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Thursday, 31 March 2011

Case Law - Tesco Supermarkets Ltd v. Nattrass (1972)

Case: Tesco Supermarkets Ltd v. Nattrass (1972)
Precedent: “Due Diligence”

Tesco was offering a discount on washing powder which was advertised on posters displayed in stores. Once they ran out of the lower priced product the stores began to replace it with the regularly priced stock. The manager failed to ensure the signs were taken down and a customer was charged at the higher price. Tesco was charged under the Trade Descriptions Act 1968 for falsely advertising the price of washing powder. In its defence Tesco argued that the company had taken all reasonable precautions and all 'due diligence', and that the conduct of the manager could not attach liability to the corporation.

The House of Lords accepted the defence and found that the manager was not a "directing mind" of the corporation and therefore his conduct was not attributable to the corporation. The corporation had done all it could to enforce the rules regarding advertising.

Lord Reid held that "The person who acts is not speaking or acting for the company. He is acting as the company and his mind which directs his acts is the mind of the company. If it is a guilty mind then that guilt is the guilt of the company."

This is known as a due diligence defence and senior managers may be able to avail themselves of it where junior members of staff or other persons commit offences. Bear in mind that the Tesco case involved the interpretation of the Trade Descriptions Act and not health and safety at work legislation.

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