Consumer Rights Act 2015 – 1 All Change?

From 1st October 2015 there are fundamental changes to consumer rights introduced under the Consumer Rights Act 2015.  This Act replaces almost all existing consumer protection legislation.   It introduces significant new concepts and protections for consumers.  All businesses should be reviewing their Terms of Business for consumers, their procedures and staff training.

We are posting a series of brief summaries of the changes, highlighting their significance, and with links to further advice.  This is not intended to be legal advice upon which you should act, but awareness of issues which you need to consider.

See the guidance issued by Business Companion – the sale and supply of goods from 1 October 2015.

For legal advice please contact Neil Howlett or Andy Hambleton

Goods & Services

Although there remains a distinction between Goods and Services any installation provided by the same trader will be treated as part of the provision of the goods, not as a separate service.   Whether the goods are compliant with the law will be assessed based upon their qualities once installed.

What is a Consumer?

Consumers must be individuals acting for purposes which are wholly or mainly outside their trade business craft or profession. This definition is wider in the UK than is required by the EU Directive or applies in most of the rest of the EU.

A Company, Partnership or LLP cannot be a consumer.  However, someone who works from home may be.  Where a trader is selling Goods or Services that may be used by individuals and for trade they will need to consider how much they ask to establish the status of the buyer or may want to assume that the other party is going to be a Consumer.  If a claim is made the trader might reasonably ask whether the “Consumer” has put the costs through their business accounts.

The legal standards for Goods?

The Consumer Rights Act broadly reproduces the existing implied terms from the Sale of Goods Act under which Goods must:-

  • be of satisfactory quality
  • be fit for purpose
  • match their description
  • match any sample

In addition, Goods must match any model seen or examined by the consumer (e.g. in a showroom).  The onus is on the trader to bring to the Consumer’s attention any differences between those and the Goods to be supplied.  General disclaimers are unlikely to be enough.  Traders will need to consider being able to prove exactly what was drawn to the consumer’s attention and that this was before the consumer entered into the contract.

 Consumer remedies for Goods not up to the standards

There is a new structured hierarchy of rights where goods are up to standard.  These are a great deal clearer than the previous law, which should make it more difficult for traders to fob off consumers and sit back hoping that they will not take matters further.

For many traders the new law will represent good commercial practice and for low value goods there may be no need to change practices other than making staff aware of the new deadlines.

Consumers still retain a residual right to claim damages at Common Law (and also but less likely for Specific Performance).  The consumer also has the right to terminate a contract if there is a fundamental breach at any time.

1. Short term right to reject.

If the goods are non-conforming the consumer can reject the goods within 30 days of transfer of ownership, delivery or installation the consumer will be entitled to a full refund without any deduction for usage.  Where goods are installed the short term right to reject does not apply.

The consumer has an option to agree to a repair or replacement.  If the consumer agrees either of these the period for rejection is paused for 7 days (or longer if that is required for repair or replacement).

2. Right to repair or replacement

After 30 days the consumer still has the right to require a repair or replacement (unless this would be impossible or the cost disproportionate to the value of the goods).  Traders cannot refuse a repair or replacement on the grounds that they are more expensive than the price reduction or refund that the consumer could claim.

Traders get one go at repair or replacement.  If the trader does not carry out the consumer’s chosen remedy the consumer can reject the goods.

There may be disputes where consumers want repairs but traders will want to replace goods (and seek compensation from their suppliers).  The burden is on the trader to demonstrate that the cost of repair is disproportionate.  For traders selling high value goods which may not immediately show defects, or where they have been used to trying tiered repair strategies will need to be aware of the right to reject if the first repair is unsuccessful.

3. Final right to reject or price reduction

If after repair or replacement the goods are still non-conforming, or cannot be repaired or replaced within a reasonable time, the consumer has a final right to reject the goods, return them to the trader and claim a refund.  If this is done within six months the trader cannot reduce the refund to reflect the use of the rejected goods (other than motor vehicles).  After that period the trader can make a reduction.  The alternative remedy is for the consumer to keep the goods and claim a price reduction, which could be the full price.

The amount of a price reduction will depend upon the circumstances and should reflect the difference between what the consumer paid for and what they received, considering the benefit that the consumer has rejected.

Context will be important and traders may have to take a pragmatic approach to the time and cost involved in precise calculation.

Point of sale information using very simple wording has been agreed by business and consumer groups. This is available on the Business Companion website with more guidance.

Specialist Solicitor Gains STEP Qualification

Harris & Harris are delighted to announce that Joshua Eva, Partner at our Wells office who specialises in private client matters, has been admitted as a full member of the Society of Trust and Estate Practitioners (“STEP”).  Joshua studied for the STEP Diploma in Trusts and Estates (England and Wales) and, having passed all his exams and exceeded the STEP requirements for minimum relevant experience, was admitted as a full member on 28th July 2015.

The Diploma qualification focused on four key areas of private client practice: Administration of Estates, Administration of Trusts, Taxation of Trusts and Estates, and Trust and Estate Accounting.  Joshua commented “Studying for the diploma has been both challenging and rewarding. The best thing about it has been the immediate positive impact on my expertise, as the content covered by the qualification is highly relevant to my day to day work”.

STEP is the worldwide professional association for those advising families across generations.  STEP members can advise from drafting a will, to protecting elderly or vulnerable relatives, to advising family businesses, to helping those with interests spread across the world.  The organisation promotes best practice, professional integrity and education of its members.

Annemarie Swainson, partner and head of Wills & Probate said “Joshua has worked very hard to gain this qualification, and we are all extremely proud of his achievement”.

Joshua’s profile can be found here:-

Joshua Eva

To find out more about STEP, click here:-

STEP

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Read the Contract!

English Law can be a tough beast. Some European jurisdictions have an obligation on parties to act in “good faith”. English law has a longstanding rule “caveat emptor” – until 1998 when the Civil Procedure Rules banned the use of Latin – so let’s call it “Let the Buyer beware”. If you sign a contract you are bound by the terms, even if you haven’t read them. Where judges think that innocent people have been exploited they will strive to find a way to release them, but that isn’t always possible.

The Supreme Court has dismissed (by a majority of 4:1) the tenants’ appeal on the interpretation of a service charge clause in the tenants’ 99 year leases of chalets in a holiday park. The Court held that the natural meaning of the clause requiring the tenants to pay the service charge to the landlord was clear. The reasonable reader of the clause would understand that:

  • The first part of the clause required the tenants to pay an annual charge to reimburse the landlord for providing the services.
  • The second part of the clause identified how that service charge was to be calculated and that was a fixed sum which increased at a compound rate of 10% per annum.

The fact that this meant that by 2072 each tenant would be paying a service charge of over £550,000 per annum did not justify departing from the natural meaning of the clause. Therefore the court could not apply the power it has where a clause is ambiguous to apply a meaning that it thinks accords with business sense.

Commercial common sense is not a relevant consideration where the natural meaning of the language is clear, even if this results in commercially detrimental consequences. The court will not step in to save a party from a bad bargain.

Arnold v Britton and others [2015] UKSC 36

Doing Law Online

It can be convenient and easy to do things online.  However, it isn’t always the most prudent way to do things, and can make it easier to defraud or exploit the vulnerable.

In August 2014 the government shelved plans to create a fully online process for creating Lasting Powers of Attorney (LPAs) including electronic signatures, in light of concerns that such a system would increase the scope for fraud and financial abuse, and would not be suitable for the elderly. In many cases the best way to protect the person making the LPA is to get specialist advice to ensure that an LPA is both appropriate and effective.

Recently the Court of Protection revoked an LPA made without such advice, which was drawn up by the 77 year old donor’s daughter online and appointed the daughter as sole attorney.  The donor, who suffered from Alzheimer’s disease, did not receive any independent advice, although her daughter claimed to have fully explained the document to her before she signed it, which seems unlikely as she admitted she hadn’t read it.  A friend of the family witnessed the mother’s signature.

Six months after the LPA was registered, the Office of the Public Guardian made its application to the Court of Protection on the basis of evidence indicating that there had been a number of excessive and uncharacteristic withdrawals from the mother’s bank account, reducing its value by half over the six months.  The daughter admitted that she had not read the declaration about her duties in the prescribed form of LPA (who reads terms & conditions online?). She claimed that she gave her mother £600 a month “spending money”, but the judge found that the mother was living in squalor.  Her home urgently needed deep cleaning, disinfecting and furnishing with white goods.  When questioned about the withdrawals from her mother’s account, the daughter’s response was “there is no point in her being the wealthiest woman in the graveyard”.  The case doesn’t report whether any of the money which had been taken was recovered.

The judge decided that the daughter had behaved in a way which contravened her authority and was not in her mother’s best interests.  The LPA was revoked and the local authority was appointed as deputy to manage the mother’s property and financial affairs.  This wouldn’t have been the donor’s wish when the LPA was made.  If the attorney had read the terms of the appointment she might have understood her responsibilities and carried them out appropriately.

At Harris + Harris we aim to help you make the right decisions, at the right time. We have experienced solicitors in both our Wells and Frome offices who can make sure your LPA has the effect you intend, and your wishes are carried out.

Contact Annemarie Swainson or Joshua Eva in Wells or Caroline Fletcher in Frome.

Holiday Pay – is it such a big deal?

There has been lots in the press about the Employment Appeal Tribunal (EAT) decision on holiday pay.  The EAT decided that non-guaranteed overtime which the employee is contractually bound to perform if asked must be taken into account.

This is not a great surprise.  It is in accordance with the intention of the original EC Directive that the workers should not suffer any detriment by taking holiday.  Indeed the conclusion of the EAT can be reduced to the very simple proposition – “‘Normal pay’ is that which is normally received.”

This also applies to taxable travel time payments in excess of the actual expenses incurred.  Guaranteed overtime was already to be included.  Overtime which the worker requests but is not contractually obliged to do will not.

This only matters for holiday pay calculated for the 4 weeks holiday which is covered by the Working Time regulations.  The additional 1.6 weeks holiday which makes up the statutory holiday in Britain, or any additional contractual holiday are not covered.

On a procedural point the EAT decided that as claims to the Employment tribunal will be for “unlawful deduction from wages” a claim can only be brought if the employee has taken holiday within the last 3 months, and then only for previous holidays if there has not been a break of more than three months between them.  This limits the extent of claims via the ET.

It is highly unlikely that the EAT’s decision will be the last word on this issue.  Leave to Appeal to the Court of Appeal has been given, and after that there is still the Supreme Court.  The government intervened and sent a QC to argue against the propositions accepted by the EAT.  BIS has already set up a Task Force, containing only employers organisations, to “assess the possible impact”, though a tweet from BIS put the purpose rather differently – “limiting the impact”.

This one will run and run. Expect lots of anti EU rhetoric, and possibly unsolicited calls from claims companies.  If you are an employee who may have lost a substantial amount you should get advice and start a claim within 3 months of your last deduction, but expect that to be stayed until there is a final decision on this case, which could be another year.  If you are employer you may want to calculate the potential value of claims and make provision for them.  Employers may also want to review their contracts to see if they can be changed.

For advice on Employment Law contact:

Neil Howlett

Andy Hambleton

Fraud Risk Posed by Bogus Law Firms

A recent BBC television programme “Fake Britain” (aired on 12th August) highlighted the ease with which criminals can impersonate solicitors in order to steal from individuals engaged in property transactions.

The programme recounted the case of Nick Christofi who lost £735,000 to fraudsters who assumed the identity of a genuine firm of solicitors.  Mr Christofi had instructed a genuine solicitor to act on his behalf in the purchase transaction.  That genuine solicitor checked that the solicitor they were dealing with on the other side of the transaction was authentic by checking their details using the “find a solicitor” facility on the Law Society website.

It later transpired that the criminals had stolen the identity of a retired solicitor and managed to dupe the Solicitors Regulation Authority (‘SRA’) into listing that solicitor as practising from a fake office address under the name of an existing genuine firm of solicitors (the SRA is the official body responsible for regulating solicitors).

Mr Christofi’s claim for compensation from the SRA was rejected on the grounds that the SRA regulates solicitors, not criminals and therefore people with complaints should go to the police.

The SRA has warned that there has been a marked increase in criminals targeting firms of solicitors in order to steal their identity and thereby steal funds.  They have warned against relying solely upon the list of solicitors on the Law Society website.

In the Christofi case the fraud was only discovered after the transaction had completed, when it transpired that the property that had been purchased was in the process of being repossessed and the fraudsters had got away with the purchase funds.

As with other types of identity theft, it would seem the internet presents greater opportunities for criminals to impersonate others through the use of fake websites, email addresses and online profiles.  It is therefore important for solicitors and consumers to be aware of the possibilities and to be vigilant, especially when very large sums of money are involved.

The programme suggests that consumers should use a reputable solicitor for conveyancing transactions, ideally one that is recommended to them.  At Harris & Harris the vast majority of our conveyancing clients are returning clients or have been recommended to us.  Harris & Harris are members of the Law Society Conveyancing Quality Scheme.  This means that all our conveyancing staff undergo additional training and security checks to monitor the risks of fraud.

A report of the case can be read here:-

http://www.dailymail.co.uk/property/article-1305436/How-bogus-solicitors-robbed-735-000-Family-lose-fortune-dream-home-scam.html

Wells Moat Boat Race Halted by Too Much Water

Although this year’s Wells Moat Boat Race (on bank holiday Monday, 25th August) had to be brought to a slightly premature end due to persistent rain, we are pleased to report that the Harris & Harris team won both races in which they took part at this year’s event and that they also won second place in the Fancy Dress competition, for their Crocodile Dundee themed raft and costumes.

The charity event takes place each year on the August bank holiday Monday on the Bishop’s Palace Moat. Entrants must build their own raft and paddles. The funds raised are split equally between the Wells Lions Club good causes, and participant’s chosen charities. Harris & Harris’ chosen charity is St Margaret’s Somerset Hospice.

Our team this year: Solicitors Joshua Eva and Andy Hambleton, trainee solicitor Chris Mullett, legal secretary Emma Wiltshire, office clerk Tom Hampson, and local farmer Joe Stradling.

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Below is a video of one of the races:-

 

“15 Minute Wonders” 27 November 2014

On 27 November Neil Howlett of Harris is one of the experts providing “15 Minute Wonders” from 3-5.30pm at Frome Rugby Club. This is a brilliant concept started by South West FD which brings together five speakers (including three from Frome) on a range of topics relevant to business owners, directors and entrepreneurs. The trick is that they each have only 15 very focused minutes to give you all the relevant information you need without any the waffle! Come along and learn something valuable for free.

      • Neil Howlett will talk on Intellectual property – what you need to do  This will probably include Albert Einstein, the Rolling Stones or a sweater (possibly two) – if you don’t know why they are important you need to come.
      • Online Security Basics: conducting banking and accounting online safely from Adam Harling at Netitude;
      • Jenna Yhearm from Gumption Social Media on A guide to using LinkedIn for you and your business; and
      • Future Business with Jerry Davison;
      • Using alternative finance to increase working capital from Tim Jones at Start Point Finance;

This is a free event. There is more information, event timetable and booking link on the South West FD website.

Funds raised for St Margaret’s Hospice

We are delighted to confirm that a total of £690 was raised by generous donations from our clients who participated in the St Margaret’s Somerset Hospice “Make a Will Week” in 2013.

Harris & Harris will be taking part again in the scheme in the week commencing 15th September 2014. Under the scheme, we waive our usual fee for preparing a Will in return for the client making a donation to the hospice.

The hospice has confirmed that total donations under the scheme in 2013 have exceeded £23,000.

You can find out more about the hospice by visiting their website:

http://www.somerset-hospice.org.uk/

If you are interested in booking a place under the scheme, please contact our Wills, Probate and Trusts department:

http://www.harris-harris.co.uk/what_we_do/wills_probate_trusts/

 

Will Aid 2013 – Several Thousand Raised for Charities

We are pleased to announce that the firm has already raised  £3,370 for Will Aid’s 25th Anniversary charity scheme and anticipate the total will exceed £4,000 . We have taken part in the scheme for a number of years and in 2013 public interest was at an all time high for us, and as a consequence we have raised almost double our total for the previous year.

Will Aid offers an opportunity to have a professionally drawn Will in exchange for a donation to help people in need and all over the world. This money is shared by nine well-known UK charities: ActionAid, Age UK, British Red Cross, Christian Aid, NSPCC, Save the Children, Sightsavers, SCIAF (Scotland) and Trocaire (Northern Ireland). In 2012 over £2 million was raised nation-wide and it is hoped that the final 2013 figures will exceed this.

Will Aid brought a successful conclusion to a fundraising year. In addition to Will Aid, Harris & Harris raised almost £1,000 by supporting the St Margaret’s Somerset Hospice “Make a Will Week” in September, the Somerset Wildlife Trust “Will for Wildlife Week” in October and the “Wetlands and Wildfowl Trust Will Month” in November. The firm would like to express thanks to all those clients who took part in the various schemes and whose generous donations will make a difference to so many lives.

We hope to continue our support for all the above charities in 2014. If you are interested in any of these charitable schemes please contact the Wells office on 01749 674747, or the Frome office on 01373 463366