Buying a phone with a “free” tablet
In December 2013, Mark purchased an android phone from a door to door sales company, Sales to Me. Mark said Sales to Me told him that he would receive a 10 inch, 16 gigabyte Samsung tablet (“the Samsung tablet”) as a free gift with the android phone.
Mark said he was told by Sales to Me on the day he purchased the goods that he would receive them after he had made 10 payments. However, by 17 February 2014 he had made 11 payments and had not received the goods. Mark was also told he would not receive a Samsung tablet, but would receive another type of tablet which was smaller in physical size and storage size. Mark said the only reason he signed the contract with Sales to Me was to receive the Samsung tablet as a free gift.
Mark then tried to cancel the contract with Sales to Me. He was told he would incur a cancellation fee of $150-$250. Instead of cancelling, Sales to Me said it would look to ‘do a deal’ with Mark where he would receive 2 free gifts instead of 1.
By April 2014 Sales to Me had not confirmed the ‘deal’. Mark then cancelled the contract and was told he would receive a refund of $350, and that the cancellation fee was $265. Mark said Sales to Me was going to provide a breakdown of the cancellation fee.
Mark complained to FSCL that the cancellation fee was too high. He also said that Sales to Me could not charge the cancellation fee because it had delayed delivery and he was ‘tricked’ into signing the contract because the tablet’s physical size and storage size were misrepresented to him.
Review of the contract
The information provided by Sales to Me simply stated that delivery would be after Mark had made 10 payments to Sales to Me. Mark made his 10th payment in February 2014, but by April 2014, had not received the goods. Sales to Me’s contract had a clause which said that any time stated for delivery is an estimate only and that it would not be liable for any delay in delivery. The clause also said that a customer was not entitled to cancel the agreement as a result of a delay.
On 28 March 2014 Sales to Me told Mark that it could deliver the goods, but Mark said he did not want the goods unless he was going to receive the Samsung tablet. Mark cancelled the contract on 10 April 2014 and was told the cancellation fee would be $265.
We tried to negotiate a settlement between Sales to Me and Mark, whereby Mark would receive the 2 free gifts as previously offered. Mark did not accept this; he wanted to end his relationship completely with Sales to Me.
Sales to Me had also not paid Mark the amount of the refund which was not in dispute ($350). Sales to Me said it had not paid this amount because of our ongoing investigation. We asked Sales to Me to make this payment to Mark immediately, as the complaint had no bearing on whether that amount should be paid to Mark. However, Sales to Me did not respond to our further correspondence and we had to issue a formal Recommendation on the complaint.
In our view, Mark put Sales to Me on notice that the time of delivery was of the essence when he spoke with Sales to Me on 28 March and 3 April 2014. When the goods were not then supplied, we were of the view that Sales to Me had breached the contract and Mark was able to cancel the contract without incurring a cancellation fee, under section 12 of the Sale of Goods Act 1908. Although the clause in Sales to Me’s contract said delivery times were an estimate only, because Mark had made time of delivery an essential part of the contract on 28 March and 3 April, and the goods were not delivered in a reasonable period after this, he was permitted to cancel the contract and not incur a cancellation fee.
However, we also found that a major reason for the delay in the delivery of the goods was the dispute over the type of tablet Mark would receive as a free gift. Therefore Mark had contributed to the delay.
We looked at what was a fair and reasonable outcome in the circumstances of the complaint. We thought it was reasonable for Sales to Me to only charge half the amount of the cancellation fee and refund the amount not in dispute ($350). This was a total refund of about $480. Both parties accepted and the complaint was resolved.