The computer seller has agreed to erase two crucial limits to its own liabilities for equipment it sells. Its liability for negligence will no longer be capped at the price of the product, and it will remove a term which excluded liability for consequential loss arising out of breach of contract.
While the move will be seen as a victory for consumer rights, the demands of the Office of Fair Trading (OFT) in relation to consumer sales contracts is perceived by some as being potentially problematic for businesses.
"On the one hand it is laudable to make sure that consumers are protected, but on the other hand I think they can sometimes go a little over the top," said Jon Fell, a partner at Pinsent Masons, the law firm behind OUT-LAW.COM. "Ultimately it is up to a court to decide what is reasonable, but any guidance issued by the OFT is something that will be persuasive. I think it is tough on business but it is not that surprising."
A statement from the OFT said: "The OFT identified a number of terms that it considered to be inconsistent with the requirements of the Unfair Terms in Consumer Contracts Regulations 1999 or The Consumer Protection (Distance Selling) Regulations 2000 and therefore unsuitable for use in consumer contracts."
"The limited liability [for consequential loss] is a bit harsh, because it depends what you are going to use the computer for," said Fell. "There is an assumption that a consumer is not a business customer, but if you know that the person is buying it for small office or home office use regardless of the fact that it was a consumer purchase are they going to look for more than just their money back?"
The OFT had once before made recommendations about consumer computer purchase contracts. It made further recommendations at the end of last year.
"What is significant here is that the OFT produced its guidelines in December and they have gone after someone they see as a big consumer name selling almost exclusively by distance selling, looking to get them to agree to changes," said Fell. "It shows that they want to be seen to be taking this seriously."
Christine Wade, director of consumer regulation enforcement for the OFT, said: "Distance selling, be that by mail, phone or the internet, does not exclude businesses from ensuring their contracts are fair to consumers and compatible with the law. I'm pleased that Dell has worked with the OFT to modify important aspects of its terms and conditions, such as those relating to time of delivery and liability for faulty goods, in the light of the OFT's concerns."
The other two changes made by Dell are less controversial. It has changed the term which "excluded liability for oral representations not confirmed in writing" and another that "required the consumer to notify Dell of any errors in its confirmation of the consumer's order immediately".
