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Selling and marketing

Doorstep selling - selling at consumer’s home or work place

1. Background

1.1 The Council of the European Communities (as the EU was then known) passed on 20 December 1985 a <Directive> to protect the consumer in respect of contracts negotiated away from business premises (Directive 85/577/EEC). The <European Commission> proposed this directive because it had become a common form of commercial practice for sale contracts between a trader and consumer to be made away from the business premises of the trader, and such contracts were subject to laws which differed from one Member State to another.

1.2 The preamble to the Directive stated that any disparity between such legislation may directly affect the functioning of the common market; it was therefore necessary to approximate laws in this field; that appropriate measures be taken to protect consumers against unfair commercial practices in respect of doorstep selling; the special feature of contracts concluded away from the business premises of the trader was that as a rule it was the trader who initiated the contract negotiations, for which the consumer was unprepared or which he did not except;  the consumer was often unable to compare the quality and price of the offer with other offers; the consumer should be given a right of cancellation over a period of at least seven days in order to enable him to assess the obligations arising under the contract.

1.3 The UK implemented the 1985 Directive by making the Cancellation of Contracts Concluded away from Business Premises) Regulations 1987. 

In 2002, Citizens Advice (Citizens Advice is an operating name of the UK National Association of Citizens Advice Bureaux -Charity registration number 279057) published a report called “Door to Door” which looked at a wide range of goods and services sold at the door and problems reported to Citizen Advice Bureaux (CAB). The report was submitted to the Office of Fair Trading (OFT) as a “super-complaint”. In 2002, in response to the CAB super-complaint, the OFT launched a market study of doorstep selling. In May 2004, the OFT published a report which included 7 recommendations for improving consumer protection in the area of doorstep sales.

1.4 In July 2004, the Government launched a public consultation based on the recommendations included in the OFT report. In September 2006, the Government published its response to the public consultation and said that it would take forward measures to:
(a) extend the cooling-off period and cancellation rights, which currently apply to contracts made during unsolicited visits by traders, to contracts made during solicited visits by traders;
(b) require a notice of the right to cancel the contract be prominently and clearly displayed in the same document, where the contract is completed wholly or partly in writing; and
(c) encourage greater transparency on prices and greater willingness to provide written quotes

The first of these measures (a) was taken forward through the Consumers, Estate Agents and Redress Act 2007. The Act includes a power to enable the Secretary of State to make regulations entitling a customer, who is a party to a contract concluded as a result of a solicited visit by a trader, to cancel the contract.

1.5 After a consultation process, the Government revoked the 1987 regulations and made new regulations in order to re-implement the 1985 Directive and introduce the measures set out in (a) and (b) above.

Measures to encourage greater transparency on prices and greater willingness to provide written quotes (c) were taken forward via voluntary industry self-regulation and in line with the OFT’s Consumer Codes Approval Scheme.

2.  Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008

2.1  Sale contracts affected
The Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations  “CHPW” came into force on 1st October 2008. The Regulations apply to a contract between a consumer and a trader which is for the supply of goods or services to the consumer by a trader and which is made:
(a) during a visit by the trader to the consumer’s home or place of work, or to the home of another individual;
(b) during an excursion organised by the trader away from his business premises; or
(c) after an offer made by the consumer during such a visit or excursion.

What's new item:
15/01/2013: Removal firm loses claim based on contract made at customer’s home

Robertson v Swift [2012] EWCA Civ 1794
After winning a claim for a cancellation charge payable by a householder both in the Small Claims Court and on appeal to a County Court judge, a London removals firm has lost the claim after the lower court’s decision was overturned in the Court of Appeal.

Terence Swift is the proprietor of ‘ Swift Move’, a long established family firm of removers based in London SW20. During the second of two visits by Mr Swift to the Weybridge home of Doctor Toby Robertson, the latter signed a removal contract acceptance form. The form did not contain written notice of his right to cancel the contract under the Cancellation of Contracts made in a Consumer's Home or Place of Work etc Regulations 2008.

A couple of days later, Dr Robertson found a cheaper quote and telephoned Swift to cancel the removal. He agreed to pay a cancellation charge of £2,450.60, being 50% of the removal price less the £1,000 deposit. He also claimed to have sent a cancellation letter to Swift but the latter did not receive it. Subsequently Roberston denied he was liable to pay the cancellation charge.

The Court of Appeal held that Swift was not entitled to enforce the contract against Robertson. As Swift had not notified Robertson of the right to cancel the contract [as it was made at the customer’s home], the statutory 7 day cancellation period was automatically extended indefinitely but never exercised because Swift did not receive a cancellation notice. However, Robertson was not entitled to recover his deposit because he had not given a written notice of cancellation

Legaleze comment: several aspects of this case are interesting:
(i) It is rare for a small claims case to reach the Court of Appeal.
(ii) The case highlights the effect of the 2008 Regulations which are not as well-known as they might be.
(iii) It is striking that one of the Appeal Justices, Lord Justice Jackson, observed as follows: ‘I reach this decision with regret. For consumer protection regulations to apply in the circumstances of this case is, in my view, inappropriate. Many removal firms are small businesses. They necessarily visit customers at home in order to assess the proposed work. It must often happen that the remover and the customer enter into an agreement at the customer's home. Once the deal is done, the remover must incur costs in preparing for the move. He may also turn away other work during the relevant period. If the customer has seven days grace in which to cancel the contract, the remover is put in an impossible position. I express hope that the Department for Business, Innovation, and Skills will review the 2008 Regulations in the light of this case and consider whether any amendments are appropriate. It may, for example, be thought appropriate to include removal contracts in the list of "excepted contracts" in Schedule 3 to the Regulations’.
(iii) Finally, the 2008 Regulations might be seen as an example of the UK ‘gold plating’ an EU Directive. The Directive does not apply where the trader’s visit takes place at the express request of the consumer, whereas the 2008 Regulations do apply even if the customer specifically requests the trader to come to his house in order to assess the services which he is to provide.
Traders may wish to reconsider their contracts procedure to avoid such a result.

2.2 Excepted contracts
Certain types of contract are excluded from the scope of the CHPW regulations:

(i) A contract for the construction, sale or rental of immovable property (i.e. real estate and buildings) or a contract concerning other rights relating to immovable property except for the following which therefore ARE COVERED by the CHPW regulations:
(a) a contract for the construction of extensions, patios, conservatories or driveways;
(b) a contract for the supply of goods and their incorporation in immovable property;
Legaleze comment: this could cover the supply and installation of built in kitchens, bathrooms and  bedrooms;
(c) a contract for the repair, refurbishment or improvement of immovable property.

(ii)  A contract for the supply of foodstuffs or beverages or other goods intended for current consumption in the household and supplied by a regular roundsman.

(iii) A contract for the supply of goods or services provided that each of the following conditions is met:
 (a) the contract is concluded on the basis of a trader’s catalogue which the consumer has a proper opportunity of reading in the absence of the trader’s representative;
 (b) there is intended to be continuity of contact between the trader’s representative and the consumer in relation to that or any subsequent transaction; and.
 (c) both the catalogue and the contract contain a prominent notice informing the consumer of his rights to return goods to the supplier within a period of not less than seven days of receipt or otherwise to cancel the contract within that period without obligation of any kind other than to take reasonable care of the goods.

(iv) A contract of insurance.

(v)  Any contract under which credit within the meaning of the Consumer Credit Act 1974 Act is provided not exceeding £35 other than a hire purchase or conditional sale agreement.

(vi) Any contract not falling within paragraph (v) under which the total payments to be made by the consumer do not exceed £35.

(vii) Any agreement the making or performance of which by either party constitutes a relevant “regulated activity”. This includes such activities as dealing in investments, arranging deals in investments, operating a multilateral trading facility, managing investments, safeguarding and administering investments and establishing, operating or winding up a collective investment scheme. Note that advising on investments is not in this list and therefore is NOT excluded from the CHPW regulations. For these purposes “investment” includes shares, instruments creating or acknowledging indebtedness and other rights giving entitlement to investments.

(viii) An agreement which is cancellable under s.67 Consumer Credit Act 1974;

(ix)  A consumer credit agreement which may be cancelled by the consumer in accordance with the terms of the agreement conferring upon him similar rights as if the agreement were a cancellable agreement; or

(x) A contract made during a solicited visit or a contract made after an offer made by a consumer during a solicited visit where the contract is:
 (a) a regulated mortgage, home purchase plan or home reversion plan if the making or performance of such a contract constitutes a regulated activity for the purposes of the Financial Services and Markets Act 2000;
 (b) a consumer credit agreement secured on land which is regulated or exempt under the 1974 Act;
(c) any other consumer credit agreement regulated under the 1974 Act.

3. Right to cancel a contract to which the CHPW Regulations apply

3.1 A consumer has the right to cancel a contract to which the CHPW Regulations apply within the “cancellation period” which means the period of 7 days starting with the date of receipt by the consumer of a notice of the right to cancel.

3.2 The trader must give the consumer a written notice of his right to cancel the contract. The trader must give the notice at the time the contract is made.  However, if the contract is made after an offer made by the consumer during a visit or excursion (see 2.1(c) above), the notice must be given at the time the offer is made by the consumer.

3.3  The notice must:
 (a) be dated;
 (b) indicate the right of the consumer to cancel the contract within the cancellation period;
 (c) be easily legible;
 (d) contain the information set out in 3.4 below;
 (c) contain a a cancellation form in the form set out in 3.5 below and be provided as a detachable slip and completed by or on behalf of the trader in accordance with the notes; and
 (e) indicate if applicable:

 (i) that the consumer may be required to pay for the goods or services supplied if the performance of the contract has begun with his written agreement before the end of the cancellation period;

 (ii) that a related credit agreement will be automatically cancelled if the contract for goods or services is cancelled.

3.4 The information to be contained in the notice is:

 (i)  The identity of the trader including trading name if any.

 (ii) The trader’s reference number, code or other details to enable the contract or offer to be identified.

(iii)  A statement that the consumer has a right to cancel the contract if he wishes and that this right can be exercised by delivering, or sending (including by electronic mail) a cancellation notice to the person mentioned in the next paragraph at any time within the period of 7 days starting with the day of receipt of a notice in writing of the right to cancel the contract.

(iv) The name and address, (including any electronic mail address as well as the postal address), of a person to whom a cancellation notice may be given.

 (v)  A statement that notice of cancellation is deemed to be served as soon as it is posted or sent to a trader or in the case of an electronic communication from the day it is sent to the trader.

 (vi) A statement that the consumer can use the cancellation form provided if he wishes.

3.5 The form of the cancellation notice is:
If you wish to cancel the contract you MUST DO SO IN WRITING and deliver personally or send (which may be by electronic mail) this to the person named below. You may use this form if you want to but you do not have to.

( Complete, detach and return this form ONLY IF YOU WISH TO CANCEL THE CONTRACT.)

To:…………………………………………………………………………………………………………..

(trader to insert name and address of person to whom notice may be given.)

I/We (delete as appropriate) hereby give notice that I/we (delete as appropriate) wish to cancel my/our (delete as appropriate) contract…………………………………………………………………………

(trader to insert reference number, code or other details to enable the contract or offer to be identified. He may also insert the name and address of the consumer.)

Signed

Name and address

Date

3.6 Where the contract is wholly or partly in writing the notice must be incorporated in the same document. If incorporated in the contract or another document the notice of the right to cancel must:
 (a) be set out in a separate box with the heading “Notice of the Right to Cancel”; and
 (b) have as much prominence as any other information in the contract or document apart from the heading and the names of the parties to the contract and any information inserted in handwriting.

4. Unless the trader has given the consumer a notice of the right to cancel and the information required in accordance with the CHPW Regulations, the trader will not have the right to enforce the contract against the consumer.

5. Exercise of the right to cancel a contract

5.1  If the consumer serves a cancellation notice within the cancellation period then the contract is cancelled.  A contract which is cancelled is treated as if it had never been entered into by the consumer except where the PCHW Regulations provide otherwise.

5.2 The cancellation notice must indicate the intention of the consumer to cancel the contract and does not need to follow the form of cancellation notice set out in 3.5.

5.3 The cancellation notice must be served on the trader or another person specified in the notice of the right to cancel as a person to whom the cancellation notice may be given. A cancellation notice sent by post is taken to have been served at the time of posting, whether or not it is actually received.  Where a cancellation notice is sent by electronic mail it is taken to have been served on the day on which it is sent.

6. Cancellation of specified contracts commenced before expiry of the right to cancel

6.1 Special rules apply to a “specified contract” which is a contract for any of the following:
(a) the supply of newspapers, periodicals or magazines;
 (b) advertising in any medium;
 (c) the supply of goods the price of which is dependent on fluctuations in the financial markets which cannot be controlled by the trader;
 (d) the supply of goods to meet an emergency;
 (e) the supply of goods made to a customer’s specifications or clearly personalised and any services in connection with the provision of such goods;
 (f) the supply of perishable goods;
 (g) the supply of goods which by their nature are consumed by use and which, before the cancellation, were so consumed;
 (h) the supply of goods which, before the cancellation, had become incorporated in any land or thing not comprised in the cancelled contract;
 (i) the supply of goods or services relating to a funeral; or
 (j) the supply of services of any other kind.

6.2 If the consumer enters into a specified contract and he wishes the performance of the contract to begin before the end of the cancellation period, he must request this in writing.

6.3 If the consumer cancels a specified contract in accordance with the rules in 5 above, he must pay in accordance with the requirements of the cancelled contract as far they are reasonable  for goods or services that were supplied before the cancellation.

6.4 If the consumer fails to provide the request in writing referred to in 6.2 then:
 (a) the trader is not obliged to begin performance of the specified contract before the end of the cancellation period; and
 (b) the consumer is not bound to pay as referred to in 6.3 if he cancels the contract in accordance with the rules in 5.

7. Recovery of money paid by consumer

7.1 If the consumer cancels a contract under the rules in 5, any sum paid by him in relation to the contract becomes repayable, except where the CHPW Regulations provide otherwise.

7.2 The consumer has the right to keep possession of any goods (a “lien”) under the terms of the cancelled contract so long as there is any sum repayable to him under 7.1.

7.3 If any security has been provided in relation to the cancelled contract, the security is treated as never having had effect for that purpose and the trader must immediately return any property lodged with him solely as security for the purposes of the cancelled contract.

8. Duty to return goods

8.1 If a consumer  has acquired possession of any goods by virtue of the contract and then cancels the contract, he must subject to any lien he has under 7.2,  restore the goods to the trader and meanwhile must retain possession of the goods and take reasonable care of them.

8.2 The consumer is not under a duty to restore goods supplied under a specified contract in circumstances where:
 (a) he is required to pay, in accordance with the reasonable requirements of the cancelled contract, for the supply of such goods before cancellation; or
 (b) the trader has begun performance of the contract before the end of the cancellation period without a prior request in writing by the consumer.

8.3 The consumer need only deliver the goods to the trader at the consumer’s own premises and following a request in writing signed by the trader and served on the consumer either before, or at the time when, the goods are collected from those premises.

8.4 The consumer ceases to have any duty to retain possession of the goods or restore them to the trader if he:
 (a) delivers the goods (whether at his own premises or elsewhere) to any person on whom, under the rules in 5 above,  a cancellation notice could have been served; or
 (b) sends the goods at his own expense to such a person.

8.5 If the consumer delivers the goods as mentioned in 8.4(a), his obligation to take care of the goods ceases.

8.6 If the consumer sends the goods as mentioned in 8.4(b), he is under a duty to take reasonable care to see that they are received by the trader and not damaged in transit, but in other respects his duty to take care of the goods ceases.

Legaleze comment: it is not clear if this means that the consumer should insure the goods or if sending by post should use registered post.

8.7 If at any time during the period of 21 days following the cancellation, the consumer receives a request to deliver the goods as mentioned in 8.3 above and unreasonably refuses or unreasonably fails to comply with it, his duty to retain possession and take reasonable care of the goods will continue until he delivers or sends the goods as mentioned in 8.4 above.

8.8 If within the period of 21 days following the cancellation, the consumer does not receive a request to deliver the goods as mentioned in 8.3 above, his duty to take reasonable care of the goods will cease at the end of that period.

8.9 If any security has been provided in relation to the cancelled contract, the duty imposed on the consumer to restore goods is not enforceable before the trader has returned any property lodged with him in accordance with 7.3 above.

9. Goods given in part-exchange

9.1 If the trader has agreed take goods in part-exchange (the “part-exchange goods”) and those goods have been delivered to him and the contract is cancelled, the trader must, before the end of the period of 10 days beginning with the date of cancellation,  return the part-exchanged goods  to the consumer in a condition substantially as good as when they were delivered to the trader. If not, the consumer will be entitled to recover from the trader a sum equal to the part-exchange allowance.

9.2 During the period of 10 days beginning with the date of cancellation, the consumer, if he is in possession of goods to which the cancelled contract relates, has a right of a lien on them for:
 (a) delivery of the part-exchange goods in a condition substantially as good as when they were delivered to the trader; or
 (b) a sum equal to the part-exchange allowance.

After the end of that period, if the part-exchanged goods have not been returned, the consumer’s lien continues to be effective only as a lien for a sum equal to the part-exchange allowance.

9.3 The “part-exchange allowance” means the sum agreed as such in the cancelled contract, or if no such sum was agreed, such sum as it would have been reasonable to allow in respect of the part-exchange goods if no notice of cancellation had been served.

10. No contracting-out

10.1 A contract may not validly avoid or be inconsistent with any provision for the protection of the consumer contained in the CPHW Regulations.

10.2 No term contained in a contract may validly impose, directly or indirectly, an additional or different duty or liability on the consumer than those set out in the CPHW Regulations.

11. Enforcement

11.1 Criminal law enforcement
A trader is guilty of an offence if he enters into a contract to which the CPHW Regulations apply but fails to give the consumer a notice of the right to cancel in accordance with the rules in 3 above. This offence is punishable on summary conviction to a fine not exceeding level 5 on the standard scale.
Due diligence defence: a trader has a defence to the charge of the offence if he proves:
 (a) that the commission of the offence was due to the act or default of another or reliance on information given by another; and
 (b) that he took all reasonable precautions and exercised all due diligence to avoid the commission of such an offence by himself or any person under his control.
The Regulations provide for Director’s criminal liability

11.2 Civil law enforcement:  unless the trader has given the consumer a notice of the right to cancel and the information required in accordance with the CHPW Regulations, the trader will not have the right to enforce the contract against the consumer.

Legaleze comment:  If the trader fails to give the notice of cancellation rights exactly as required by the CPHW Regulations, there appears to be no decided case on the question whether the trader would still be allowed to enforce the contract. Clearly it is better if the trader uses the wording and requirements exactly as set out in the regulations.

[Page updted: 04/03/2013]

More information>
The basics: contract for sale
Legal tender
Limitation and exclusion clauses
Sale of goods
Supply of services
Inertia selling to businesses
E-commerce
Sales to consumers
Unfair terms
Sales to consumers, distance selling
Doorstep selling
Marketing and advertising regulation    introduction
Advertising Codes
Advertising to businesses and    comparative advertising
Advertising to consumer regulations
Approved trader schemes
Direct marketing by telephone, email,    text message, fax and post
Data protection in relation to marketing