Smythe v Watford Electronics

Smythe v. Watford Electronics Ltd. A lesson in the value of customer service (and how a breach of contract can be remedied through the County Courts).

On March 20th 1998, I obtained judgement against Watford Electronics Ltd (Dallow Road, Luton) in Woolwich County Court for breach of contract relating to the sale of a defective computer motherboard to me in November 1996 (yes, that long ago).  I was awarded the sum of £401.08 plus court costs of £40. The bare 486 motherboard itself only cost £81.08, but I had claimed consequential losses arising from the breach of contract amounting to a further £270. These losses included the cost of having to buy extra ancillary equipment, such as 72 pin memory SIMMS. Watford's failure to remedy the faulty motherboard in a reasonable timescale meant that equivalent motherboards which allowed 30 pin SIMMS were not generally available at the time I commenced my action.  Watford argued unsuccessfully that they could not be held liable for consequential losses such as these. District Judge Lee held that the second limb of Hadley versus Baxendale applied, as the losses "may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach". Watford Electronics Ltd should have known, he said, that the longer the matter went on, the more obsolete the motherboard would become. The Judge also held that Watford's express denial of liability for consequential losses within their Terms and Conditions would have represented an unfair term in the circumstances, but that I was not in fact bound by the Terms and Conditions. As it was a mail-order transaction, I did not have knowledge of the Terms and Conditions at the time the contract was made; neither did I have the opportunity to inspect or test the goods before accepting them. The Judge held Watford's defence to be "vacuous", and their actions to be "vexatious".

Having offered Watford every opportunity to remedy the situation either by repairing or replacing the motherboard, or by refunding the purchase price (plus postage), I had no alternative but to issue proceedings against them in the "Small Claims Court". I feel it is in the public interest for people to be aware of companies attempting to apply unfair terms and using vexatious delaying tactics to avoid their liabilities, so that potential customers can place their business elsewhere. Often, these companies settle out of court without admission of liability which would mean that their actions cannot be publicised. Whilst I was in principle prepared to accept such a settlement, to avoid wasting the Court's time and to avoid an escalation of costs, Watford did not make me an offer which I could accept.

The cost of providing proper after sales support in the first place would look like good business sense when Watford Electronics Ltd add up the amount awarded to me (£441.08), plus their own legal costs, plus the time they themselves spent in preparing their case and attending court. In addition, they have lost potential sales from myself and people to whom I might have recommended them, which I estimate to be in the order of £25,000 in the past year. A valuable lesson learned? Let's hope so!

[Postscript (April 2013) - Watford Electronics went bust. Surprise surprise!]