Online dispute resolution platform postponed

Businesses were supposed be ready to implement the new laws on online dispute resolution (ODR) by adding a link to their websites, and online ordering systems by 9th January 2016. The Department for Business, Innovation & Skills (BIS) has issued a statement delaying that which says :

‘We have been informed by the European Commission that due to a number of other member states not being in a position to implement the requirements of the ODR Regulation by 9 January, the ‘go live’ date of the platform has been delayed to 15 February. Businesses will now not be required to carry a link to the ODR platform until it is launched on this new date of 15 February.

‘We recognise that the decision to delay is not ideal as a number of businesses and consumer organisations have been gearing up for 9 January. However, we also acknowledge that as we have not been able to provide you with a link to the platform the six-week delay will give additional time to get ready for its introduction.

‘We can reassure you that although the date of 9 January remains in our Regulations, we fully understand that it will not be possible for businesses to meet this date as the ODR platform will not yet be launched. There will of course be no question of enforcement action before 15 February.’

See the ‘Alternative dispute resolution’ guide which has been updated to reflect these developments, and diarise for early February in the hope we will know more then.

Consumer Rights Act 2015 – 4 Off-Premises and Distance Sales, Variations, and Timing

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

Variation of Terms

It will be much more important for traders to obtain the agreement of the customer before delivery to any changes in the goods to be supplied.  There is draft CMA guidance allowing minor technical adjustments or changes required by law or necessity which can be or not real significance to the consumer.  However, traders may have still an obligation to inform consumers of such changes.

If there is the likelihood of a need to make changes between the date of the contract and delivery it may be possible to do so fairly if the possible variation is clearly described, there is a valid reason for it, and the consumer will be given notice in advance and the right to cancel.

In principle a trader may be able to change any terms provided that the consumer is given the right to terminate without being left worse off, although traders will need to be wary of anything that may give rise to a claim for breach of contract and civil damages.

Timing and Delivery

Goods must be delivered without undue delay and in any event not more than 30 calendar days after the date of the contract, unless that period is varied by agreement.

Services must be performed within a reasonable time, which is a question of fact in each case, unless the time or a method for fixing the time is set out in the contract.

On-premises and Off-premises contracts.

One element of the current law not brought into the Consumer Rights Act is the requirement for giving Notice of Cancellation Rights for Off-premises contracts.  These remain the same as before.

See Business Companion – Consumer contracts – off-premises sales

Distance Selling

The Consumer Rights Act has not changed the law of Distance Selling – the sales of goods, services and digital content without face-to-face contact with the customer. This includes sales online, by mail order or by telephone. In our experience many websites are not compliant with this law.

See Business Companion – Distance Selling

Consumer Rights Act 2015 – 3 Consumer Notices & Unfair Terms

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 Consumer Rights Act 2015 – 1 All Change? and 2 Services & Digital Content

For legal advice please contact Neil Howlett or Andy Hambleton

The Consumer Rights Act will apply to all forms of contract.  Previously, obligations of fairness were restricted to contracts which were not individually negotiated.  The Consumer Rights Act’s test of fairness will apply to all contracts, including oral contracts.   It will be much more important for a trader to be able to prove on the balance of probabilities what they agreed to provide or do, and on what terms.  That will be a great deal easier if the terms are in writing and there is a copy signed by the consumer.

Consumer Notices & Pre-contractual statements

The Consumer Rights Act introduces a new concept of a Consumer Notice.  That is anything which sets out the rights or obligations of the trader and consumer or restricts the trader’s liability.   Anything in these will be subject to the same test of fairness as if they were set out in a trader’s Terms & Conditions.

This will apply to marketing communications, brochures, and signs at premises, all of which will be treated in the same way as if they were contract terms.

Anything said or written to a consumer about a service or trader, whether by or on behalf of the trader, will be treated as a term of the contract if the consumer takes it into account when deciding whether to enter into the contract, and when making any decision about the services after the contract is entered into.

This will make it a great deal easier for consumers to bring claims which would previously have had to be pursued under the complex law of Misrepresentation.

Unfair Terms

The Consumer Rights Act 2015 replaces the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999 (though UCTA remains for B2B contracts).

All written terms of a consumer contract must be “transparent”, i.e. in plain and intelligible language, not using jargon the average consumer must be able to understand them. One ECJ decision said that it must enable the consumer “to evaluate, on the basis of clear, intelligible criteria, the economic consequences for him which derive from it”. Any ambiguity will be interpreted in favour of the consumer. In addition terms must be:-

  • Legible, if in writing, which means that they cannot be hidden away in small print
  • Prominent, which is a new definition, requiring that they are brought to the consumer’s attention in a way that an average consumer would become aware of them.  The average consumer is assumed to be reasonably well informed, observant and circumspect.  The more significant the term, or the closer to the boundary of fairness, the greater the obligation to make it prominent.

Although a term which is not “transparent” may still be enforceable it is more likely to fail the test of “fairness”.

The CRA does not apply to unwritten terms.  Although Sam Goldwyn was not precisely correct any trader seeking to rely upon verbal terms which are advantageous to them as against a consumer is going to be climbing Mount Everest.

A term is unfair if “contrary to the requirement of good faith it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer”.  Any attempt to limit or exclude liability is subject to review. In particular for:-

  • Breach of contract
  • Liability for injury or death not caused by negligence
  • Damage to property

There is a ‘black list’ of items that cannot be excluded.  Any attempt to exclude them will be ineffective.  They are:

  • Excluding liability for death or personal injury resulting from negligence
  • Excluding the statutory tests for conformity
  • Excluding liability for incorrect installation of goods
  • Excluding the obligation to provide services with reasonable skill and care.

There is an extended ‘grey list’ of terms which will be assumed to be unfair and therefore ineffective.  These include:-

  • Disproportionate charges if the consumer ends the contract.
  • Terms which allow the trader to change the characteristics of the Goods (or Services) after the consumer has become bound by the contract.
  • Terms which allow the trader to change the characteristics of the goods or services after the consumer has become bound by the contract.  There is an exception where there is a contract which is “indefinite” and where the trader gives reasonable notice and the consumer has the right to terminate the contract.
  • Terms where the trader can set the price after the consumer has become bound by the contract and has not agreed the price or method of determining the price.  The explanatory notes to the Act gives as an example of lack of prominence a low headline price with hidden extras in separate terms and conditions.

The grey list is not exclusive.  A Court could determine that any term is unfair against the statutory test.

Provisions excluding common law rights are possible but are likely to be subject to assessment against the grey list and the test of fairness.

Terms can be excluded from assessment against fairness if:-

  • They are the main subject matter of the contract, or
  • Terms that set the price; although price may be excluded, terms such as time and method of payment may still be subject to assessment against fairness.

Courts considering consumer contracts must consider the issue of fairness if there is sufficient legal and factual material available, even if it is not raised as an issue by the parties.  The introduction of an obligation of good faith is also a novel concept under English law.  Courts continue to be reluctant to apply it in commercial contracts.

Given the present pressures on the Court Service it seems unlikely that there will be legions of campaigning Judges going through the small print of every consumer contract which comes before them.  The danger is of Judges looking for ways to find in favour of consumers and that these issues will arise at a hearing without prior notice to a trader who is attempting to defend their position.

Useful guidance

Rules for the supply of goods: BIS’s Consumer Rights Act: Goods Guidance for Business 

Rules for the supply of services: BIS’s Consumer Rights Act: Services Guidance for Business

Rules for the supply of digital content: BIS’s Consumer Rights Act: Digital Content Guidance for Business

Unfair terms: The current guidance on unfair terms is CMA Unfair contract terms guidance: CMA37 This guidance makes reference to Annex A, which contains examples of terms which the CMA’s predecessor body, the Office of Fair Trading (OFT), required be withdrawn and substitutes which were accepted under the UTCCRs.  The CMA has not updated Annex A but has stated that it remains of substantial illustrative value.

Consumer Rights – all change again . . .

In May 2014 we wrote about the new Consumer Contracts Regulations. Consumer law is set for a major change later this year, and all traders dealing with consumers will need to prepare for that.

The Consumer Rights Bill is currently before Parliament. This will implement the EU Consumer Rights Directive and codify consumer law that is currently set out in a number of fragmented (and sometimes inconsistent) pieces of legislation, some of which date back to the 1970s. In particular, it introduces consistent definitions of key concepts (such as who classifies as a ‘trader’ or ‘consumer’), introduces new statutory rights and remedies for consumers, and updates and modernises the law, in particular for the digital economy.

The Bill sets out a series of tiered remedies for the consumer in the event the consumer’s statutory rights are breached. These comprise:

  • A short-term right to reject the goods, lasting 30 days. If the consumer requests that the goods be repaired or replaced (see below), this is extended by the time taken to repair or replace) or 7 days from the date of return (whichever is longer);
  • The consumer may also require the trader to repair or replace the goods at the trader’s cost, and within a reasonable time and without causing significant inconvenience to the consumer (unless this would be impossible, or the costs required would be disproportionate compared to the consumer’s other remedies).
  • If the trader refuses to repair or replace the goods or is unable to do so at the first attempt, or if the consumer cannot enforce this right as it would be impossible or disproportionate, the remedies move on to the next tier;
  • The next tier is a right to an appropriate price reduction (up to the full price paid by the consumer), or a final right to reject. The final right to reject is subject to a right of deduction for use, to take into account the use the consumer has made of the goods since they were delivered.

The Department for Business, Information and Skills (BIS) intends that the Bill will come into force on 1 October 2015 and intends to publish guidance on the Bill in April 2015. This will give businesses six months’ notice to make the changes required to inform consumers of their new rights in relation to faulty goods, services, or digital content.

The primary source of information will be the Trading Standards Institute Business Companion website, which will present general advice and also more detailed advice on the law.

Businesses will need to plan to review and update their terms and conditions for consumers once the Bill is passed and the Guidance issued, and review their sales processes and staff awareness so they are ready for the planned implementation in October 2015.

Contact: Neil Howlett

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