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Consumer Rights Act 2015: An overview for businesses selling to consumers

The Consumer Rights Act 2015 consolidates, clarifies and in some areas, enhances consumer protection. Businesses selling to consumers will need to ensure compliance with these rules.

Scope of the Consumer Rights Act 2015 (‘CRA’)

The CRA consolidates and reforms a large part of consumer law in the UK, namely:

  • It reforms the law on rights and remedies for defective goods and services
  • It introduces new rights and remedies for digital content
  • It reforms the law on unfair terms in consumer contracts and consumer notices
  • It extends the range of remedies and measures that enforcers can impose on businesses breaching consumer law

Key dates

The main provisions of the CRA will come into force on 1 October 2015.

New rights

The CRA imposes additional statutory rights in respect of goods, for example:

  • The short-term right to reject faulty goods within 30 days
  • A final right to reject once other remedies have been exhausted
  • If installation of goods is part of the contract, goods will not conform to contract where they are incorrectly installed
  • Digital content, including digital content incorporated into other goods, is covered by the CRA. Previously, intangible digital property was not considered a ‘good’
  • Terms previously excluded from an assessment of fairness, such as ancillary charges, must now be fair and they must be prominent terms

Existing consumer rights either remain or have been updated in the CRA. These rights extend to matters such as:

  • Goods to be of satisfactory quality
  • Goods to be fit for a particular purpose
  • Goods must be as described or match a model seen or examined or match a sample
  • Goods to be delivered at the agreed time or otherwise without undue delay
  • Risk in goods to remain with the trader until they are delivered to the consumer
  • Service to be provided with reasonable skill and care
  • If time for performance of the service has not been agreed, the trader must provide the service within a reasonable time

Rejecting goods

Consumers have two rights to reject faulty goods. Firstly, they will have a short-term right to reject goods which are faulty or not as described within 30 days. To reject goods, a consumer must indicate to the trader he is rejecting the goods and treating the contract at an end.

Consumers also have a final right to reject which is part of a consumer’s ‘tiered’ remedies. Once a consumer has lost the short-term right to reject, the final right to reject provides the consumer with the right to repair or replacement or otherwise, the right to a price reduction.

In respect of digital content, the consumer does not have the right of rejecting the goods with the short-term right to reject as described above, but does have the right to repair or replacement or otherwise, the right to a price reduction.

Unfair terms

The CRA consolidates and enhances existing rules on unfair terms in consumer contracts. There are also new statutory remedies in respect of defective services.

Pre-contract information

Information provided to consumers in advance of a contract will become an implied term of the contract with the consumer. The consumer will be entitled to claim for any costs incurred if a trader breaches this implied term.

The impact on your business!

It will be necessary for businesses that sell to consumers, to look carefully at their technical and sales processes and, where applicable, how the inclusion of digital content will impact them. Consider:

  • amending standard terms and conditions especially where they attempt to exclude or limit statutory terms
  • amending the information provided on websites or as part of sales engagement as this could be construed as pre-contract information
  • amending the information provided on websites or as part of sales engagement that informs consumers of their statutory rights
  • updating the processes and procedures used by customer service teams and customer facing staff to ensure they are aware of consumer rights and in particular the remedies under the CRA
  • Providing training to customer facing staff

Summary

Although the CRA serves primarily to consolidate much of the existing law into one statute, it makes marked changes to the law in some areas.

Overall, the CRA represents a significant increase in the rights of consumers and in the powers of the court. In light of these changes and to ensure compliance, businesses will need to revisit their business practices before the CRA comes into force on the 1st October 2015.

For further advice please contact Mairead McErlean on 01908 689333 or Neena Jakhu on 01908 689373.

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Key Definitions

A “trader” means a person acting for purposes relating to that person’s trade, business, craft of profession, whether acting personally or through another person acting in the trader’s name or on the trader’s behalf. The definition of “trader” will include government departments and public sector authorities (as these are included in the meaning of “business”).

A “consumer” means an individual acting for purposes which are wholly or mainly outside that individual’s trade, business, craft or profession. The trader will bear the burden of proof on showing an individual is not a consumer. There are certain exclusions from the definition of consumer in respect of second hand goods at a public auction.

Goods” means any tangible moveable items, but which include water, gas and electricity if and only if they were put up for supply in a limited volume or set quantity. This is broadly in line with the definition in the Consumer Rights Directive

Digital content” means data which are produced and supplied in digital form. This adopts the definition in the Consumer Rights Directive.