The Consumer Rights Act 2015

Introductory Guide

30th July 2015

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The Consumer Rights Act 2015 (the “CRA”) is due to come into force on 1st October this year.

Amongst other things, it will introduce changes to the rights, remedies and obligations that will apply in the UK to contracts entered into by traders and consumers for the supply of goods, services and/or digital content. The changes will apply to contracts entered into after 1st October.

Now is the time to work out whether the CRA will impact upon the contracts your business enters into and, if it will, to get to grips with the new rules. This, the first in a series of articles by Geldards on the CRA, will help you to understand:

  • Whether your business will be affected;

  • If so, what the main changes will be; and

  • What steps you may need to take to comply with the new laws.

WILL YOUR BUSINESS BE AFFECTED?

The new rules will apply to your business if:

  • You are a trader;

  • Who enters into contracts for the supply of goods, digital content or services (or any combination of these);

  • With consumers.

It does not matter if the contract is written, oral, or implied by conduct or a mixture of all three.

Are you a trader?

You will be a “trader” under the CRA if you are acting for purposes relating to your trade, business, craft or profession. Individuals, partnerships, companies, charities, government departments and local and public authorities can all be "traders".

You will be a trader even if, in entering into or performing a contract, you appoint someone else to act on your behalf (e.g. you sub-contract the performance of part of a contract to another business).

Are you contracting with a consumer?

Firstly, the CRA defines a “consumer” as an individual. This means that the consumer rights set out in the CRA will not apply to small businesses or legally incorporated organisations.

Secondly, an individual will be a consumer if he is acting for purposes that are wholly or mainly outside his trade, business, craft or profession. The inclusion of the word “mainly” means that an individual who, for example, buys a laptop for his personal use but uses it while working from home one day a week will still be a consumer under the CRA. If you dispute that a person is a consumer, the burden will be on you to prove this on a balance of probabilities.

Are you supplying goods, digital content and/or services?

  • The definition of “Goods” under the CRA is broad and will effectively cover anything physical which you can move.

  • “Digital content” is defined as data produced and supplied in digital form. This will include software, music and computer games. Digital content may be intangible (e.g. apps or music downloads) or tangible (e.g. software supplied on a computer or a disk). However, special rules apply where digital content is supplied in tangible form.

  • “Services” are not defined by the CRA. The new rules are intended to apply to all types of services, except those specifically exempted.

WHAT CHANGES WILL THE CRA INTRODUCE TO CONSUMER CONTRACTS?

The main changes that the CRA will introduce to consumer contracts are as follows:

Contracts for the supply of goods

  • Supply not just sale: Generally speaking, the CRA applies the same rights and obligations to different types of supply contract (e.g. sale, hire and hire purchase). However, there will still be some differences between the different contract types.
  • New quality standards: As well as the existing standards of satisfactory quality etc. the CRA will introduce certain new statutory quality standards when goods are supplied to consumers, which cannot be excluded. The new standards are that:
    • Goods must match a model seen or examined by the consumer (save to the extent that any differences are drawn to the consumer’s attention before the contract is formed); and
    • Pre-contract information supplied to consumers by traders about the main characteristics of goods under the obligations set out in the Consumer Contracts Regulations 2013 (“the 2013 Regulations”) will form part of the description of the goods supplied. The consumer will have specific statutory rights if that information is breached or turns out to be incorrect.

  • Changes to consumer remedies if goods do not conform: The CRA will introduce changes to the remedies available to a consumer if goods do not conform to the statutory quality standards. In particular:
    • Consumers will have a new, initial fixed rejection period of 30 days following delivery to reject faulty goods and end the contract. If a consumer does so, he will be entitled to a full refund. A shorter rejection period will apply to perishable goods. A consumer does not need to give a trader the chance to repair or replace goods during this period, but can do so if he/she wishes;

    • After the initial rejection period has expired, a consumer must give a trader the chance to repair or replace faulty goods. However, traders will only have one opportunity to do so. If, after that, the fault re-occurs or a new problem arises, the consumer will have a final right to reject the goods or require a price reduction;
    • If a consumer exercises his final right to reject goods, no deduction for use can be made from any refund payable during the first 6 months after delivery. The only exception to this is where the product supplied consists of a motor vehicle.

  • Goods which contain digital content: Goods which contain digital content will automatically be deemed to be faulty if the digital content in them does not conform to the statutory quality standards that will apply to digital content under the CRA (see further below).
  • Changes to delivery rules: The new rules relating to delivery that were introduced into the UK by the 2013 Regulations will apply under the CRA. This means that, unless an alternative delivery time or period is agreed with the consumer before a contract is entered into, goods must be delivered without undue delay and in any event no later than 30 days from the date on which the contract between the trader and the consumer was formed. A consumer will also have new statutory remedies if delivery is late.

Very few goods contracts are excluded from the CRA. Excluded contracts include:

  • Contracts under which a consumer acquires second hand goods at a public auction which they had the opportunity to attend; and
  • Goods sold by execution or authority of law (e.g. an official sale of the property of a bankrupt).

Contracts for the supply of digital content

Under the current law, no specific statutory obligations, rights or remedies apply where a trader supplies digital content. Under the CRA:

  • Quality Standards: New statutory quality standards (which cannot be limited or excluded) will apply to supplies of digital content to consumers. These are very similar to the quality standards that will apply to goods;

  • Statutory remedies: A consumer will have specific statutory remedies if digital content does not meet the statutory quality standards. A consumer will have the right to have non-conforming digital content repaired or replaced and there will also be a right to a price reduction in certain circumstances (e.g. if digital content cannot be repaired or replaced within a reasonable time). Unlike goods, however, there will be no right for consumers to reject digital content and receive a refund. That said, if digital content is supplied in a tangible form (e.g. on a disk or as part of a digital camera) and the digital content is faulty, the product as a whole will automatically be deemed not to conform to the contract and the full range of goods remedies will apply (including a right to reject).

Generally, the rights and remedies set out in the CRA relating to digital content will only apply where:

  • a consumer pays for the digital content with money or a facility which has monetary value (such as a token, virtual currency or a gift voucher); or

  • the digital content is associated with paid for goods, other digital content or services (e.g. it comes free with a paid for magazine).

However, the CRA also includes certain rights that are not conditional upon the digital content having been “paid for”. Such rights and the related remedies apply where digital content supplied by a trader causes damage to a device or other digital content owned by the consumer.

Contracts for the supply of services

  • New quality standard: As well as an obligation to supply services with reasonable care and skill, a trader will be subject to a new obligation to ensure that the service it provides complies with any information that the trader has voluntarily supplied (orally or in writing) to the consumer, where the consumer has taken this information into account when making any decision about the service (including whether to enter into the contract).

    In addition, any service supplied will need to continue to comply with any pre-contract information supplied under the 2013 Regulations.

  • New statutory remedies: If a service is not provided with reasonable care and skill or in line with information provided by the trader about the service, the service will not conform to the contract. In this situation, a consumer will have the right to require that the service is re-performed properly (this may require the trader to re-perform all or part of the service). The consumer can also require a price reduction in certain circumstances (e.g. if it is not possible for the trader to re-perform the service or if the service is not re-performed in conformity with the contract within a reasonable time).

The provisions in the CRA relating to services contracts will not apply to contracts of employment or apprenticeship. Also, where there is legislation that contains more detailed provisions about the rights or duties that apply to certain services, such provisions will take precedence over the services provisions included in the CRA.

Exclusions and limitations of liability and unfair terms

The CRA creates a new regime (a combination of UCTA and the UTCCRs) that will control attempts to exclude or limit a consumer’s rights and remedies under the CRA and also the inclusion of unfair terms in consumer contracts. For the most part, the CRA prohibits attempts by traders to limit or exclude their statutory liability (though there are certain exceptions). The provisions relating to unfair terms largely repeat the laws currently set out in the UTCCRs (which will be repealed when the CRA comes into force).

WHAT SHOULD YOU DO TO COMPLY WITH THE CRA?

  • Familiarise yourself with the specific rules that will apply to the types of contract your business enters into;

  • Conduct an audit of your standard terms, other consumer related documentation, your website, and your policies and procedures to identify any changes that will need to be made;

  • Implement the necessary changes by 1st October (e.g. prepare new versions of your standard terms and returns policies);

  • Train members of staff who deal with customers on the new rights and remedies consumers will have.

The Trading Standards Institute has recently produced a number of business companion guides on the CRA which you may find useful. It has also produced sample "point of sale" information which businesses can use to inform consumers about their rights.

This would also be a good time, if you have not already done so, to check that you are compliant with the 2013 Regulations. The 2013 Regulations are particularly important if you supply goods, services or digital content to consumers online.

HOW CAN GELDARDS HELP?

  • We can provide bespoke training to you and your staff to help you get ready for the changes that the CRA will introduce.

  • We can help you to identify areas of risk within your business.

  • We can assist you to make any necessary changes to your standard terms, website, policies and procedures etc.

If you would like any further information about the CRA or the ways in which Geldards may be able to assist your business, don’t hesitate to contact any member of the commercial team.

Please also keep an eye out for our additional guides on the CRA, which will look in more detail at certain aspects of the changes.

ONE MORE THING

In addition to CRA, other consumer law changes are also in the pipeline. From October of this year, new rules will come into force relating to the use of alternative forms of dispute resolution (“ADR”) to settle disputes relating to consumer contracts (for example, mediation). Amongst other things, the new laws will, in certain circumstances, introduce obligations on traders to signpost consumers to the availability of ADR as a means of resolving disputes. Keep an eye out for our guide on the ADR Regulations.

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