might be about the price of the work and who carries it out. Mrs B may believe she is entitled to compensation for the extra time she has to take off to be at home when the decorator is doing the job, but this is very unlikely. Note also that public liability insurance covers accidents and it does not cover incompetence, so if the damage arises because you or one of your team doesn’t do their job properly, insurers may well refer the claim back to you.

The most common misunderstandings about compensation come from missed appointments or the time and inconvenience caused to a customer in order to get an issue resolved.

A court would generally consider that the time spent writing emails or letters, taking phone calls, and other ‘work’ to progress a complaint is just a necessary fact of life. I have seen many claims for reimbursement for such time dismissed without a second thought by a judge on the basis that the customer is not entitled to a trouble-free life and everyone has to suffer minor inconveniences as a matter of routine. It would be crazy to think that the law would support a customer who claimed for time spent waiting in a queue, but that would potentially be the absurd outcome if such claims were accepted.

When a person has to attend court to bring their claim, they can claim travel expenses (which are capped) but not loss of earnings, so at least the courts are consistent with this.

When it comes to days off work, the general view is that even when you’re waiting for a delivery or tradesperson, you are able to use the time, so it is not lost and therefore does not give rise to a claim for damages.

From a commercial point of view, our customer relationships are a most important asset to our business and we should make sure we are doing all we can to keep our customers so that we avoid any need to take a hard line. We may be on the right side of the law, but it’s very easy to pay a high price when we lose a customer.

Richard Renouf is an experienced customer service and flooring consultant and expert witness. He can be contacted via The Stocklists’ editor – lauren.mccarthy@kick-startpublishing.co.uk – and your questions may even find their way into future articles to help others dealing with similar situations. Please note that this article is not intended to be, or to be a substitute for, legal advice.