Opinion and insights from Roythornes
Opinion and insights from Roythornes
Over the last few years consumer legislation and regulation has gone through one of the most extensive processes of consolidation and modernisation seen in England and Wales in decades. The final piece of the jigsaw, the Consumer Rights Act 2015, comes into force on 1st October 2015 and if you deal with consumers you need to be aware of the changes it brings with it.
What types of contracts are affected?
The Act applies to consumer contracts and notices, regardless of whether the terms have been individually negotiated with the consumer or not. The Act does not apply to business-to-business contracts and the regulation of those contracts remains as was.
The key changes:
Consumers have a period of 30 days to reject substandard goods and receive a full refund. Previously the consumer had a “reasonable period” and the Act has clarified this by setting a non-negotiable minimum 30 days. This is not to be confused with any voluntary refund policy allowing the consumer to return the goods for any reason.
The consumer is still entitled to ask you to repair or replace the goods, but unlike before they can refuse you more than one opportunity to do this. As before, if goods cannot be, or are not, repaired within a reasonable period the consumer can reject the goods receiving a full refund (regardless of whether the 30 day period above has passed) or request a price reduction.
Where goods are sold by reference to a model, consumers must be made aware of any differences between it and the actual goods. Businesses need to be extremely careful what they are showing to consumers, and what their salesroom staff are saying, as this new standard could catch some businesses out.
If you agree to install goods as part of the contract, they will not conform to the contract if they have been incorrectly installed. Businesses must be careful that they are complying with the contract through all stages of the sales process.
The Act introduces two new statutory remedies for the consumer in cases where services are not provided with reasonable skill and care. In these circumstances the consumer may require you to repeat the services or, if you cannot or do not do that, give them a price reduction. The Act also specifies other circumstances where a price reduction will be given.
The Act introduces a ban on limiting liability to below the price paid for the services.
Digital content is a new concept introduced to keep up with developments in technology. The Act can catch paid for digital content and content provided for free together with other paid for goods/services.
The Act introduces new standards that digital content must now comply with. Generally speaking, digital content will be treated as similar to tangible goods.
Unlike goods the consumer does not have a 30 day period to reject the digital content, but there are circumstances in which they are entitled to a full refund (with no obligation to return the content) and they can require businesses to repair or replace the content.
If the business has not used reasonable skill and care and this has caused the damage to occur to the consumer’s device or other digital content the business may find itself paying uncapped compensation to the consumer. A business needs to be very careful what digital content it is providing and where it comes from.
Unfair contract terms
Similar to the previous regime, the Act specifies terms that you cannot include in your contract and also terms that may be unfair and therefore unenforceable. You must not use any automatically unfair terms and you must be careful when using a potentially unfair term. Thought needs to be given as to how the contract is worded and the circumstances in which the terms are used.
In light of the changes it is extremely important that terms and conditions (and any other contract terms or notices) are written in plain English and are drawn to the attention of a consumer. Businesses are being encouraged to adopt a new approach to terms and conditions and to make it clear to the consumer what their rights are. If documents are not “up to scratch” you may not be able to rely on them and so it is important to get them right.
Actions to take
As mentioned above the Act forms part of the wider consumer reforms and it is increasingly more important to keep on top of training and trading practices. Certain information must be provided to the consumer before the contract is entered into (particularly with distance and off-premises contracts) and the Act shows just how important it is that that information is correct.
If you have not already done so, you should review your policies, consumer supply terms, trading practices and other marketing literature to ensure they comply with the new rules. You should also make staff aware of the new standards and remedies that have been introduced and when they apply and provide guidance on what information they can and cannot provide to the consumer when making the contract with them. If you are selling goods made by somebody else you might also want to consider the terms of any contract you have with the manufacturer to make sure that they are assisting you in meeting your obligations under the Act.
If you are in any doubt whatsoever, or would like us to review them for you please contact Elizabeth Naylor in our Corporate and Commercial team.