Tesco Supermarkets Ltd v Nattrass

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Tesco Supermarkets v Nattrass [1972] AC 153 is a leading decision of the House of Lords on the "directing mind" theory of corporate liability.

[edit] Background

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.One manager omitted to take the signs 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 manager had taken all reasonable precautions and all due diligence, and that the conduct of the manager could not attach liability to the corporation.

[edit] Opinion of the court

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." Tesco Supermarkets v Nattrass [1972] AC 153 (HL)

Directing Mind, Concerning the "directing mind" of a concern

[edit] Tesco Continued

Facts

This is a leading case on the Trade Descriptions Act 1968,(s.24(1) of the TDA) where Tesco relied upon the defence of the ‘act or omission of another person’ i.e. their store manager, to show that they had taken all reasonable precautions and all due diligence. Tesco had a special offer on washing powder, with a poster relating to the offer displayed in the store. They ran out of the specially marked low price packets but failed to remove the poster when higher priced stock was put on the shelves and someone was overcharged. Tesco said that their system was that the store manager should check the pricing and on this occasion he failed to follow their instructions.

The Decision

In the House of Lords Tesco were successful with their defence showing that:
• a store manager was classed as ‘another person’, and
• a system of delegating responsibility to that person was performance of due diligence, not avoidance of it

Note

The prosecution was under the Trade Descriptions Act 1968,(s.24(1) of the TDA) - the important part in relation to health and safety is "Directing Mind"

The store manager was not the directing mind and will of the company - the company had done all it could to avoid committing an offence and the offence was the fault of another person (an employee). The company was acquitted.