The Consumer Contracts Regulations will come into force on 13 June 2014 and will apply to consumer contracts (distance contracts, off-premises contracts and on-premises contracts) which are made on or after 13 June 2014. They will replace The Consumer Protection (Distance Selling) Regulations 2000 and The Cancellation of Contracts made in a Consumer's Home or Place of Work etc. Regulations 2008.
The key changes relate to:
- pre-contract information to be provided. The information required for distance and off-premises contract has been extended and requirements have been introduced for on-premises contracts;
- improved cancellation rights. The "cooling off period" is extended to 14 calendar days. Where a right to cancel exists, traders must supply consumers with a cancellation form in the prescribed manner;
- the prohibition of hidden costs. Traders must seek express consent from consumers to any additional payments. Traders must not use pre-ticked boxes on websites which result in payments being made by the consumer. Consumers cannot be charged more than the basic rate to call a customer service helpline or to discuss any issue with goods or services which have been supplied.
Businesses selling to consumers should review their terms of sale and websites. It is very likely that changes will be required to comply with the new rules.
The Consumer Contracts Regulations only apply to contracts between traders and consumers. A consumer is: "An individual acting for purposes which are wholly or mainly outside that individual's trade, business, craft or profession". The consumer must be an individual (a natural person). A trader is: "A person acting for purposes relating to that person's trade, business, craft or profession, whether acting personally or through another person acting in the trader's name or on the trader's behalf". This includes a sole trader.
The Consumer Contracts Regulations do not apply to any contracts for financial services, but if a financial services contract is ancillary to a distance or off-premises contract Regulation 38 will apply and the financial services contract will automatically terminate if a consumer exercises his rights to cancel the distance or off-premises contract.
The Consumer Contracts Regulations apply to:
- distance contracts;
- off-premises contracts; and
- on-premises contracts.
A distance contract is: "A contract concluded between a trader and a consumer under an organised distance sales or service-provision scheme without the simultaneous physical presence of the trader and the consumer, with the exclusive use of one or more means of distance communication up to and including the time at which the contract is concluded". Websites which merely offer information on the trader, his goods and/or services and his contact details do not constitute an organised distance sales or service provision scheme.
An off-premises contract is a contract between a trader and a consumer which is any of the following:
- "a contract concluded in the simultaneous physical presence of the trader and the consumer, in a place which is not the business premises of the trader;
- a contract for which an offer was made by the consumer in the simultaneous physical presence of the trader and the consumer, in a place which is not the business premises of the trader;
- a contract concluded on the business premises of the trader or through any means of distant communication immediately after the consumer was personally and individually addressed in a place which is not the business premises of the trader in the simultaneous physical presence of the trader and the consumer;or
- a contract concluded during an excursion organised by the trader with the aim or effect of promoting and selling goods or services to the consumer."
An on-premises contract is a contract between a trader and a consumer which is neither a distance contract nor an off-premises contract.
Part 2 Information requirements
Before the consumer is bound by an on-premises contract, the trader must give or make available to the consumer the information described in Schedule 1 in a clear and comprehensible manner, if that information is not already apparent from the context. This requirement does not apply to a contract which involves a day-to-day transaction and is performed immediately at the time when the contract is entered into.
Before the consumer is bound by an off-premises contract or a distance contract, the trader must provide the consumer with the information listed in Schedule 2 in a clear and comprehensible manner and, if a right to cancel exists, the trader must give the consumer (or make available to the consumer, if it is a distance contract) a cancellation form as set out in Part B of Schedule 3.
The information required in Schedule 2 in relation to cancellation rights may be given in accordance with the model instructions on cancellation which are set out in Part A of Schedule 3. This is not mandatory, but if the trader supplies these instructions he will be treated as having complied with his obligations in this respect.
There are further requirements for distance contracts concluded by electronic means. The trader must ensure that the consumer, when placing the order, explicitly acknowledges that the order implies an obligation to pay and, if placing an order entails activating a button or similar device, the trader must ensure that the button or device is labelled "order with obligation to pay" or a corresponding, unambiguous formulation indicating that placing the order entails an obligation to pay. If the trader does not comply with these requirements, the consumer will not be bound by the contract.
Part 3 Right to cancel
This part applies to distance and off-premises contracts. There are circumstances in which a consumer will not have a right to cancel. For example:
- if the goods supplied are made to the consumer's specifications or are clearly personalised;
- if the goods are liable to deteriorate or expire rapidly;
- if the contract is for the supply of accommodation, transport of goods, vehicle rental services, or services relating to leisure activities and the contract provides for a specific date of performance.
Cancellation rights will cease to be available where:
- sealed goods have been unsealed after delivery and are not suitable to be returned due to health protection or hygiene reasons;
- sealed audio or video recordings or computer software have been unsealed after delivery; or
- the goods have become mixed inseparably with other items after delivery.
The cancellation period is broadly speaking 14 calendar days, but if the trader fails to give the consumer the required information in relation to his cancellation rights this is extended by an additional 12 months.
If the contract is a contract for the supply of services or a contract for the supply of digital content which is not supplied on a tangible medium, the cancellation period ends at the end of 14 days after the day on which the contract is entered into. If the contract is a sales contract the cancellation period ends at the end of 14 days after the day on which the goods come into the physical possession of the consumer. However, if multiple goods (or multiple pieces of one item) are ordered in one order but some of the goods or pieces (as appropriate) are delivered on different days, the cancellation period ends at the end of 14 days after the day on which the last of the goods or pieces (as appropriate) comes into the physical possession of the consumer.
In order to cancel a distance contract, a consumer must notify the trader either by completing a cancellation form (following the model cancellation form) or by making any other clear statement setting out his decision to cancel the contract. This would include a telephone call or email. The consumer does not have to use the cancellation form supplied by the trader, but if the consumer does so the trader must acknowledge receipt without delay.
The consumer must return the goods to the trader unless either the trader has offered to collect them or, in the case of an off-premises contract, the goods were delivered to the consumer's home and could not by their nature normally be returned by post. The consumer must send off the goods or hand them over without undue delay and in any event not later than 14 days after the day on which he informs the trader that he is cancelling the contract. The consumer must also pay the cost of returning the goods unless either the trader has agreed to pay the costs or the trader has failed to inform the consumer that he is required to pay the costs.
Upon cancellation, the trader must reimburse all payments received from the consumer. This includes delivery charges paid for the delivery of the goods to the consumer. However, if the consumer chose a more expensive method of delivery than the usual and least expensive method offered by the trader, the trader is only obliged to reimburse the amount which the consumer would have paid had he chosen the trader's usual and least expensive method of delivery. Reimbursement must be made "without undue delay" and generally within 14 days after the day on which the trader receives the goods back, or, if earlier, the day on which the consumer supplies evidence of having sent the goods back. The reimbursement must be made by the same means of payment used by the consumer. The trader may not charge any fees. The trader may deduct the amount of any diminution in value of the goods as result of the handling of the goods by the consumer, but this right will be lost if the trader failed to inform the consumer correctly of his rights to cancel.
Part 4 Protection from inertia selling and additional charges
Inertia selling, where a trader demands payment for unsolicited goods supplied by the trader to a consumer, is an unfair commercial practice under The Consumer Protection from Unfair Trading Regulations 2008 (Unfair Trading Regulations). A new Regulation 27A is being inserted into the Unfair Trading Regulations to make it clear that a consumer does not have any obligation to pay for unsolicited goods and that, as between the trader who supplied the goods and the consumer, the consumer may use, deal with or dispose of the unsolicited goods as if they were an unconditional gift.
Under any contract between a trader and a consumer, no payment shall be payable in addition to the remuneration agreed for the trader's main obligation unless the consumer gives his express consent before becoming bound by the contract. If the consumer does not change a default option (such as a pre-ticked box on a website), this will not be treated as express consent. The trader will be obliged to reimburse any payment made without the consumer's express consent.
Traders must not charge consumers any more than the basic rate for all telephone calls made by a consumer to a trader in relation to contracts entered into with the trader. The trader will be obliged to reimburse any telephone charges in excess of the basic rate.