With a range of outdated legislation in force to protect consumers, the landscape of consumer protection law can be difficult for consumers and businesses alike to navigate. In a bid to simplify the consumer protection regime in place, the government has introduced new consumer protection legislation which is intended to reform and consolidate the disjointed existing legislation. This new legislation is in the form of the Consumer Rights Act 2015 (“CRA”), which came into force on 1 October 2015.

The CRA applies to contracts between a business and consumer. Before the assent of the CRA, Jo Swinson, the Consumer Minister, stated that “clarity and fairness are at the heart of proposed consumer rights bill” and the CRA has certainly been designed with this in mind covering the following key areas of consumer protection law:

  • statutory implied terms and remedies in consumer contracts for goods, digital content and services;
  • unfair contract terms in consumer contracts; and
  • enforcement of consumer protection law.

The CRA defines a consumer as "an individual acting for purposes that are wholly or mainly outside that individual's trade, business, craft or profession". This means that companies are precluded from claiming consumer rights under the CRA.

The CRA is intended to have a harmonising effect on existing consumer protection law with its inclusion of key terms from the Sale of Goods and Services Act 1979 and Unfair Contract Terms Act 1977. Set out below, is a non-exhaustive list of some of the provisions of the CRA.

1. Goods

  • Are to be of satisfactory quality, fit for purposes, match a description and correspond to a sample.
  • There is a new implied term that goods must match any model seen by the consumer, so care must be taken to bring any differences to the consumer’s attention and make a record where this is important.
  • Businesses cannot contract out of these terms or restrict any resulting liability.

The CRA has also taken steps to enhance the remedies for breach of the CRA in respect of the supply of goods, providing consumers with a short term right to reject. This right to reject lasts for 30 days after delivery/installation, which is extended if the supplier has to repair or replace the goods. The onus of proof lies on the consumer. Where the consumer has required the business to repair or replace the goods, if the goods are unavailable or this is not done within a reasonable time, it follows that the consumer may be entitled to a price reduction or final right to reject the goods. In the case where the final right to reject is exercised, the trader must provide a refund without undue delay and in any event within 14 days.

2. Services:

  • Are to be provided using reasonable care and skill, in a reasonable time and at a reasonable price.
  • Businesses cannot contract out of these terms or restrict any resulting liability.

The CRA offers a two tier remedy in respect of services. The trader should either redo the element of the service which is inadequate or perform the whole service again. If the repeat performance is not possible, or is not repeated within a reasonable time, the consumer has the right to a price reduction.

A notable change in the CRA is the introduction of a new statutory right that if a business provides pre-contract information in relation to a service, and the consumer takes this information into account, the service must comply with that information. This widens considerably the potential liability of traders for breach of contract claims. Businesses should consider carefully what information they give to consumers before a service is commenced and the accuracy of this information.

3. Digital Content

The CRA has hauled consumer protection law into the twenty-first century, and for the first time contracts for the supply of digital content ("data produced and supplied in digital form") are treated as a separate category of contract with their own statutory rights and remedies. The CRA applies to digital content which has been paid for and digital content that comes free with physical goods. However, it does not cover internet or mobile services that provide access to digital content.

The CRA requires that digital content be of satisfactory quality, fit for purpose and as described. In the same way as for the provisions for goods and services, businesses cannot contract out of the terms or restrict any resulting liability. Where the consumer enforces their rights under the CRA digital content provisions, the consumer can require repair or replacement of the digital content. If this is unavailable or not provided in a reasonable time, the consumer has a right to a price reduction.

It should be noted that the consumer's entitlement to the remedies in the CRA may also be triggered by the statements or actions of some third party independent of the trader, if the third party is acting in the trader's name or on the trader's behalf. This could also apply to create a liability for a credit card company or company providing credit, which may incur liability to a consumer for statements made by the employees of the trader.

4. Unfair terms

Part 2 of the CRA consolidates the existing consumer legislation, but moves away from the current test of “reasonableness” and simply requires all consumer contract terms to be “fair”. If a term is unfair, it will not bind the consumer and so will be unenforceable.

  • A term in a contract or notice is unfair if it creates a significant imbalance in the rights of the parties to the detriment of the consumer, contrary to a requirement of good faith.
  • If a term in a consumer contract is ambiguous, the meaning that is most favourable to the consumer will prevail.
  • All written terms must be transparent and in plain intelligible language.
  • Core terms as to the subject of the contract or to price were previously exempt from the fairness requirement if they were in plain and intelligible language, but now they must also be prominent.
  • The CRA contain a grey list of terms that may be unfair including now disproportionately high excess fees, terms whereby the subject matter of the contract is determined after agreement, and terms whereby price is determined after the consumer is already bound..

It is important that businesses consider the effect of the CRA. Businesses should consider reviewing their existing:

  • training for sales and returns staff;
  • sales contracts or terms and conditions;
  • limitation of liability clauses;
  • pre-contractual information and processes;
  • complaints procedure;
  • cancellation and returns policies;
  • procedures for bringing policies to the attention of consumers.