OBLIGATION OF MANUFACTURERS/VENDORS OF GOODS AND SERVICES IN A COMMERCIAL TRANSACTION
In every commercial transaction, obligations, rights, and remedies are imposed on Vendors and Buyers. Such obligations, rights, and remedies could be expressly written or implied by the laws governing its operation.
In our previous article, we have exhaustively highlighted and discussed the rights of consumers and available remedies in commercial transactions. You can click here to read about it.
This article seeks to analyze and discuss the obligations of vendors in commercial transactions. For ease of reference, we will discuss these obligations under the following headings;
- Laws guiding vendors’ obligations
- Obligations of vendors as enshrined in the Federal Competition and Consumer Protection Act
- Obligations of vendors as enshrined in the Sale of Goods Act
Vendor: A vendor is a person, organization (usually with a business name), or some other legal entity that makes goods or sells its services to a consumer or other business owners[i].
Buyer: the person who accepts a quotation from the Seller for the sale of the Goods or whose order for the Goods is accepted by the Seller.[ii]
N.B: In this article, the words “vendor,” “manufacturer,” “importer,” “distributor,” and “supplier” will be used interchangeably.
Laws guiding vendors’ obligation
- The Federal Competition and Consumer Protection Act (FCCPA) 2018 Cap P41 LFN 2004
- Sale of Goods Act (SOGA) 1983
Obligations of Vendors as enshrined in the FCCPA
Section 134 of the Act places a duty on the manufacturer, importer, or distributor of goods to label goods properly and in a manner that will be easily traceable[iii].
The Act inter alia imposes a duty on the manufacturer or distributor to withdraw hazardous goods from the market upon becoming aware of any unforeseen hazard arising from the use of the goods which have already been placed in the market.[iv]
A vendor who violates the provision of this section is liable on conviction to imprisonment for a term not exceeding three years or to a payment of a fine not exceeding N10,000,000.00 (Ten Million Naira) or to both where the vendor is an individual[v]. Where the vendor is a corporate body, the vendor is liable on conviction to a fine not exceeding 10% of its turnover in the preceding business year[vi].
By the provisions of this Act, manufacturers/suppliers of goods are liable for any damage[vii] caused by defective goods, whether wholly or partly or caused by the supply of a service.[viii] This liability clause on defective goods is so stringent as the Act places a lien on its exclusion or restriction[ix] and further states that it is immaterial if the affected consumer bought the goods or services from or entered into any contractual agreement with the undertaking, so long as the undertaking supplied the defective goods or service.[x] In cases where loss or damage arises from the goods proving defective while in consumer use,[xi] the manufacturer of such defective goods cannot be excluded from liability for the loss or damage by reference to any contract term or notice of non-liability in a guarantee[xii]. Where it is alleged that goods or services are defective, the onus of proving the same is on the supplier of the goods or services.[xiii]
It is noteworthy to state that liability can also arise from the supplier’s implied assurance of the conformity of goods to what has been described or sampled to the consumer. This implied liability for breach of obligations also extends to the quality or suitability of goods for a particular purpose, which has been communicated to the Consumer.[xiv] However, where the affected person is not an end consumer, liability may be excluded or restricted by reference to a contract term in a guarantee. However, such a term must satisfy the reasonableness requirement [xv].
A manufacturer and/or supplier of goods or services have a duty to give the consumer true and accurate information and description about the goods or services. The Act imposes a liability on the supplier for misrepresentation of goods, and any contract that contains a term that purports to restrict this liability for misrepresentation made before the contract was made is void ab initio and of no effect.[xvi]
There is an implied duty on a supplier for the supply of a service[xvii]. This implied duty is to the effect that where a time has not been fixed for the supply of the service, the supplier is expected to carry out the service with reasonable care and skill[xviii] and within a reasonable time.[xix]
Obligations of Vendors as enshrined in the SOGA
The foremost duty of a Seller in a commercial transaction is duty to deliver goods.[xx] Therefore, to presume the freedom of parties, some terms are essentially implied in the contract of sale of goods. The Act inter alia imposes a certain implied condition on the part of a seller. Though, these implied conditions could be excluded by the parties. There is an implied duty on the seller that in the case of a sale, he has a right to sell the goods and that in the case of an agreement to sell, he will have a right to sell the goods at the time when the property passes[xxi]. Where the sale is by description, there is an implied condition that the goods delivered must correspond with what has been described, and where the sale is by description as well as sample, the goods delivered must correspond with the sample and the description.[xxii]
It is a principle that whoever is the owner of goods would bear the risk of damages that happen to the goods while it is still his property. This is encapsulated in the maxim “res periit domino suo” which literally means “the destruction of a thing is a loss to its owner”. By the provision of section 20 of SOGA, risk in the transfer of goods passes with the property. As such, unless otherwise agreed by parties, the goods remain at the seller’s risk until property in the goods is transferred to the buyer, whether or not delivery has been made.
NOTE; THE INFORMATION CONTAINED IN THIS PUBLICATION IS ONLY INTENDED AS A GENERAL REVIEW OF THE SUBJECT CONCERNED AND SHOULD NOT BE USED AS A SUBSTITUTE FOR SPECIFIC ADVICE CONCERNING SPECIFIC SITUATIONS.
[i] https://www.masterclass.com/articles/what-is-a-vendor accessed on October 18, 2022, at 10:18 am
[iii] Section 134
[iv] Section 135(1)
[v] Section 135(2)(a)
[vi] Section 135(2)(b)
[vii] The Act defies damage to include personal injury and damage to consumers’ property in section 136 (2)
[viii] Section 136(1)
[ix] Section 136(5)
[x] Section 136(3)
[xi] Goods are regarded as “in consumer use” when a person is using them or has them in his possession for personal use and not for business
[xii] A guarantee is anything in writing that contains an assurance that defects will be rectified by complete or partial replacement.
[xiii] Section 145
[xiv] Section 138
[xv] Section 139(3)
[xvi] Section 140
[xvii] A contract is a contract for the supply of a service
[xviii] Section 142(3)
[xix] Section 143
[xx] Section 27 Sale of Goods Act, 1983
[xxi] Section 12(1)
[xxii] Section 13
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