The Consumer Rights Act 2015 (“the Act”) comes into force on 1st October 2015, having received Royal Assent on 26th March 2015. The Act is predicted to boost the economy by 4 billion over the next ten years and has been described by Vince Cable as “the biggest shake up of consumer law for a generation”.
The Act is split into two parts, each of which is said to provide consumers with enhanced, easy to understand rights, as well as streamlining law from eight pieces of legislation. It is vital for traders to be aware of the changes implemented by the Act and to take any necessary action in order to ensure compliance and avoid potential liability.
Part 1: Consumer contracts for goods, digital content and services
The first part of the Act focuses on consumer contracts for goods, digital content and services and consolidates law from legislation such as the Supply of Goods and Services Act 1982 and the Sale of Goods Act 1979. A key feature of this section is its attempt to bring this area of law into the 21st century by setting out clear and updated consumer rights for digital content, such as:
- a right to repair or replacement of faulty digital content; and
- the right to a price reduction where repair and replacement are not possible or do not resolve the fault.
More generally, part 1 also provides consumers with a 30-day time period in which to return faulty goods, if the goods are found to fall below any of the statutory standards. Further, the trader is barred from imposing a fee for the refund and the refund must be made within 14 days after the agreement to refund is made.
It is hoped that the provision of rights such as those listed above will help to ensure that consumers are better protected, particularly when purchasing goods and services on the internet. This will allow consumers to challenge bad practices, boosting consumer confidence.
Part 2: Unfair terms
The second part of the Act addresses unfair contract terms and reproduces and expands upon law from previous legislation, such as the Unfair Terms in Consumer Contracts Regulation 1999 (“UTCCR”).
Under the UTCCR, an unfair term of a consumer contract is not binding on the consumer. As one would expect, this provision has been reproduced in section 62 of the Act. The UTCCR does, however, also provide that a contractual term that specifies the main subject matter of the contract, or the price, can be excluded from an assessment of fairness, provided that it is “transparent”, i.e. in plain and intelligible language and (if written) legible. Not only has this exception been reproduced in the Act at section 64, it is now more onerous, as the Act requires the term to be “prominent”, as well as transparent. To qualify as being prominent, the term must be brought to the customer’s attention in such a way that the average consumer (i.e. a consumer who is reasonably well-informed, observant and circumspect) would be aware of it.
Consequently, it may not be possible for business owners to rely on the protection of the “small print” in the future.
Other noteworthy changes include the expansion of the list of potentially unfair contractual terms from the UTCCR at Schedule 2 of the Act and the ability of the court to consider whether a contractual term is fair, regardless of whether any party has complained on that issue.
Conclusion: What does this mean for business owners?
It is vital for business owners to have a clear understanding of the changes introduced by the Act. From 1st October, they will be required to adhere to higher standards, which if not met may impact upon companies’ volume of administration, running costs and workload.
Those offering online services should be aware that, for the first time, this legislation extends consumer rights into digital content. As well as paying close attention to these rights, online traders should also take note of the remedies available to consumers where such content is faulty.
Finally, all business owners should now review their standard terms and conditions in order to ensure compliance with the Act, with a particular focus on the exemption from the assessment of fairness in section 64 and the expanded list of terms that are potentially unfair contained within Schedule 2.
If you require assistance with conducting a review of your business’ terms and conditions, or would like to learn more about the impact of the Consumer Rights Act 2015,
please contact Paul Forsyth, Associate Solicitor in the Corporate and Commercial department: email@example.com