The Pros and Cons of the Law Reform Commission Recognising the Doctrine of Unfairness in Contract Law for Consumer Protection in Irish Law

2. Content: Using your own words, briefly explain your understanding of the essay title and the issue you are being asked to address. What exactly is the essay title asking you to do? In my opinion the essay title was asking for me to research other jurisdictions for evidence of a doctrine of unfairness, how it is stated and used in said jurisdiction. I think that it also called for a comparison to be drawn between the already in place unfairness doctrine elsewhere with consumer protection legislation in the Irish legal sphere, this legal comparison and contrasting would also encompass how the new doctrine and the Law Reform Commission would interact, this being if the LRC would deem it necessary, or completely redundant, and whether it would officially bring a doctrine of unfairness into Irish law or leave it up to judicial decisions to use something of its kind in deciding cases. 7. Overall: Having read the essay Marking Standards, what do you think would be a fair mark for this essay? Explain your reasons. I would give my essay 60% because my essay is adequate but not as good as I had hope I would make. This essay will discuss the pros and cons of the law reform commission recognising, within the law, a doctrine of unfairness for contracts with the aim for consumer protection, debate whether or not a doctrine of unfairness in Irish law is necessary and should said doctrine be welcomed or not. A legal doctrine is a framework, set of rules or procedural steps often established through precedents from cases in the common law, through which judgments can be determined in a given legal case. Now, due to our understanding of a doctrine, this essay can consider the necessity of the unfairness doctrine in Irish law and consider, with reference to previous cases and consumer protection acts already in place, the possible positive or negative ramifications of the inclusion of this doctrine. Overall, the aim of this essay is to discuss the Unfairness doctrine and validate or oppose its introduction to Irish Law. The doctrine of unfairness is a doctrine in United States trade regulation law under which The Federal Trade Commission (FTC) can declare a business practice “unfair” because it is overbearing, oppressive or inimical to consumers even though the practice is not, an antitrust transgression, a commencement of antitrust infraction, a violation of the essence of the antitrust laws, or a misleading or deceptive practice.[1] To begin, the doctrine of unfairness was first authoritatively recognized in American law in Federal Trade Commission v. Sperry & Hutchinson Co., 405 U.S. 233 (1972) although earlier Supreme Court decisions had suggested it in obiter dicta. In the Stamp Company case, the FTC were suing Sperry & Hutchinson Trading Stamp Company for what they thought was an “unfair” practice. This practice was suing “trading stamp exchanges”. Businesses set up for to allow customers, for a fee, to exchange one type of stamp for another, so as to consolidate all their stamps into one set / brand instead of a few. S&H did this so as to suppress what they called “trafficking” of their stamps, which, under their terms and conditions, customers do not own but only have the right to just paste the stamps into the booklets and to redeem said booklets at their S&H redemption centre. Thus meaning that customers were not allowed to buy, sell, swap or exchange their S&H stamps. The FTC were of the opinion that this was “unfair” as it did not allow for consumers who wished to spend their stamps, or their equivalent in monetary amounts, on the essentials such as shoes, food, rent etc. rather than the “luxury” items that the S&H centres offered, such as blenders and food processors, to do so. This case was taken as far as the United States Supreme Court where it was decided in favour of the FTC. Thus leading to the creation of the Doctrine of Unfairness in United States Trade Regulation Law. However, though this doctrine has been utilized in this specific case, the use of the unfairness doctrine has been limited and in some cases, for example R. J. Reynolds Tobacco Co. v. Federal Trade Commission, 192 F.2d 535 (7th Cir. 1951) the doctrine of unfairness was not used at all. This could possibly sway our overall perception of the doctrine as the American legal system have decided that utilizing the unfairness doctrine may not have been necessary or indeed warranted plus, in a situation involving Irish law, we must also consider the currently in place sections of consumer and contract law such as the Sale of Goods and Supply of Services Act 1980 and the Consumer protection acts that are currently used in Irish law and the impact that a doctrine of unfairness may have on cases in which both our current laws and the unfairness doctrine can be applied. Overall, the Doctrine of Unfairness, though valid in certain situations may be overlooked entirely given the correct circumstances in favour of a more clear and decisive ruling. However would a similar Doctrine of Unfairness be welcomed, or even be necessary in modern Irish law? There are pros and cons to this which we shall discuss in due course throughout the essay. In the creation of a doctrine of unfairness we must firstly decide as to whether the doctrine would be created to protect consumers from the unfairness of the bargain, which can be identified by use of rules, or from the unfairness of the outcome of said bargain, which is difficult to define. What is “unfair”? Unfairness in a bargain can be identified and set down in a set of rules, but unfairness in the outcome of a bargain would be ambiguous, uncertain and difficult to resolve. Any rules on this would be decided by a judge in a given court and could change upon appeal if the judge in the appeals court does not uphold the previous judge’s decision. It could also be decided by the Law Reform Commission if they, upon reviewing the law, decided that a Doctrine of Unfairness would be needed or helpful in Irish Law. However, if an Irish judge should make the decision of creating such a doctrine to apply to a case before them, if it is poorly thought out, or the case is too ambiguous so as to allow the undue application of this doctrine to a wide number of cases the courts will see, it could lead to a floodgate effect. A floodgate effect is situation in which a small action, in this case a decision on a case, can result in a far greater effect with no easily discernible limit, this being the foreseeable forced application of the newly created doctrine of unfairness to cases where previously no such principle or rule would have been applied. Overall, the inclusion of the unfairness doctrine would require a clear and concise definition of what is unfair with regard to both the bargain and the result of the bargain and, as such, may lead to an inundation of cases regarding unfairness which in the eyes of the law may be deem permissible under the definition of unfairness. To consider the introduction of the Unfairness Doctrine, we must first take into consideration the Law Reform Commission which is an independent law making body that was established under the Law Reform Commission Act 1975. The functional purpose of the law reform commission is to keep the law under review and, in accordance with the provisions of the 1975 act, shall undertake examinations and conduct research with a view to reforming the law and formulate proposals for law reform. The Law Reform Commission Act 1975 defines law reform to include the development of law, the codification of the law and the revision and consolidation of statute law. This means that if a judge were to recognise a doctrine of unfairness in the law it would need to be recognised and codified by the law reform commission before passing into the law. Although judicial decisions would set legal precedent, to allow the Unfairness Doctrine be passed into Irish law, the Law Reform Commission would, first and foremost, have to define what is deemed to be fair and unfair within the boundaries of contract and or consumer law, nonetheless, the view of what is deemed to be fair varies from person to person and this may lead to varying interpretations of the doctrine and eventually the complete misuse of the doctrine over time. That notwithstanding, one could argue that the rules for statutory interpretation could be applied when considering how to use the unfairness doctrine. The use of the golden rule, the mischief rule and the literal rule. However, before these rules can be applied there would have to be concrete legislation set down to state what is believed to be “unfair” and this needs to be done with great care and certainty. In the determination of what should be deemed “unfair” we could follow what the United States has already decided. Both jurisdictions, the United States and Ireland, are common law jurisdictions and so Federal Trade Commission v. Sperry & Hutchinson Co., 405 U.S. 233 (1972) and R. J. Reynolds Tobacco Co. v. Federal Trade Commission, 192 F.2d 535 (7th Cir. 1951) have persuasive precedents within Irish law even without a doctrine of unfairness explicitly written into the law. Essentially, if the Law Reform Commission were to include the doctrine a necessity to define unfairness would occur and such a process would not be considered ergonomically sound and require frequent review if introduced to Irish law. Looking at this doctrine as applying solely in cases that are incontrovertibly similar to the Sperry & Hutchinson case the use of statutory interpretation methods as mentioned above could disallow the misuse or misapplication of the doctrine. The golden rule is a rule of statutory interpretation which allows a judge to change from the normal meaning given to a piece of law so as to avoid an absurd ruling resulting. This could be used to great effect so as not to create injustices for either concerned party. The Mischief rule would a rule that would also be used to great effect as with the golden rule. The Mischief rule is where the judge would look are the aim of the doctrine of unfairness to determine what mischief it was created to redress and then from this the judge can apply the doctrine to the case if they deem it necessary or appropriate to do so. The Literal rule, is a rule that could be detrimental to the use of this doctrine if the doctrine is not correctly set out with a clear and unambiguous meaning as it is interpreted using the ordinary meaning of the words and language in the statute / legislation unless it is explicitly stated that certain words in the context have alternative meaning. Comparing the Doctrine of Unfairness with Irish legislation allows us to see what effect the doctrine could have if it were to be recognised in Irish law. With consumer protection legislation already in the law this comparison will allow for us to see if there is any necessity for the introduction of an Unfairness Doctrine. The Sale of Goods and Supply of Services Act 1980, as a significant piece of legislation and an intrinsic part of every contract, ensures that all goods and services are of merchantable quality, fit for purpose, Conform to the sample given and are as described, these four elements are the conditions, contestably, that most people would think of when considering how a contract might be considered to be unfair, from this, one could conceivably say that there is no room and no need for another piece of legislation of a similar nature like this doctrine. Despite this frame of mind, it could also be said that there is room for an unfairness doctrine under certain circumstances if it can take less precedence than already in place legislation. For example, if a company such as Sperry & Hutchinson Co. were to be making their stamps and these stamps were to dissolve or diminish in quality to the point of uselessness solely from their one use with the purpose of being placed in an S&H stamp book, then it would violate the Sale of Goods and Supply of Services Act 1980 for not being of merchantable quality nor being fit for purpose, thus rendering the using of the unfairness doctrine moot. However, if, like in the original case Sperry & Hutchinson Co. had only “unfair” policies / practices not regarding production of their stamps but regarding the distribution and movement of the stamps once the public have them in their possession, then this would be a situation where no current legislation would apply and so could open up a place for utilizing a Doctrine of Unfairness. A Doctrine of Unfairness would need to take less precedence than legislation already in place in cases where the two pieces of legislation would be able to both be used. As the Sale of Goods and Supply of Services Act 1980 is a mandatory part of every contract unless it is explicitly state in the creation of the contract as an express term that it will not apply, this should take precedence over any following legislation. Thus opening up an area of law an Unfairness Doctrine can be left to solely apply, business practices and policies within contracts rather than product or production based transgressions. It is the duty of the judiciary to decide on cases that are brought before them in the fairest way they can, being as strict or as lenient as they have to be with the respective cases. Even without the Law Reform Commission deciding to officially adopt a Doctrine of Unfairness within the Irish legal sphere, as previously stated, judges have the ability to use the precedent from American cases such as the S&H and the Camel Cigarette Advertising Cases because American Cases have persuasive precedents. The significance of this is that the decisions of these cases are not binding on any judge in Ireland but, as both the United States and Ireland are common law jurisdictions judges can apply an American legal stance to an Irish case it they deem it fair and appropriate. In summary, the creation and utilisation of a Doctrine of Unfairness in Irish law could be argued easily either for or against. Due to the current state of consumer protection law the doctrine can mostly be thought of as unnecessary except in very specific cases that could very easily be decided in the same way it would with an Unfairness Doctrine without one. As consumers we would all like to be more and more protected against unfair and unjust practices used by companies, and conglomerates, and even each other when we buy from and sell to them. However from the look of its use in US law it would, more likely than not, go unused for a great amount of time either that or it would create an unceasing number of cases coming to court that would succeed because of ambiguity in the creation of the doctrine. Bibliography

• FTC v. Sperry & Hutchinson Co., 405 U.S. 233 (1972)
• R. J. Reynolds Tobacco Co. v. Federal Trade Commission, 192 F.2d 535 (7th Cir. 1951)
• Sale of Goods and Supply of Services 1980
• Michael D. Scott, “The FTC, The Unfairness Doctrine and Data Security Breach Litigation: Has the Commission Gone Too Far?” (2007) <https://ssrn.com/abstract=1012232> accessed 25/02/2015
• Ernest Gellhorn, “Trading Stamps, S & H, and The FTC's Unfairness Doctrine” Duke Law Journal Vol. 1983:903-958
• John Harrington, “Up In Smoke: The FTC's Refusal to Apply the "Unfairness Doctrine" to Camel Cigarette Advertising” Federal Communications Law Journal (1995) Vol. 47 Issue 3 Art. 5 593-610

 

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[1] Federal Trade Commission v. Sperry & Hutchinson Co., 405 U.S. 233 (1972)

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