Archives for May 2014

New Consumer Contracts Regulations

On 13th June 2014 the law changes on consumer contracts and distance selling. The Distance Selling Regulations and the Doorstep Selling Regulations are replaced by The Consumer Contracts Regulations 2013. The concepts remain broadly the same, but the difference is now between “on-premises”, “distance” and “off-premises” contracts. This doesn’t apply to commercial contracts or to normal over the counter shops sales where the customer takes the product away, and there are a series of exemptions.

There are new obligations which apply to all consumer contracts. These include:

  • Traders must, unless the consumer agrees otherwise, deliver any goods purchased within 30 calendar days.
  • Traders must not make the consumer use a premium rate telephone line to contact the trader about an existing contract.
  • Traders must not impose excessive payment surcharges when consumers pay by certain means, such as credit or debit cards.

There is a set of basic information that has to be given to all consumers for all contracts, plus enhanced information that has to be given for “distance” and “off premises” contracts. The definition of “distance” is complex, requiring “an organised distance sales or service-provision scheme . . . with the exclusive use of one or more means of distance communication up to and including the time at which the contract is concluded”. A trader selling via a scheme offered by a third party, such as an online platform is selling via an organised distance sales or service provision scheme. “Off premise” contracts may include contracts concluded at business premises if that followed an offer made at or is immediately after an “off premises” meeting. For these the Regulations:-

  • Extend the list of pre-contract information that a trader must give to a consumer (there are some differences between distance and off-premises contracts).
  • Introduce new rules on the cancellation of contracts for the supply of digital content not on a tangible medium.
  • Extend the statutory cancellation period (sometimes known as the cooling-off period) to 14 calendar days.
  • Where a consumer has a right to cancel a contract, require the trader to provide the consumer with a model cancellation form.
  • Extend the cancellation period to, broadly, one year if the trader fails to provide certain pre-contract information.
  • Require online traders to make it clear (for example by labelling the payment button with “Order with obligation to pay”), where proceeding with the transaction will trigger a payment.
  • Require a consumer to return goods within 14 calendar days of cancelling the contract.
  • Allow the trader to withhold a refund until the goods are returned (or evidence of their return is provided).
  • Allow the trader to deduct an amount for the diminished value of the goods when refunding payments.
  • Extend the list of ancillary contracts which will be automatically terminated on termination of a distance or off-premises contract.

This is a good time to check your contracts and processes comply. BIS has published Implementing Guidance which is worth reading to see if and how this will apply to you. However, we can’t understand how BIS can claim their horribly drafted Cancellation Notice complies with the Unfair Terms in Consumer Contracts Regulations 1994, which say that terms in consumer contracts must be in “plain and intelligible language”. Traders will have to make a decision whether to go for safety and use the BIS version or redraft it so that their customers might actually understand it. If you need it we can help.

Contact: Neil Howlett

The Legal Ombudsman and Stamp Duty Land Tax

The Legal Ombudsman (LeO) is one of the routes for redress for client of regulated legal services providers. He has recently been in the press expressing concerns about Stamp Duty Land Tax (SDLT) which is payable in many conveyancing transactions. The LeO hasn’t issued any figures so the extent of the problem isn’t clear. It seems from his examples that it mainly arises from firms which have received money to pay SDLT but have not paid it out, and have become insolvent. That’s wrong, and in some of the instances appears to have been dishonest. The LeO doesn’t deal with disciplining lawyers so we can’t link his examples with disciplinary action taken by the SRA.

The LeO has issued tips for consumers which are sensible:

1. Try and avoid any nasty surprises. Make sure you know from the start how much stamp duty you will have to pay.

H&H will tell you what you should expect to pay when you first contact us.

2. Consider getting like for like quotes.

The LeO warns against firms who charge extra for submitting the SDLT Return, he says typically £75 to £100 on top of their fees. Beware “headline” figures which have extras added.

H&H will give you an estimate for the whole job at the start.

3. Seek confirmation that your lawyer has met the 30 day deadline.

Stamp duty has to be paid within 30 days of completion; we will do that, it is part of our job. If you want us to confirm we have done it please ask and we will. Unless we have submitted the SDLT Return we cannot apply to HM Land Registry to record the transaction so if we tell you we have done that you can be sure we’ve done both.

4. Know your options if the lawyer ceases trading.

This should really be the first – put this way it is like shutting the stable door after the horse has bolted. The first principle should be “Don’t instruct someone you don’t know and trust”. Are you confident they have a good record and are secure? In case you are wondering, H&H does and is

5. Be wary of fraudulent activity.

There are a lot of new entities in the legal market, some of whom may be good, but some have new adventurous and risky business models. Are they more than just a website? We’re sticking with what we know works, looking after our clients so they come back again.

6. Avoid the temptation to cut corners.

The LeO says “be wary of any scheme offering to reduce your stamp duty liability – if it seems too good to be true it usually is.” We sometimes have to tell clients that “cunning plans” put to them by third parties will not work and may be illegal. The same advice applies to very cheap quotes for work – conveyancing factories may be able to cut their costs but at what price to you?

7. Be clear about lender or builder promotions and what they mean.

Some mortgage lenders will offer to “pay your stamp duty”. Usually, this means the lender will lend you an extra amount equivalent to the stamp duty, so you are still paying it. Similarly, a builder may offer an “allowance” against the house sale price. That’s just marketing; sadly builders don’t yet offer Buy One Get One Free!

If you want to deal with someone you can trust contact the Harris & Harris Conveyancing Department.