The Consumer Rights Act 2015 (CRA) received royal assent on 26 March 2015, and will come into force on 1 October 2015. The Act overhauls consumer rights and remedies in relation to defective goods, containing a number of important provisions, clarifying a previously unclear area of law, in particular Part 1 which treats consumer contracts for digital content as a separate category of content with its own statutory rights and remedies for the first time.

Digital content

According to the Act, 'digital content' means data which is produced and supplied in digital form. This ranges from apps, to streamed music, to other software.

Previous law

Prior to the CRA, digital content was loosely dealt with by the Sale of Goods Act 1979 (SGA) and the Supply of Goods and Services Act 1982 (SGSA). While these two pieces of legislation clearly defined consumer rights with regards to buying goods or services, they did not adequately deal with the advent of digital content, having been drawn up before the digital age.

While the SGA and SGSA contain provisions which incorporate implied terms into contracts for goods and services, they appear only to apply to tangible goods and services, excluding digital content from their scope.

While dealing with digital content as a separate category of product, the CRA seeks to bring digital content within the scope of the existing consumer rights regime by providing specific rights and remedies for digital content contracts.

Who is affected

The Act applies to all contract for the transfer of goods made with consumers acting outside the course of business. This has been drafted widely to encompass all sales contracts, hire contracts, hire-purchase contracts as well as any other contracts which involve the transfer of ownership of goods.

Digital content contract

The Act defines a digital content contract as a contract for a trader to supply digital content to a consumer where the digital content is supplied or to be supplied for a price paid by the consumer.

The definition also includes contracts where a trader supplies digital content to a consumer free with paid-for goods, services or digital content, where that content is not generally available to consumers unless they have paid a price either for it or for the goods, services or digital content with which it is supplied.

Free apps and other digital content which are not supplied in conjunction with something which is paid for is not classed as a digital content contract except for when the content supplied causes damage to a device or to other digital content.

Consumer rights and remedies

Unlike the SGA, the current implied terms are extended to contracts for digital content and new remedies are offered where digital content is faulty. Consumers are entitled to:

replacement or for the digital content to be repaired provided that the chosen remedy is not impossible or disproportionately difficult;

where repair and replacement is impossible or if not done within a reasonable time and without significant inconvenience to the consumer, a consumer can request a price reduction, reflecting the difference in value between the price paid for the content and what the consumer actually receives (up to a full refund); and

a short term right to reject, the right to repair or replace and a final right to reject in relation to any goods which are supplied with digital content where the content does not conform.

Where the contract is for the supply of both services and digital content (such as a music streaming service), the Act retains the implied terms of the SGSA, but also introduces new remedies for consumers in case of breach:

the right to request that a service which has not been performed with reasonable care and skill is performed again; and

where the above is not possible, or the service is not performed within a reasonable time, a price reduction.

The role of the dealer

If a consumer has entered into an agreement via a dealership, it is likely that the consumer will want to reject the goods by contacting the dealership, so the finance provider has very limited ability mitigate the risk. The Act allows a consumer to exercise his right to reject the goods by indicating that he is doing so to the trader; however questions arise as to whether the finance provider as the trader can require the consumer to exercise the short term right to reject the goods only by contacting the finance provider.

What does this mean?

Whilst there are some concerns that the Act may drive an increase in early cancellation and rejection of goods which could have financial and operational impacts, the CRA is good news for consumers. The Act brings much-needed clarity to a previously uncertain area of law, and brings existing consumer rights into the digital era. For traders, the Act will mean that traders must ensure that their terms of sale are compliant with the new provisions by 1 October, and must make themselves aware of the remedies available to consumers.