The Consumer Rights Act 2015 is coming - is your business ready?

This article first appeared in Equestrian Trade News. 

Current consumer law is changing as a result of the new Consumer Rights Act 2015 which comes into force on 1 October 2015.

Retailers dealing directly with consumers will need to make sure they are compliant with the Consumer Rights Act 2015 ("CRA") by reviewing terms and conditions, sales documents  and assessing business practices.  The aim of the CRA is to consolidate and replace current consumer legislation including:

• Unfair Contract Terms Act 1977
• Sale of Goods Act 1979
• Supply of Good and Services Act 1982
• Unfair Terms in Consumer Contracts Regulations 1999

The CRA will only apply to business to consumer contracts and to contracts made after 1 October 2015.  The legislation listed above will still be in force in relation to business to business contracts and those contracts made prior to 1 October 2015.

Goods and delivery

Retailers will be aware of the various statutory quality standards that apply to the sale of goods.  Requirements that goods must be (1) as described;  (2) of satisfactory quality; and (3) fit for purpose still remain. However, the CRA  introduces a number of additional requirements and twists to the existing standards.  These include:

• In relation to assessing whether goods are fit for purpose, the purpose must be communicated to the retailer before the contract is completed.
• Goods must match the model seen or examined by the consumer and any differences must be brought to the consumer's attention before the contract is completed.
• Where pre-contractual information has been provided to consumers, this information will become an implied term of the contract.
• If installation forms part of the contract, goods will only be deemed to conform if they are installed correctly. This will be particularly relevant to any business that sells items that have an installation element to them, such as stabling, horse walkers and solaria. This requirement will apply regardless of whether a retailer performs the installation itself or uses a sub-contractor or a third party to install goods on its behalf.
• Unless agreed otherwise, there is now a default delivery period of 30 days.

Goods - Rights and Remedies

The rights and remedies available to consumer have been significantly clarified and widened.  The key changes are as follows:

• The current legal position allows for defective goods to be rejected within a 'reasonable period'. Under the CRA there will now be a period of 30 days in which the consumer can reject the goods. 
• Retailers will 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. 
• A retailer will now have one opportunity to repair and replace unless further requests are received. If a consumer agrees a trader can try to repair or replace faulty goods, the consumer's right to reject is "paused".
• Refunds to consumers may be reduced to take account of any use the consumer has had from the goods, but no deduction can be made in circumstances where the goods are rejected within six months of delivery. There is an exception to this rule which applies to motor vehicles that include vehicles such as horse boxes.
• Remedies for late delivery may include (1) an immediate right to terminate; (2) the right to set a new deadline for delivery; and (3) a right to receive a refund where the contract is terminated or goods are rejected.

As a result, retailers will need to review existing refund and repair policies as well ensuring that any information given to consumers about their rights does not conflict with the CRA.

Unfair terms 

The Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999 are being merged in the CRA 2015. As with the previous legislation, a retailer will be unable to exclude or limit its liability in relation to many of the core CRA provisions. In addition, the CRA now extends the fairness test to contract terms and consumer notices and relevant terms 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. 

Services - Rights and remedies

As well as covering goods and digital content, the CRA will also govern the standards relating to services.  The implied terms relating to services are largely a repetition of the existing law, however, by way of reminder:

• The service must be performed with reasonable care and skill.
• The consumer must pay a reasonable price for the services (reasonable price will be a question of fact and the CRA provides no further guidance).
• The service must be carried out within a reasonable time frame.

Any verbal or written information provided to the consumer which they rely on when (1) deciding to enter into the contract; and/or (2) when making a decision about the service after entering into the contract will be incorporated into the contract.

Although the onus will be on the consumer to prove that a service did not meet the terms referred to above, the remedies for defective performance of services include:

• repeat performance - this must be provided within a reasonable time and without causing significant inconvenience to the consumer. In addition, retailers should bear any necessary costs (i.e. labour or materials).
• a price reduction - this will be available where repeat performance cannot be carried out or where the service has not been completed in a reasonable time. The amount of the price reduction will depend on how serious the nature of the breach is.

The CRA does not give a consumer the right to have someone else complete the service and then charge the original trader.  However, as with the sale of goods, other remedies available to consumers include claiming damages, seeking specific performance and the right to treat the contract as being at an end.

As with the sale of goods, retailers will not be able to exclude or limit liability in relation to the implied terms.

What does your business need to do?

In order to achieve compliance with the CRA, retailers should review and update:

• Sales lifecycle
• Standard web and app terms
• References to legislation
• Cancellation and return policies
• Sales contracts
• Limitation of liability
• Pre-contractual information
• Implement staff training