Posted: 19/11/2015
The rules relating to consumer rights changed on 1 October 2015 for contracts made from that date. The Consumer Rights Act 2015 (CRA) has removed and consolidated consumer law provisions from various existing pieces of legislation, (including the Sale of Goods Act, the Unfair Contract Terms Act (UCTA), Unfair Terms in Consumer Contracts Regulations (UTCCR) and the Supply of Goods and Services Act). The key principles and concepts from previous consumer legislation remain, but the rules have been updated and extended to provide a single set of rules that apply to consumer contracts that supply goods (including sale, hire, hire purchase and transfer of goods), services or digital content. The CRA makes some changes to UK competition law to make it easier for consumers to bring private actions for breaches of competition law and introduces enhanced investigatory powers for enforcers of consumer law (including Trading Standards), which are beyond the scope of this article.
This article looks at the rights and remedies consumers have under the new rules when contracting for the supply of goods, services and digital content under the Act.
The new rules in the CRA apply to supplies between traders and consumers. A “trader” is a person (natural or legal) acting for purposes relating to that person’s trade, business, craft or profession and whether acting personally or through an agent. A “consumer” is defined as an individual (businesses or legally incorporated organisations cannot claim protection) acting for purposes that are wholly or mainly outside his trade, business, craft or profession.
The CRA broadly restates the quality standards applicable under previous consumer legislation, namely that goods must be of satisfactory quality, fit for purpose and as described.
In addition under the CRA goods must:
This requirement will be relevant to companies that have display models on the shop floor. Any model seen or examined by the consumer must match the goods sold. It does not apply to e-commerce.
This is the information provided by the trader about the goods as required by the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (CCR) and set out in in Schedule 1 of the CCR (for on-premises contracts) and Schedule 2 (for distance and off-premises contracts). This pre-contract information will form part of the contract and so it is important that it is accurate and up to date.
The CRA 2015 introduces tiered remedies for faulty goods (ie goods that do not meet the statutory quality standards). These tiered remedies are in addition to standard remedies for damages, subject to the general prohibition on double recovery.
The CRA 2015 gives consumers the right to reject faulty goods within 30 days of delivery (but not digital content except where such digital content is included in goods, see later section on mixed contracts). A shorter period applies to perishable goods, which will be determined by how long it is reasonable to have expected the goods to last. Consumers are not required to give traders the opportunity to repair or replace faulty goods during this 30 day period, but if they do then the consumer’s right to reject is put on hold. The 30 day clock pauses while the consumer is waiting for the goods to be replaced or repaired. The clock continues running when the faulty goods are returned or replaced.
A consumer outside the 30-day right to reject period can, under the CRA, ask the trader to repair or replace faulty goods. This follows previous consumer legislation save that the trader only has one chance to repair or replace the faulty goods. If the attempt at a repair or replacement is unsuccessful, then the consumer is not obliged to accept any further repairs or replacements and can claim a refund (or a price reduction if they wish to keep the product).
If goods are not repaired or replaced within a reasonable time or if repair or replacement is not possible then, under the CRA, the consumer has the right to reject the faulty goods and obtain a refund or request a price reduction. This is similar to the Tier 2 rights that existed under the previous consumer legislation, save that under the CRA consumers can exercise their Tier 2 rights after one unsuccessful failed repair or replacement. In addition under the CRA traders will not be able to make a deduction for use where goods are rejected in the first six months following delivery. There is an exception to this rule for motor vehicles where a reasonable reduction may be made for the use the consumer has already had from the vehicle.
The services provisions in the CRA will apply to most service contracts. The only specific exclusions are for employment contracts and contracts of apprenticeship. Under the CRA statutory rights applicable to service contracts are broadly the same as those set out in earlier consumer legislation and provide that:
In addition, any pre-contract information provided by the trader to the consumer (including information provided under the CCR) will form part of the contract and bind the trader.
If a trader does not provide services with reasonable care and skill then the consumer can require the trader to re-perform some or all of the services (whatever is necessary to bring the services up to standard). Re-performance must take place within a reasonable time and without causing the consumer significant inconvenience. All costs involved in re-performing the services to the correct standard must be borne by the trader (cost of labour and materials).
If a trader fails to re-perform services within a reasonable time (and without causing the consumer significant inconvenience) or if it is impossible for the trader to re-perform services (for example if the services were required on a specific date) then the consumer can require the trader to reduce the price of the services (and provide a refund if necessary). The amount of the price reduction must be appropriate, based on the difference between the value of what the consumer paid to receive and what was actually received. It can be up to the full amount of the price. Any refund or price reduction must be provided without undue delay and, in any event, within 14 days of the trader agreeing that the consumer is entitled to the remedy.
If a trader does not provide services in accordance with pre-contractual information relating to the performance of the services provided by the trader to the consumer (whether this is information provided under the CCRs or voluntarily), the same statutory remedies as those set out above in relation to a breach of the obligation to provide services with reasonable care and skill will apply. If a trader does not comply with any other pre-contractual information not relating the performance of the service it has provided, the consumer will be entitled to price reduction only. The amount of the price reduction will need to be negotiated with the consumer.
If a trader is supplying goods together with services and/ or digital content then there are some specific rules in the CRA to note:
The effect is to provide the consumer with remedies that apply to goods (but no short term right to reject installation) even though the fault was not with the goods themselves. This means that if a trader sold kitchen units with installation services and the units are badly installed then the consumer may be able to demand replacement units.
This provision provides the consumer with the remedies that apply to goods. This means that if a trader provides a consumer with faulty software on a disk then the consumer can reject the disk and claim a full refund, which the consumer would not be able to do if the faulty software had been downloaded (see later section on digital content).
The CRA consolidates the relevant consumer provisions of UCTA and the UTCCRs to produce one set of rules. The unfairness test in the CRA is essentially the same as that set out in the UTCCRs. Most consumer contract terms and any notices (including website notices, oral communications and announcements) will be subject to the fairness test. Terms which are unfair will be unenforceable against a consumer.
All written terms must be in plain and intelligible language. Terms that relate to the amount to be paid or which define the subject matter of the contract are only exempt from the fairness test if transparent and prominent. Prominence is a new requirement. The more onerous and unusual a clause, the more prominent it must be.
The CRA incorporates the grey list of potentially unfair terms previously set out in the schedule to the UTCCRs and adds the following two items:
Under the CRA a term specifically negotiated can be deemed unfair. The CRA also provides that the courts will consider fairness in relation to consumer contract disputes, even if fairness is not raised as an issue by the parties.
The CRA introduces a new right for a consumer to request a copy of any guarantee. Save for that new right, the rules relating to consumer guarantees in the CRA follow those previously set out in the Sale and Supply of Goods to Consumers Regulations 2002.
Prior to the CRA there were no specific statutory provisions applicable to the supply of digital content to consumers. The CRA extends consumer protection to specifically apply when a consumer buys digital content from a trader.
Digital content is defined in the CRA as data produced and supplied in digital form. This would include software, apps, digital music, e-books and cloud computing services. Digital content may be supplied in a tangible form (such as on a disk, or embedded in a product such as a mobile phone) or in an intangible form (eg software on a PC, a music download or streamed content).
The main rights and remedies under the CRA applies to digital content which is either: paid for (with money or a pre-paid facility such as a gift voucher or virtual currency); or supplied free alongside other paid for digital content, goods or services and is not usually made available free of charge.
Digital content supplied by a trader to a consumer will need to comply with statutory quality standards that are similar to those that apply to goods. Digital content must:
There is no "must match model or sample" requirement for digital content. If a trial version is supplied, then the digital content usually needs to match the trial version, but any description of the digital content provided by the trader will take precedence.
In addition, where a consumer has paid for digital content, it is a term of the contract that the business has the right to supply that digital content.
Unlike with goods, there is no right to reject faulty digital content (except where such digital content is included in goods, for example on a DVD).
If the digital content breaches the statutory requirements, a consumer is entitled to a repair, replacement or reduction in price. A consumer cannot require that a business repairs or replaces the digital content if such a remedy would be impossible or disproportionate compared to the other of such remedies. If a repair or replacement is impossible or not carried out within a reasonable amount of time or without significant inconvenience to the consumer, the consumer has the right to a price reduction.
If the trader fails to provide the required pre-contract information the consumer has the right to recover from the trader the amount of any costs incurred by the consumer as a result of the breach (up to the amount of the price paid for the digital content, or for any facility used as payment for the digital content).
For breaches of the requirement that the business has the right to supply the digital content, the consumer has the right to a refund.
There is also a new protection for consumers who, as a result of purchasing digital content, suffer damage either to their device or to other digital content, for example downloading an app that contains malware and so damages a smartphone and/or corrupts existing software on the phone. Provided that the damage suffered is of a kind that would not have occurred if the trader had exercised reasonable care and skill, consumers will have the right to require the digital content provider to either repair the damage and bear all costs of doing so or pay appropriate compensation to the consumer. What is reasonable will be judged by the particular facts and circumstances of each case.
The focus of the provisions in the CRA dealing with supply is to provide a consolidated framework that is simpler to refer to than the old law and avoid protracted disputes. We have set out a checklist of next steps to assist compliance.
Review existing procedures to ensure that they comply with the new regime. In particular, check:
Review terms and conditions of supply, to ensure that the terms are in line with the new regime. In particular note that:
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