On 1 October 2015, a significant change is going to happen to consumer law, a change with implications for any business which sells goods or services to consumers. The familiar landscape of the Unfair Contract Terms Act 1977 (“UCTA”) and the Unfair Terms in Consumer Contracts Regulations 1999 (“UTCCR”) (among others) are going to be swept away, and replaced with the Consumer Rights Act 2015. Touted primarily as a piece of consolidating legislation, pulling many separate strands of consumer protection law together under a single umbrella, the reality is that this act significantly extends consumers’ protections in several key respects. The changes which it is bringing about are ones that any supplier of goods and services in the consumer sector needs to have prepared for, and taken into account.

The Act’s scope is wide-ranging. It encompasses every contract between a trader (a person/company acting, whether directly or through an intermediary, for purposes related to their business, trade, profession or craft) and a consumer (an individual acting wholly or mainly for purposes outside of their business, trade, profession or craft). It applies to contracts on the trader’s standard terms, where the consumer has had no opportunity to negotiate these, but it also applies to negotiated contracts. Furthermore, the Act’s effect also extends to non-contractual notices displayed by traders to their consumers.

Like the legislation that it replaces, the Act designates certain terms in consumer contracts or notices as automatically unfair, such as attempts to limit the trader’s liability for death or personal injury through the trader’s negligence. These “black-listed” terms will automatically be unenforceable in such contracts or notices. Other terms are “grey-listed” – capable of being enforceable but only where their inclusion in the contract or notice satisfies the test of fairness as set out in the Act, and where the contract as a whole is sufficiently transparent, in the sense of being clear and intelligible.

It is within the grey-list of terms that the first significant new features of the 2015 legislation can be found. While, as previously, the legislation will not generally allow terms as to the price or subject matter under the contract to be subjected to the fairness test (except where they do not meet the requirements of transparency, or are not sufficiently prominent) terms as to payments on cancellation or termination can be struck down as unfair if the charges payable at the conclusion of the contract are “disproportionate”. Similarly, any term which seeks to allow the trader to define what the subject matter of the contract is, or to fix the price, after it has been entered into, is at risk of being struck down.

Beyond the requirement for terms to be fair and transparent, a number of other specific consumer rights are set out in the Act and deemed to be incorporated into consumer contracts. Any attempt to limit liability under any of these further rights, or to restrict the remedies provided for under the Act in connection with these, will automatically fail. These include the provisions previously to be found under the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982, relating to the quality of goods supplied and the care and skill with which services are to be provided. They have, however, been updated – particularly to take account of the wide extent to which goods/services are now supplied digitally.

They have also been expanded, most significantly in relation to the range of information and material provided to the consumer pre-contractually which, if the consumer can show that they relied upon it in deciding to enter into the contract, will be incorporated as a term. This is a significant change, potentially importing a significantly wider range of unwritten terms into consumer contracts which will have to be considered and addressed by traders on a case by case basis. It represents a particular risk to any trader who conducts their business with consumers through sales-people, and it is going to be more important than ever to ensure that the trader’s sales-force are given extremely clear parameters over the scope of what promises they are entitled to make to a consumer beyond what is documented within the contract itself. It is also going to be important to revisit all advertising since even inducements to buy which might previously have been regarded as “mere puffs” – too vague to be enforceable as contractual terms – may well now be resurrected by disappointed consumers as factors which influenced their decision. If not delivered upon, this could entitle the consumer to a price reduction.

On the subject of remedies, traders also need to be aware that the way in which a consumer’s statutory rights are required to be satisfied will change under the new Act. A more rigorous tiered system of remedies is being imposed, with fewer opportunities for manufacturers or suppliers to attempt to effect repairs before the consumer has an option to reject the product supplied or to require a replacement. For traders involved in the supply of complex, multi-faceted products, this represents a real challenge, because the “good” in question might be the car, or computer, even though that one item is comprised of a number of components, not all of them sourced from a single supplier. Ensuring that the trader’s own contractual remedies against those suppliers are robust, and aligned with the trader’s obligations to its consumer under the Act, is therefore going to be essential.

An article such as this can necessarily only scratch the surface of the significant changes which are coming into force at the end of this month.  While we are aware that many businesses in the commercial sector have been taking the prudent course of having their terms of business, working practices and supplier chain documentation reviewed and updated, there are undoubtedly many other suppliers of goods and services for whom the change of law on 1 October 2015 is going to come as an unexpected and extremely unpleasant surprise. For those who are sleep-walking into the new regime, the risk is not only that specific terms in individual disputes with consumers end up being unenforceable, it is that (as established under the new Act) the business as a whole can find itself being referred to the Competition and Markets Authority for regulatory review, with very serious sanctions awaiting businesses found to be systematically unfair to their consumers. You have been warned!