Does your company need to include a cancellation period in its terms and conditions?

Business customers do not have any general cancellation rights for goods and services they purchase, however, in certain circumstances, consumers do. Consumers have a right to a cancellation period for distance selling contracts (e.g. those formed online) under the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, unless a relevant exception applies.

The regulations entitle consumers to a 14-day right to cancel. They also set out the information that a business must provide to their consumer concerning the cancellation right, whether or not the right is exercised.

To qualify for the right to cancel under the regulations there are two requirements:

1.                  The purchaser must have purchased in their capacity as a ‘consumer’. In other words, the purchase must not be carried out in the course of any business activity.

2.                  The contract for the purchase must have been concluded at a distance. In other words, distance contracts are contracts made online, over the telephone or by mail order. Essentially sales that salespeople have not completed in person.

Where these requirements are met for goods and services (and subject to the exceptions outlined in the regulations) the consumer has the right to cancel within 14 days for any reason and get their money back.

When does the cancellation period begin?

The cancelation period for services purchased at a distance begins the day after the consumer completes the purchase. For goods purchased at a distance, the cancellation period starts from the date the consumer takes ownership of the goods. The consumer takes ownership of the goods once they have been delivered safely.

Note this is a general position and the regulations specify the cancellation periods for a variety of circumstances. One example is specifying the applicable cancellation period where multiple goods are purchased under one order.

Is the Consumer entitled to a full refund?

Certain costs can be deducted. One example is when the provider offers services to the consumer during the cancellation period. The consumer still has the right to cancel within the 14-day window before the contract is fully performed. If the consumer cancels, the consumer will have to pay for the service element that has already been performed, provided that certain information was given to the consumer in advance, as part of the information requirements within the regulations.

What are the Information requirements?

The company must provide the conditions, time limits and procedure for exercising a right to cancel. This information may be provided by correctly filling in and providing the ‘Model instructions for cancellation’ provided by the Regulations, found here:

There are specific exceptions to the right to cancel a contract, however, it does not entitle a company to ignore the right to cancel entirely. Instead, a business should be aware that the information requirements under the act still apply. A business must advise their customer that the cancellation does not apply because the goods or services are excluded.

Ensuring your business is compliant with these regulations is important, as failure to do so can be costly. If you have any queries as to whether your terms and conditions are compliant, please get in touch with the Commercial Team and we can assist you.