The Consumer Rights Act 2015 (“the CRA”) received royal assent on 26 March 2015, the last day of the last Parliament. It heralds significant changes to consumer rights and redress, in part implementing the Consumer Rights Directive.
Chapter 4 of the CRA consolidates existing law in relation to the provision of services and also provides new statutory remedies to consumers. Chapter 4 is expected to come into force, in relevant part, in October 2015.
The CRA adopts the European term of “trader”, as opposed “supplier” as previously referred to in the Supply of Goods and Services Act 1982.
Information about the trader or service to be binding - S50
One of the headline provisions introduced by the CRA as far as traders will be concerned is S50 (1). Under this provision, anything said or written to the consumer, by or on behalf of the trader, about the trader or the service will be treated as an implied term of the contract if it is taken into account by the consumer when deciding to enter the contract or making a decision after entering the contract.
This is an extraordinary development in contract law. As a matter of law, traders will be held accountable for statements made to a consumer which affected their decision to engage the trader’s services. Clearly, the evidence as to what the consumer took into account will be the evidence of the consumer.
New statutory remedies under the CRA - S55 and S56
The CRA provides for two statutory remedies in the event that a service does not conform to the contract (including the implied terms): the right to require repeat performance of the contract; and the right to a price reduction.
Should the consumer require repeat performance of the contract then it must be carried out in a reasonable time and without significant inconvenience to the customer, and the trader must bear the necessary costs incurred in doing so.
While the consumer has the right to require repeat performance by the trader, they are only permitted to obtain a price reduction in more limited circumstances. It must be impossible to repeat performance of the service in accordance with the contract or the trader must have failed to provide repeat performance within a reasonable time and without significant inconvenience to the customer.
It is not hard to foresee difficulty in defining the point at which a trader would have failed to provide a service within a “reasonable time”. This is because the CRA fails to provide a definition of the same and, in the context of repeat performance, only provides that what constitutes a “reasonable time” is to be determined by taking into account the nature of the service and the purpose for which the service was to be performed.
The scope of the applicability of pre-contractual and post-contractual representations should be of particular concern. For example, if the advertising for Business Class of a particular airline featured its passengers drinking Bollinger champagne then this could form part of the consumer’s contract, if the consumer has taken this into account when deciding to enter the contract. If Pol Roger champagne was then served instead of Bollinger, the airline would be in breach of the CRA. Provided that repeat performance of the contract is not impossible, which is unlikely to be the case, then this could lead to a scenario whereby the passenger could be entitled to demand another business class flight on the same routing, even though they had already been carried by the airline. Whether or not the courts will require repeat performance for such trifling breaches is not clear, but the CRA provides that repeat performance may be required “to the extent necessary to complete its performance in conformity with the contract”.
Should the Courts decide that repeat performance is not appropriate in such circumstances, the alternative would be for the passenger to seek a price reduction of an “appropriate amount”, which can be up to the full price paid.
Position in relation to the Montreal Convention
In the context of claims arising from international carriage by air, or other carriage to which it applies, the Montreal Convention, at least in some jurisdictions, including the UK, has been held to provide the exclusive cause of action and remedy for claims by a passenger against an airline. The question arises as to whether the CRA provides new remedies for breaches of the Convention, and whether it creates a new cause of action where the breach occurs outside of the temporal scope of the Convention.
In Stott v Thomas Cook Tour Operators Limited , the Supreme Court considered the scope of the Montreal Convention (“the Convention”) covered what “may physically happen to passengers between embarkation and disembarkation.”
The first question which arises is whether the remedies provided for by the CRA are available in the context of a Convention claim. For example, could a passenger, injured (perhaps de minimis) by a defective seat during the course of carriage, seek damages for pain and suffering and re-performance of the contract? The CRA specifically provides that the rights to a price reduction and/or repeat performance are without prejudice to such other remedies as are available.
The second question is whether a contractual claim arises in circumstances where the Convention does not provide a remedy. In Stott, the Supreme Court clearly contemplated that actions arising outside of the temporal scope of the Convention were not limited by or subject to the Convention. Therefore, a “failure” in the amenities provided in a premium lounge (time in the lounge not being in the operations of embarkation) may give rise to a contractual claim by reason of the terms implied by the CRA.
Chapter 3 - Digital Content
Although Chapter 4 will be of most interest and relevance to airlines, some elements of the service provided by an airline could be caught by the provisions in Chapter 3 of the CRA concerning digital content.
For example, if an airline provides inflight entertainment (“IFE”) during its carriage, and the IFE does not conform with representations made by or on behalf of the carrier, the consumer becomes entitled to the remedies provided for under the CRA specific to digital content: repair or replacement; price reduction or refund (of the price attributable to the digital content).
The CRA will impose potentially onerous obligations on traders, including airlines. Advertising that would have previously been characterised as “mere puff” will now result in implied terms of the contract, giving rise, in the event of breach, to the right to repeat performance and/or a price reduction, in addition to existing remedies. We can expect to see an increase in consumer expectations as to the extent of actionable shortfalls in service performance and the value of the compensation offered in response.