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 – 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

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.

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.

Unregulated Will writing services

There has been widespread dismay amongst consumer groups at the Justice Secretary Chris Grayling’s rejection of the recommendation by the Legal Services Board that Will writing should be regulated – see our earlier article for what that means.  The LSB had recommended regulation in a report submitted in February 2013 because of concerns about the quality, sustainability and lack of consumer protection. Grayling accepted the need for improvements but is quoted as having said “further efforts should be made to see if measures can be made more effective before resorting to reservation”. In contrast one commentator who campaigns for access to justice wrote that he had “not only ignored overwhelming evidence of significant consumer detriment but cocked an almighty snook in the direction of the broad consensus calling for regulation.”

The consumer group Which? says on its website: “Will writers are an alternative to solicitors, but unlike solicitors they don’t have to be qualified or regulated.” and “The main benefit of going to a solicitor is that you can discuss face to face what you want the will to achieve.” In addition, solicitors are qualified and regulated so “If something goes wrong, you or your dependants have access to redress through the relevant body’s complaints service and compensation fund.” The Citizen’s Advice Bureau also says “It is generally advisable to use a solicitor or to have a solicitor check a will you have drawn up to make sure it will have the effect you want. This is because it is easy to make mistakes and, if there are errors in the will, this can cause problems after your death. Sorting out misunderstandings and disputes after your death may result in considerable legal costs, which will reduce the amount of money in the estate.”

Unregulated Will writers may be incompetent, untrained and uninsured. An article in the Guardian “Writing a will – the right way”  in February 2013 said: “Alternatively, you could hire a low-cost will writing service. But be careful if you do, because unregulated will writers have been accused of ripping off consumers”. The same article comments “Using a qualified solicitor may be cheaper than you think.” Some Will writers advertise headline cut price offers, but may charge for additional services and end up being more expensive than solicitors.

Lawyers at Harris & Harris are not just qualified and regulated, they have years of specialist experience, and are members of specialist bodies like STEP.

Contact  Annemarie Swainson or Joshua Eva

Help for Charity Trustees and School Governors

Charities and schools depend on Trustees, many of whom give their time voluntarily and take on major responsibilities. That can be a daunting prospect for people who have skills & experience in other sectors but have not worked in charities before. This can be a particular problem for organisation, such as parent teacher associations and community groups that have a high turnover of trustees and may see several board members arrive and move on each year.

To help them the Charity Commission has published two new online tools for newly appointed trustees.  Their online Trustees Handbook informs new trustees about their duties and responsibilities towards their charities and explains how to make use of the Commission’s online services and guidance. This includes a checklist of documents and information new trustees should either receive from their charity or find for themselves on the Commission’s website, including the charity’s governing document, recent charity accounts, minutes of board meetings, the charity’s conflicts of interest policy and key guidance such as The Essential Trustee.

Governors of academies, foundation and voluntary schools who are also trustees have the same responsibilities as trustees of registered charities. The Commission has joined with the school governor recruitment charity SGOSS and the Department for Education to produce an Introduction to Charity Law for Governors of Academies, Foundation and Voluntary Schools. This summarises their responsibilities and explains where they can find further information.

Harris & Harris can help schools and charities. Please contact Roland Callaby or Tim Berry.

 

Can you trust legal advice on the internet?

There are some very good resources on the internet.  For instance, I often refer people to www.acas.org.uk for information about employment law.  The internet is an easy way for an organisation to publish information to a wide audience, which can be accessed 24 hours a day.   However, as with any publication, on the internet or elsewhere, the key questions are who is producing it and why.

Some years ago, when the internet was bright and shiny, Yahoo was a market leader and I was an “early adopter” I was asked by the Internet Newsletter for Lawyers to review the largest set of forms published on the internet for consumers to use, which was being made available through Tesco.   I looked at a small selection, in an area in which I knew what I was talking about.   I was very surprised to find that several of the forms were out of date, had incorrect statements of the law and were valueless.

A lot of “free” legal resources are primarily marketing tools.  Ask yourself who is providing the service and how are they paying for it.   That doesn’t have to be simply getting you to sign up for legal services, which may well be more expensive than using a solicitor.  In many cases these won;t be provided by the name on the Homepage but contracted to third party; Saga doesn’t provide legal advice, it comes through the Sga site from Paribas. Sometimes sites like this are basically adverts for claims management companies.   For instance, Law on the Web  is ultimately owned by DAS, a large insurance company, through a company that also owns a PPI claims management business.   The business model is opaque, but appears to be based on referral fees.

Although the site says prominently that it is “featured in” the Observer, a review of its advice on Evicting Tenants in the Guardian suggested that it was both wrong and out of date.   Do you have any remedy if you follow their advice?   Have you read their small print which excludes their liability for just about everything?    Although the front of the web site shows a serious looking man who used to be a solicitor, the Terms & Conditions make it clear that “the Proprietor is not a legal advisor” and that “none of the content of the Website is intended to be taken as advice or recommendation, professional or otherwise, and should not be relied upon by you in reaching any decision or conclusion”.   That rather raises the question what you can use it for?  Answers on a postcard please.

Their documents are “fully legally approved” but they disclaim any responsibility for their use – indeed they say “our online legal guidance can be very helpful, and it is certainly worth perusing it carefully before deciding to take the extra step of seeking professional legal advice.  However, reading about the law can never compare to truly knowing the law and having the guidance of an experienced solicitor…..”.  [my emphasis]

Neil Howlett

 

 

 

New Requirements for Gift Aid Declarations

HMRC has updated its requirements for Gift Aid declarations. It is important that you review and, if necessary, amend the wording that you use.

HMRC now require that donors confirm they have been given an explanation that they must pay enough Income or Capital Gains Tax to cover all Gift Aided donations that they intend to make that year.  Previously, donors were asked to confirm only that they pay enough tax to cover the gift to your charity.

This does not represent a change in the law but a clarification of HMRC’s requirements.  HMRC say that if charities use this new form they can be confident HMRC will not later challenge a Gift Aid claim on the grounds that the donor gave an invalid declaration, i.e., because they were not in fact paying sufficient tax.  This risk applies particularly to large donations.

You have until 31 December 2012 to change your declarations.  There are model declarations available on HMRC’s website and a checklist for Gift Aid donations.

Contact

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