13 January 2015 #Commercial
The Consumer Rights Bill
UK consumer law – the law governing the rights of consumers supplied with goods and/or services by businesses – is currently set out in dozens of separate pieces of primary and secondary legislation, some of which date from the 1970s. This time last year, the Government introduced the Consumer Rights Bill, with a view to consolidating into one statute much of the existing law, modernising the law in some key areas (such as digital content) and giving more teeth to consumers, public enforcers and private enforcers (currently only Which? is in this last category). The Bill has now been through both Houses, though some amendments are still being dealt with, and is expected to come into force in October this year (general election notwithstanding).
The Bill only applies to business-consumer relationships, and not to business-business contracts, though it is worth noting that “consumer” is defined as “an individual acting for purposes which are wholly or mainly outside that individual's trade, business, craft or profession”, so some arrangements thought to be business-business may actually fall within the legislation. In any event, we are all consumers, so the Bill is of very widespread application.
Some key changes to current law introduced in the Bill are as follows.
Material information provided to a buyer about the nature of the goods before the sale will form part of the contract.
There will be a short-term right to reject faulty/non-compliant goods within 30 days (a shorter period for perishables), followed (if the seller fails to repair or replace the goods satisfactorily) by a final right to reject, and to receive a full or partial refund. These remedies apply not only to sales but also to hire and HP contracts.
Purchase of digital content – defined as data produced and supplied in digital form – has until now not had separate consumer law protection, meaning, anomalously, that someone buying a music CD has enjoyed better consumer law protection than someone buying a music download (because the definition of “goods” did not include intangible items). The Bill provides for implied terms for goods (which are now termed statutory guarantees) – such as the requirement for satisfactory quality – to apply equally to digital content. There is no right to reject digital content, but other rights such as refund or replacement apply.
Statements made by a supplier to a consumer about the supplier or the services will now be treated as a term of the contract if taken into account by the consumer when deciding to enter the contract.
There are new remedies where the services are deficient - the right to require repeat performance and, if that is not possible or not done in a reasonable time, the right to a reduction in price.
The existing requirement for all terms in consumer contracts to be “fair” remains, but terms about subject-matter and price can be excluded from this requirement provided they are “transparent and prominent”. “Transparent” means expressed in plain and intelligible language, and legible if in writing (and, in fact, all written terms of a consumer contract are required to be “transparent”).
Three new terms are added to those (the “Grey List”) automatically presumed to be unfair in consumer contracts – unjustifiably high “exit charges” and those allowing the seller/supplier to change the subject-matter or the price of the contract after it has been entered into.
This is a brief snapshot of just some of the significant changes which will be brought in when the Consumer Rights Bill becomes law. BIS have indicated that guidance for businesses should be available from April this year. It is very important that any consumer-facing business is aware of their obligations under the new legislation and has made all necessary changes to its working practices, and to contractual documentation, in readiness for the October start date.