Sharon Auton who leads the TSP Dispute Resolution team discusses the Consumer Rights Act 2015 which comes into force on 1 October 2015 and consolidates much of the existing UK consumer law. There are however some key changes which enhance consumer remedies which businesses will need to consider and may result in a review of terms and conditions to comply with the Act.

The previous consumer legislation, such as the Sale of Goods Act, the Supply of Goods and Services Act and the Unfair Contract Terms Act are over 30 years old and no longer reflected the significant growth in online trading and digital products since then which is encompassed in the new legislation.

The Act is designed to simplify the law and be more user friendly.

A consumer is defined as a natural person (not a company or limited liability partnership), so an individual, acting for purposes which are wholly or mainly outside that individual’s trade, business, craft or profession. This definition brings sole traders and the growing group of home-workers, who buy goods for both home and business use, within its scope provided that the purchase is primarily for non business use.

From 1 October 2015, companies which enter into contracts outside their normal course of business will not be treated as consumers under the Unfair Contract Terms Act, losing the protection they previously had.

A trader is defined as a person acting for purposes relating to that person’s trade, business, craft or profession, whether personally or through another person acting in the trader’s name or on the trader’s behalf. This includes professionals, sole traders, limited liability partnerships and companies.

Digital content is defined as data produced and supplied in digital form and includes music downloaded or films streamed over the internet, or software, music or film on a disc.

Goods must still be of satisfactory quality, must be fit for purpose, must match their description and must match a sample, which is similar to previous legislation. If goods are seen or examined by the consumer in a shop the goods supplied must match those seen, unless the trader brings any differences to the consumer’s attention. Services must be provided with reasonable care and skill.¬† It also brings in some key enhancements for consumers by introducing specific statutory remedies for non-conforming services. These include the right to require repeat performance, and the right to a reduction in price, depending on the nature of the non-conformity.

Remedies include:

Consumers will be able to reject non-conforming goods and claim a full refund of the price paid within 30 days. The refund cannot be reduced for use of the goods by the consumer during this period.

Consumers can agree to a repair or replacement of the goods during this 30-day period. However, the period will be paused for seven days or the time that it takes to make the repair or replacement, whichever is longer. During this extended period, the consumer can still exercise his short-term right to reject repaired or replacement goods which are still non-conforming. The consumer cannot be forced to accept a repair or replacement during this period.

Once a consumer’s short-term right to reject non-conforming goods has expired, they¬† will still have the right to repair or replacement at the trader’s cost. A consumer can choose between repair and replacement unless the chosen remedy is impossible or disproportionate when compared to the other remedy.

Traders only get one chance to make a repair or replacement before the consumer is entitled to the final remedy of a price reduction or the final right to reject. If the goods are still non-conforming after a repair or replacement, or a repair or replacement is not carried out within a reasonable time and without significant inconvenience to the consumer, the consumer will be entitled to either the final right to reject or a price reduction.

Where the goods are rejected within six months of delivery, a trader cannot deduct a sum from the refund to reflect the use which the consumer has had of the rejected goods unless the rejected goods are motor vehicles. Once the six-month period has passed, a trader can make a deduction for use of any rejected goods.

Alternatively the consumer can keep the goods and claim a price reduction. The price has to be reduced by an appropriate amount.

The Act specifies that terms must be transparent and prominent. Terms which are not will be subject to the fairness test. The Act introduces “the grey list” of potentially unfair clauses in a consumer contract, which includes:

  • Terms which allow disproportionate charges or require the consumer to pay for services which have not been supplied, if the consumer ends the contract. This is designed to prevent disproportionately high-cost cancellation clauses
  • Terms which allow the trader to decide the characteristics of the subject matter of the contract after the consumer is bound by the contract. (This does not apply to contracts which last indefinitely, where reasonable notice of the change must be made)
  • Terms which allow the trader discretion to set the price after the consumer is bound by the contract, where no price or method of determining the price is agreed when the consumer is bound. (This does not apply to contracts which last indefinitely, where reasonable notice must be given of the change)

Businesses should consider reviewing their standard consumer terms to ensure that they conform with the new Act which comes in on 1 October 2015.

Sharon can be contacted by email on sharon.auton@tsplegal.com or by telephone on 01206 217043.