Free isn’t always risk free

10 October, 2013

Retailers and advertisers often use free gift promotions to raise the profile of their brands and can sometimes assume that consumer rights regarding ‘freebies’ are non-existent. However, where a company provides a free gift which proves defective, the consumer may be entitled to the same rights as someone who had paid the full price for those goods.

 

 

Contract 

The structure of a free gift promotion can lead to there being a contract between the consumer and the promoter for the supply of the free gift. Where there is a true gift passed between two people (for example, the giving of a birthday present), there will not be a contract as there will be no consideration (a vital element for contract formation) passing between the parties. However, the courts have often found an element of consideration passing between the consumer and the promoter in relation to a free gift promotion. For example, the purchase of three promotional packs of toilet roll could be seen as consideration for a cuddly toy dog or the provision of personal data and agreeing to be added to a mailing list could be consideration for a free packet of biscuits.

Where a contract is found to exist, terms as to the quality of the free gift will be implied into that contract and the promoter could face a breach of contract claim if the gift fails to meet those quality requirements and the consumer suffers a loss as a result. 

 

 

Negligence 

In addition to contractual liability, a promoter will also have a duty of care to consumers to ensure that the free gifts which it gives away do not cause harm or loss to those consumers.  If a gift is defective and the consumer is injured or suffers a loss as a result, the promoter could be held liable if it can be shown that the promoter was at fault and failed to exercise reasonable care in the selection and provision of the gift in order to discharge its duty of care to the consumer.

 

 

CAP Code 

The CAP Code (Committee of Advertising Practice) regulates prize promotions and sets out guidance for promoters organising free gift give-aways. Consumers are not able to enforce the CAP Code directly against promoter but the Advertising Standards Agency (ASA) has the ability to impose sanctions for non-compliance.

The most relevant rule to bear in mind regarding liability for free gifts is Rule 8.3 which states:

‘Promoters must do everything reasonable to ensure that their promotions, including product samples, are safe and cause no harm to consumers or their property. Literature accompanying promotional items must give any necessary warnings and safety advice.’

Other relevant rules are Rule 8.7: ‘No promotion or promotional item should cause serious or widespread offence to consumers’; and Rule 8.8: ‘Special care must be taken with promotions addressed to children or if products or items intended for adults might fall into the hands of children’.

The general rule for retailers and advertisers looking to run a prize promotion is to take as much care in the selection, distribution and marketing of free gift promotions as you would for your full price items as consumers may have the same rights against you if they suffer a loss as a result of a defective free gift.

 

Reviewed in 2015