The Government has issued its long-awaited Consumer Rights Bill. Just over a year ago we were waiting for the Bill as the Consumer Rights Directive was published. Only a few months before the directive needs to be implemented the Bill has finally arrived.
The Bill demonstrates the long hard look at consumer law in the UK that the Government and interested bodies have had over the last few years. Running to more than 100 pages, nobody would suggest that the new bill is short and to the point. But it is simpler, for both consumers and businesses trading with consumers.
So, what are the headlines?
Is your customer a consumer?
A new consolidated definition means we know a consumer must be an individual who was acting for purposes that are wholly or mainly outside that individual's trade, business, craft or profession. "Craft" may be an interesting reference for some small "hobby" businesses. If someone says they are a consumer, it's up to you to prove that they are not.
Return them within 30 days, and consumer gets a refund - unless the trader can demonstrate that they weren't faulty when it sold them. Return them after 30 days but within six months, and consumer gets a replacement or repair. If that is faulty then the consumer receives a refund (reduced by an amount appropriate to reflect any use of the goods) or a price reduction.
Without undue delay and within 30 days unless you've agreed otherwise. Services just need to be performed within a reasonable time, which is a question of fact.
What about software?
The Bill puts to rest discussions as to whether software is covered by the Sale of Goods Act. There's a whole section on digital content, which covers any data (software, video, audio, information) supplied in a digital form. It requires that the digital content is of satisfactory quality, fit for purpose as described and that the trader has the right to provide the digital content.
There is no specific right to a refund for faulty digital content (only if the trader doesn't have the right to provide the content). Instead there is a right to repair or replacement or for a price reduction. As with goods the fault is presumed to have been there when the content was sold if it arises within the first six months.
We've been used to the information requirements of legislation such as the E-Commerce Regulations and the Distances Selling Regulations for a long time now. This Bill makes ever clearer how important this information is - it is now specified to be contractually binding, so make sure it's correct!
What's the loss?
The Bill provides for specific, statutory remedies. But it also implies terms into your contract with the consumer; breach of those contractual terms will give rise to possible damages claims. The Bill goes further, setting out what the appropriate measure of damages would be. Even though you have refunded the price of the goods to the consumer you may also find the consumer bringing a claim for extra money to buy a replacement product if prices have increased.
Am I being unfair?
The Bill consolidates the law around unfair terms with consumers. These apply to contracts and notices. If you are being unfair, it is unenforceable, unless the consumer wants to rely upon it! The overarching rule is that a term is unfair if it causes a significant imbalance in the parties' rights and obligations to the detriment of the consumer, but the Bill also sets out specific examples.
Am I negligent?
It is common to see clauses which say a trader is not seeking to exclude liability for death or personal injury caused by negligence. The Unfair Contract Terms Act has been requiring it since 1977 but the new Bill expands on what negligence means. It includes the breach of an obligation to take reasonable care or exercise reasonable skill in the performance of a contract where the obligation arises from the contract terms.
What can't I exclude?
The provisions vary slightly but in essence, traders cannot exclude or restrict your liability in relation to the terms implied by the Bill. These include satisfactory quality, fitness for purpose, complying with description/sample/model, right to supply (title), time for delivery and passing of risk. Also included are obligations to perform services with reasonable skill and care or arising from the information required to be provided under the Consumer Rights Directive.
And you can't exclude these provisions by applying a law other than UK law to your contract with the consumer. If you are pursuing or directing activities to consumers in the UK, you will be caught.
It doesn't stop here. Consolidating consumer provisions from ten pieces of UK legislation, implementing three pieces of EU legislation and provisions on enforcement from four other pieces of legislation was never going to be easy! But the Bill still doesn't reflect all of the rights of consumers.
The Distance Selling Regulations and E-Commerce Regulations will need to be brought into line with the Consumer Rights Directive, which is only partly implemented by the Bill. And there's still more to come. We've already had an early implementation of one part - the Consumer Rights (Payment Surcharges) Regulations 2012 - which doesn't form part of the Bill.
So consumer law is becoming simpler, but it's not the end of the game. Now is a good time to:
- Look at policies and process for dealing with faulty goods - and review your refund policies for the proposed changes under the Consumer Rights Directive
- Review customer contracts and notices to address unfair terms
- Check that any digital content sales comply with the rules
- Consider putting in place staff training or information for when the rules come into force.