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

New Year’s Resolutions

When Frome Chamber of Commerce ran the first year of Discuss & Do events for entrepreneurs Johnny Martin was one of the speakers, as well as doing his usual seminars at The British Library.

His newsletter this month says :
“January can be a pretty tough month for trading after the hump of Christmas – unless you happen to be a fitness coach or selling diet supplements…so as well as reviewing your marketing plans, use the time to make sure you have all your business arrangements properly documented.  In my experience more cash is lost because of unclear and undocumented business arrangements than any other reason.”

As lawyers you’d expect us to agree, but sadly it’s true. New contracts don’t have to be expensive. We can review what you have; if it is satisfactory we will tell you, if we think it needs upgrading we can do that and will give you a price for that.

If you’ve got a slow period post Christmas here’s something useful you can do that will pay dividends.

If we can help please contact us.

If you want to see more of what Johnny has to say (he’s not a lawyer) see his blog.

Break Clauses – Get it right first time

Many commercial leases include break clauses allowing the tenant to bring the lease to an end before the contractual term ends. These give tenants flexibility from being tied into a long term. In the recent economic downturn tenants have been attempting to exercise break clauses to release themselves from leases with upwards only rent reviews or other obligations that landlords used to be able to impose.

Some of these attempts to escape have come unstuck. Even very minor failures of no commercial value may block a break. There have been many court cases recently about whether or not break clauses have been effectively operated.

This is a high risk area for any business. If you plan to break your lease but don’t get it right you don’t get a second chance. You may be stuck for several more years with an obligation you have decided to get rid of and possibly two sets of premises. For landlords the stakes are equally high;  they and their lawyers will go over any attempt to operate a break clause with a fine toothcomb.

The Code for Leasing Business Premises in England and Wales recommends that the only pre-conditions to a tenant exercising a break clause should be that they are up to date with the main rent, give up occupation and leave behind no continuing sub-leases. In practice many older leases include other pre-conditions which can be a trap for tenants.

Any tenant considering exercising a break clause should plan ahead. The starting point is to look at the lease:

  • When is the break date ?
  • Notice will have to served – often several months in advance. What is the last date on which notice can be served?
  • Is there a specified form for the notice or is there specified information to be given ?
  • What does the lease say about serving notices? Who is to be served? Where ? How?
  • Are there any pre-conditions for exercising the break clause, and at what date do they have to be satisfied?
  • Rent will almost always have to be up to date, but that may include other payments defined in the lease as rent. Have you ever been late paying something and triggered an obligation to pay interest reserved as rent? There has been much litigation about what to do when rent is due for a period which continues beyond the break date. The basic advice is to pay everything that is due and try to get it back afterwards. The loss of a quarter’s rent is far less than being stuck with rent for several more years.
  • Is there an obligation to have complied with all the tenant’s obligations in the lease? At what date? Is that qualified by the word “material”? If not, even minor, previously unnoticed breaches may block compliance. If in doubt comply. Obligations as to the state of the premises on termination may be scattered throughout the lease. Can you identify tenant’s fixtures or alterations which you should remove? Aim to get work done well in advance of the break date and allow a margin for delays. Try to get the landlord to approve them.
  • You must give vacant possession – be very careful to do exactly that. Contractors still on site doing repairs, or even rubbish in the basement, have prevented tenants from meeting this obligation in recent cases.

Unless you are absolutely sure you understand everything you have to do get legal advice, and get it early. Deadlines for break clauses are absolute and if you miss them even the best lawyer in the land won’t be able to help you. You may be able to do a commercial deal, but from a position of weakness. With some other issues it may be possible to litigate whether you have complied or not, but this will be substantially more costly than getting early advice and getting it right first time.

Finally, when taking on new premises look carefully at any break clause – if you can’t make it unconditional, negotiate for it to comply with the Code for Leasing Business Premises.

Free employment advice service from ACAS

You don’t always need to pay for help with legal problems. Harris & Harris is always here – it may be cost effective to pay us for advice if the issue is serious or complex. However, there is free help available about employment problems from Acas, and they offer guidance on many everyday employment law issues.

Acas have a free online advice service for employers and employees who want answers to work related questions. It’s a good place to start. Sometimes Acas will give you the reassurance you want. If they can’t that’s the time to contact us. Acas will usually recommend that you get legal advice if they think you will need it.

Acas Helpline online offers 24 hour free advice and guidance on rights at work and employment law. Employers, employees and HR managers can receive an instant response to their work related questions and the service can help users feel more informed before a conversation with an Acas helpline adviser.

Helpline online answers over 600 of the most frequently asked workplace questions on topics ranging from maternity and family friendly rights to absence and bullying and harassment.

Available since June 2013, employers and employees have already used the service over 50,000 times. The top three questions so far are:

  • How can an employer change the terms of a contract when an employee does not agree to the change being made?
  • How can an employee raise a grievance?
  • What are the different types of dismissal?

The Acas Helpline team develop and improve the content to reflect the feedback received.

Acas Chief Executive, Anne Sharp, describes it as being an addition to their range of workplace advice services. To access helpline online visit www.acas.org.uk/helplineonline. You can also speak to an Acas helpline adviser on a whole range of workplace issues on 08457 47 47 47 from 8am – 8pm Monday to Friday and 9am-1pm on Saturday.

If you need more than Acas can provide please contact Neil Howlett or Andy Hambleton.

Social Media at Work – Who owns it?

Social Media accounts may be an important part of a business model. They will be part of the way a business communicates with customers and potential customers and the image the business presents to the world. They can be a valuable asset. They can also be used to damage a business’s reputation or to steal its customers.

Who owns social media accounts as between and employer and an employee? The lawyers answer is that this should be defined in the Employment Contract. In reality that doesn’t always happen. Many employers are willing to allow junior employers to set up accounts because they know how. They may monitor them, or not. They may not systematically collect logins and passwords.

So what happens when an employee leaves and none of these in place? All is not lost for the employer. In a recent case the High Court ordered one former employee of a publishing company to hand over business cards he had collected whilst an employee, and another to hand over the access details for LinkedIn groups that she had managed. Both ex-employees had taken steps while they were still working to set up a company whose business model was similar to their employees, persuaded other staff to leave and used the cards and LinkedIn groups to contact customers of their former employer. The employee who ran the LinkedIn groups claimed they were “personal”, which was rejected as they were done at work, and the employee who had the business cards was alleged to have purchased software to download them all before handing them back.

The judge did not have any difficulty in finding that there was a strong case that the employees had breached their duties of good faith before leaving. Having done that the judge granted the employers a “springboard injunction” to restrict the employees’ activities in their new business in such a way that they gained no unfair competitive advantage from their wrongdoing. That was effective immediately, and will last until a full trial. In most such cases the parties having had a first experience of litigation settle out of court.

Such “springboard injunctions” are well established, though not cheap to obtain. Employers need to find evidence of the employees’ wrongdoings, which here was fairly easy as they hadn’t covered their tracks. That’s why lawyers, if asked, will always advise employers to cover these issues in contracts, handbooks and policies, and also to negotiate post termination restrictions for key staff.

For advice please contact Neil Howlett or Andy Hambleton.

Protected Conversations – Are they safe?

From 29th July 2013 it will be possible for employers and employees to enter into discussions to end employment on a confidential basis.  These changes are intended to address the difficulty for employers that they cannot have “off the record” discussions with an employee unless there is an existing dispute between them.   Where the issues are ones of performance or absence or “fitting in” employers do not want to create a dispute.  Although well intentioned, this change in the law may create more problems than it solves.

The main problem with the new law is that it only prevents the use of the discussions in cases of Unfair Dismissal.   The discussions could still be used in a claim based on Discrimination, or one of the grounds where a Dismissal is Automatically Unfair.   They will also be admissible in a claim for Unfair Dismissal if there is “improper behaviour” which includes bullying and victimisation, or putting undue pressure on a party.  The gloss that it must include (but not be limited to) “unambiguous impropriety” isn’t that helpful. Exactly what will be regarded as improper behaviour will doubtless be fought out before the Employment Appeal Tribunal.

ACAS have issued a Code of Practice on Settlement Agreements and discussions. That is not statutory but is guidance on good practice, and failing to follow it may be “improper behaviour”.   This includes the requirement for a “reasonable period of time” to consider any proposed Settlement Agreement, which ACAS say should be 10 calendar days “as a general rule”, and that if there are to be face to face meetings that the employee should be allowed to be accompanied; similar to the rights they have to be accompanied at Disciplinary Hearings.

There remain many pitfalls even for the well intentioned employer.  Employers wanting to use this procedure are likely to need legal support.   They will want to be sure that there are no circumstances from which the employee involved in such a process might plausibly raise any claim for Discrimination, either direct or indirect.   They will also want to ensure that the process follows the ACAS guidance and that it cannot plausibly be alleged that any part of it amounts to “improper behaviour”. Employers will also need to consider what the Employee should do during any period when they are considering a proposed Settlement Agreement; can or should they be suspended or put on Garden Leave, and does the employer have the right to do that?

Finally, even if an agreement is reached for it to be enforceable against the employee it must still be in the form of a Compromise Agreement (to be renamed ‘Settlement Agreement’) on which the Employee must have independent advice and which must meet the statutory criteria contained in s.203(3) Employment Rights Act 1996.  Employees will expect employers to pay for the cost of such advice. It appears that the proposal to produce a Model Settlement Agreement has been dropped, and in any case it is likely that such model agreements would need to be edited to take into account the specific circumstances of each individual case.

See here for the ACAS Code of Practice

For advice please contact Neil Howlett or Andy Hambleton.

Rough for the smoothie; or not so Innocent ?

When advising on Intellectual Property Rights (IPRs) the one thing we always emphasise is to set out and document agreements from the start.  Anything else is a recipe for disaster either for the designer or the business commissioning the work. You might expect businesses with a high profile as innovative and efficient to get it right but here’s an object lesson in how to get it wrong.

Everyone knows the wunder-brand Innocent and their iconic logo of the sketched apple face and halo.  This was created in 1998 in a eureka moment of “back of the envelope” genius during a brainstorming session involving the designer and the three friends who founded Innocent.  The company owned by the designer (Deepend) and Innocent (Fresh Trading) had drawn up heads of terms by which design services would be provided in return for shares in Innocent.  So far so good, but then it all went wrong.

The parties couldn’t agree whether the heads of terms were ever agreed and neither could produce a signed document.  Then Deepend went into liquidation.  Innocent never allocated any shares nor paid anything.  Not so good, and about to get worse.

Innocent did quite well; they obtained a Community Trade Marks (CTM) for the logo.  In 2007 the liquidator of Deepend assigned the copyright in the “halo” logo to a Mr Andrew Chappell, who assigned it to a company which applied to cancel the CTMs on the grounds that it had the copyright in the original “halo” design.

The tribunal which determined CTM disputes (OHIM) concluded that copyright subsisted in the original “halo” logo, as it was a commission Deepend were the owners of the copyright, in the absence of any written assignment Deepend, Innocent’s CTM infringed the “halo” design, so were cancelled.

OHIM also rejected arguments that in these circumstances, where the business had used the logo without complaint for a decade, that it had acquired all rights by an equitable assignment, or that there was an implied term requiring assignment of the copyright to give commercial effect to the agreement.  Such arguments have succeeded in the English courts, but Innocent have a difficulty that even if there was an agreement they didn’t comply with their side of it – in short, they never paid.

This isn’t the end of the case and you won’t see the Innocent logo disappear from the shelves soon. Innocent (now owned by Coke) has made enough money to pay lawyers to appeal.  However, even if it succeeds it won’t recover most of those costs, management time will have been diverted and business planning disrupted.  Usually big share sales include warranties about the ownership of IPRs.  If the founders gave such warranties that could be costly for them.

Posted 8th May 2013

For advice on Intellectual Property contact Neil Howlett

Clearing snow and ice – is it dangerous?

Of course it is – you might slip over. However, if you are prepared to take that risk and do it sensibly you shouldn’t be deterred from being helping your community by a fear of being sued. There is simple guidance from the government.  If it is your property you may have a liability if you don’t clear it.

The Institution of Occupational Safety and Health, the largest health and safety membership organisation in the world says, “As a general rule it’s sensible for firms to consider the risks and take reasonable steps to prevent accidents from happening. If this means gritting outside the boundaries of your workplace, then it’s better to do that than to have people slipping over or involved in car crashes on your doorstep.”

If you want to assess the risk it’s always worth knowing your enemy. After the 2009 snows a firm of Claimant Personal Injury Solicitors doing the dreaded ‘No Win No Fee’ claims put out a leaflet about snow and ice claims which described the possibility of any claims against people clearing the highway voluntarily as an “urban myth”.

In legal terms there is a theoretical basis for a claim in Negligence, but it would only be sustainable is you created a new risk. Following the government guidance should ensure you don’t. Even if you did the Compensation Act 2006 says that a court may have regard to whether “imposing an obligation to take steps might prevent an activity which is desirable from taking place (either at all, to a particular extent, or in a particular way), or might discourage persons” from activities that were positive. Clearing snow and ice is exactly the kind of activity that is aimed at.

In Frome the Town Council has taken a pro-active approach and has a Snow Patrol.

This post is provides information not legal advice on any particular situation on which you should act.

Contact Neil Howlett or Andy Hambleton

Dismissal for Comments on Facebook

Employees often fail to understand that comments made on social media are not always “private”.

When an employee in a call centre posted a number of obscene comments about a female co-worker on Facebook from home, he also mentioned the name of his employer.  A member of the public with access to his Facebook posts informed the company. The employee was dismissed for breaching the company’s policies on harassment and for bringing the company into serious disrepute. [Read more…]

Who are you doing business with?

Before you make a contract you should be confident that the other party is capable of completing their commitment.  That’s “Due Diligence” which, for a big contract, can be complex.  For any contract the essential is that you know who you are doing business with.  If things go wrong you need to know who you can complain to or, if you have to, sue.  You should give your customers confidence in you by making it easy for them to confirm who you are.

There are rules about this.  It’s right to be suspicious of businesses that don’t meet these rules.  They may just not be very competent administratively (which may be a risk) or they may have something to hide.  Rogues are experts at making it difficult to find out who you are actually contracting with.  That’s fundamental to any business relationship.

Whether your business is trading on-line or not, it is almost certainly affected by the E-Commerce Regulations.  Unfortunately a lot of website designers seem to be ignorant of them.  BIS issue a Guide on Compliance.

Similar rules apply to all business communications, i.e., letters, order forms, emails etc.  There is also a rule that the registered name is displayed at any location at which a company or LLP carries on business (unless used primarily for living accommodation).  For companies see The Companies (Trading Disclosures) Regulations 2008 2008/495 in force since 1st October 2008.

Those for partnerships they are slightly complicated;

  • Partners names do not have to be given where you are a Sole Trader using only the name of the Sole Proprietor or a Partnership whose name is the names of all the Partners (e.g., “Smith and Jones” if Ms Smith and Ms Jones are the only partners.)
  • Initials & surname are sufficient, though if full names are given for some they should be given for all
  • If there are more than 20 Partners it is sufficient for the notepaper to state that their names are available for inspection at the address given (this applies also to LLPs).

Businesslink is a good place to start.

Contact | Neil Howlett