The Consumer Rights Act 2015 ('CRA 2015') received Royal Assent on 26 March 2015, with the majority of provisions coming into force on 1st October 2015. The CRA 2015 aims to consolidate existing UK consumer legislation as well as introduce new provisions relating to faulty digital content and statutory remedies for defective goods and services.
The aim is to simplify consumer protection law by consolidating eight pieces of consumer protection legislation into one statute. The CRA 2015 replaces the existing legislation relating to unfair terms, previously found within the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999. It also replaces key provisions of the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982 for consumer contracts requiring goods to be of satisfactory quality (s.9 CRA 2015) and services to be performed with reasonable care and skill (s.49 CRA 2015), although the legal language will be familiar.
This article considers what effect the changes will have to the supply of goods and services in consumer contracts.
Traders and Consumers
A 'person' (defined broadly to include an individual, partnership or company) acting for purposes related to his trade, business, craft or profession will be considered a 'trader' under the CRA 2015. A 'consumer' is a person who is not acting for the purposes of a business.
The sale and supply of goods from 1 October 2015
In a transaction for the sale and supply of goods, the following statutory terms will apply:
- The goods must be of a satisfactory quality
- The goods must be fit for a particular purpose
- The goods must match the description, sample or model
- The goods must be installed correctly (where this is agreed as part of the contract)
Where goods are supplied which do not meet these standards, the consumer has a number of 'tiered' remedies.
Firstly, they may reject the goods within 30 days (this short-term right to reject does not apply to goods incorrectly installed). If the goods are rejected, the consumer can ask the trader for a full refund. The refund must be given without delay and, in any event, within 14 days from the date the trader agrees the consumer is entitled to a refund.
Secondly, if the consumer chooses not to exercise his right to reject (or is out of time to use the short-term rejection remedy) he is entitled to claim for repair or replacement.
Finally, if repair or replacement is not available, the consumer has a final right to reject the goods.
Whichever remedy the consumer chooses, he also has a statutory right to additional compensation if the goods have caused property damage or personal injury, as well as compensation for the additional cost of purchasing equivalent goods if those goods are more expensive.
A question of evidence
Where the defect is discovered within six months from the date of delivery and the consumer seeks repair, replacement, price reduction or the final right to reject, it assumes the defect was present at the time of delivery. After this period, the consumer must prove the defect was present at the time of delivery. If the defect did not become apparent until sometime after delivery, the standard of proof is to establish that there was an underlying or 'hidden' defect at the date of delivery. The need to ensure defective goods are retained and inspected by a forensic expert is therefore very important to establish liability.
What about the supply of services?
The CRA 2015 also applies a set of standards to the supply of services. These include:
- The service must be carried out with reasonable care and skill;
- Information written or said to the consumer is binding where the consumer relies on it;
- The service must be done for a reasonable price; and
- The service must be carried out within a reasonable time.
The standard of care is that to be expected of a reasonably competent person in that trade or profession.
Consumers now have a statutory right for 'repeat performance' of the contract followed by a price reduction if the service fails to conform to the contract. However, these particular remedies do not prevent a consumer seeking other remedies such as damages provided he is not compensated twice.
Be careful what you say
Under the present law, a consumer given misleading information is only able to pursue an action for misrepresentation. This is because such information does not form part of the contract. However, under the CRA 2015 a more straightforward remedy for breach of contract is now available. Any spoken or written statements made by the trader about his service will be binding contractual terms. This includes both pre and post contractual statements, provided those statements related to the service to be provided.
Traders should keep detailed written records as to what is said in addition to using clear and unambiguous written contracts.
Whilst the legal test for unfair contract terms will remain unchanged, there will be a new requirement to ensure 'relevant terms' (defined as terms dealing with the subject matter of the contract or setting the price) are both transparent and prominent. For a term to be transparent it must be in plain and intelligible language. A term is prominent if it is brought to the consumer's attention.
Whilst many of the substantive principles applicable to consumer contracts will be unchanged, the CRA 2015 goes some way to consolidating consumer law in a single statute. Commercial insureds that regularly contract with consumers need to be aware of these changes well in advance of 1 October 2015 to allow sufficient time for contracts to be reviewed and staff to be trained.