Are you sure of the advice your business gives to your customers?

A recent case provided a stark reminder to suppliers of goods and services that if advice is sought by a customer that is outside of the supplier`s area of expertise, the supplier must explain this to their customer. If the supplier attempts to provide the advice, the customer relies upon it and then suffers a loss; the courts will have no sympathy.

In March 2012, Leather Trade House Limited was reminded of this by the Court of Appeal. Leather Trade House provided services to its subscribers which included testing and advice on leather. Argos imported a quantity of leather sofas from China which had a green and white mould on the surface of the leather. The supplier sent an anti-mould agent to Argos to remedy the problem.

Argos was a subscriber to the advisory services provided by Leather Trade House and consulted with the company about the anti-mould agent. After this consultation, Argos approved the use of it to treat the leather on the imported sofas. Argos was then hit with significant claims from its customers who had suffered injuries and (in some cases) breathing difficulties from exposure to the anti-mould agent.

Having paid out a sum in the region of £17 million to those customers affected, Argos looked to Leather Trade House for compensation.

The Judge in the case found in favour of Argos on the basis that Leather Trade House had not told Argos that the anti-mould agent was a skin irritant. The Judge considered that a competent toxicologist would have identified this. Instead Leather Trade House had failed to tell Argos that they did not have sufficient expertise to advise them about the anti-mould agent and were therefore liable for the losses suffered by Argos and its customers.

The message from the Judge was clear - Beware "blagging" to customers will not be tolerated.

Jennifer Sewell

Argos Limited -v- Leather Trade House Limited (formally BLC Leather Technology Centre Limited) [2012] ewhc 1348 (QB).

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.