Is your business ready for the Consumer Rights Act 2015?

Current consumer law is made up of a lot of different pieces of legislation and places an administrative and compliance burden on businesses.  It is also considered to be out of date.  The aim of the Consumer Rights Act 2015 ("CRA 2015") is to consolidate current consumer legislation and to provide enhanced consumer protection and consumer remedies.  The CRA 2015 is split into three parts:

• Part 1: Consumer contracts for goods, digital content and services;
• Part 2: Unfair terms; and
• Part 3: Miscellaneous and general (including enforcement etc).

The majority of the provisions of the CRA 2015 will come into force on 1 October 2015.  If your business deals with consumers, you should be making sure you are compliant with the CRA 2015 ahead of October 2015 by reviewing your terms and conditions, sales documents  and assessing your business practices.

Consolidation

Previous law in this area, that your business will be aware of, will be replaced (almost in their entirety), or will no longer apply in the business to consumer context.  This includes:

• Unfair Terms in Consumer Contracts Regulations 1999;
• Unfair Contract Terms Act 1977;
• Sale of Goods Act 1999; and
• Supply of Good and Services Act 1982.

Definitions

The definition of consumer in the CRA 2015 is wider than we have seen before.  It refers to purposes which are 'wholly or mainly outside an individual's business'.  Previously this has been restricted to 'outside of an individual's business'.  You will need to be aware that this amendment for the CRA 2015 means that now an individual entering a contract for a mixture of personal and business reasons could rely on the CRA 2015.

Trader is defined as a person acting for purposes relating to that person's trade, business, craft or profession, whether acting personally or through another person acting in the traders name or on the traders behalf.  A  government department or public sector body also comes within the definition of trader.

Goods

Goods must: 

• Be of satisfactory quality;
• Match the description; and
• Be fit for purpose.

The CRA 2015 introduces a number of additional standards.  These include:

• Where traders have to provide pre-contractual information to consumers, this information becomes an implied term (of the contract);
• Goods only conform to the contract if they are installed correctly; and
• Goods have to match the model seen or examined by the consumer.

The current legal position for rejecting defective goods is within a 'reasonable period'.  Under the CRA 2015 there will be a period of 30 days in which the consumer can reject the goods.  This period starts:

• When ownership has passed to the consumer;
• When delivery has taken place; and
• If applicable, when the trader has enabled the consumer to use the goods.

Traders have the option to extend the 30 day period, but they must not reduce it.  Perishable goods may have a shorter time period than 30 days within which to reject. 

Traders will have one opportunity to repair or replace defective goods.  If this is not possible or the repair fails or the replacement is also faulty then the consumer may be entitled to a full or partial refund.

Services

Where services are being supplied, the following terms are implied:

• The service must be performed with reasonable care and skill;
• The consumer must pay a reasonable price for the services; and
• The service must be carried out within a reasonable time frame.

The following is also to be treated as a term of the contract:

• Any verbal or written information provided to the consumer on which they rely.

The remedies for defective performance of services include repeat performance, or if that is not possible, in some circumstances, a price reduction. 

Digital Content

For the first time, there will be remedies available specific to the purchase of digital content including paid for content and content which comes free with goods or services which the consumer has paid for.  The UK is leading the way in enacting domestic legislation in this area and other European countries are starting to follow. 

Digital content (as with the supply of goods) must be of:

• Satisfactory quality;
• Fit for purpose; and
• Match the description given by the trader.

Unlike with goods, there is no right of rejection with digital content.  There will however be a right to:

• Repair or replacement; or
• A partial refund (except where there is a copyright issue and the consumer can then claim an immediate full refund).

The trader will get more than one chance at repair or replacement, which they do not get with physical goods.  The way to repair or replace is left ambiguous and this will need to be decided on a case by case basis.  The consumer must be able to show that the trader did not exercise reasonable skill and care.

Unfair terms 

The Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999 are being merged in the CRA 2015.  An effect of this is that the fairness test will be extended to consumer notices e.g. a trader will not be able to rely on a consumer notice (e.g. an oral warning or a sign) unless it is fair.

In addition, relevant terms (e.g. surrounding the subject matter or the price) will now need to be both:

• Transparent (e.g. in plain and intelligible language); and
• Prominent (e.g. brought to the consumer's attention).

Currently, the law only requires transparency but not prominence. 

Enforcement

Currently, a number of public bodies enforce consumer law.  Given the large amount of legislation this led to a fragmented and overly complex approach.  The CRA 2015 introduces enhanced consumer measures which provide greater flexibility to enforcers.  These consist of:

• Redress which offers consumers compensation or a right to terminate;
• Compliance measures intended to prevent the risk of repeat conduct; and
• Choice measures intended to enable consumers to pick between suppliers more effectively.

Both public and private (such as Which?) enforcers can impose the measures.  This is perhaps not the best news for businesses. 

What does your business need to do?

The CRA 2015 greatly increases the rights of consumers in this area and the powers of the court.  In light of the CRA 2015, prior to 1 October 2015, your business should be reviewing your sales lifecycle, sales contracts, standard web and app terms, limitation of liability clauses to check compliance and references to legislation, pre-contractual information (including notices) and cancellation and returns policies.