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.