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Sale of goods and services to consumers

Contents:

Introduction

What is a 'trader' and a ''consumer'?

Supply of goods and digital content and services to consumers

On-premises off-premises and distance selling

Consumer sales law applicable prior to 1 October 2015

Introduction


This section deals with the regulation of sales of goods and supplies of services by a trader to a consumer.

Since the later part of the 20th century, consumers dealing with persons contracting in the course of business have acquired special legal protection. Initially introduced by domestic UK law, increasingly EU law has influenced this area.

Major reforms to this area of law were effected by the Consumer Rights Act 2015 (CRA) which at the time of writing, is expected to come into effect on 1 October 2015.

The CRA applies to a contract for a trader to supply goods to a consumer including a:

* sales contract;

* contract for the hire of goods;

* hire-purchase agreement; and a

* contract for transfer of goods

The exact definitions of these types of contract are set out in CRA ss.5-8.

The CRA does not apply to a contract whereby:

* a trader buy goods or services from a consumer,;;

* one consumer contracts with another between consumer.

Further information is available from the Chartered Trading Standards Institute guidance for businesses that sell goods and/or supply services to consumers

The regulation of marketing and advertising to consumers must also be taken into account.. This area has developed significantly in recent years under the influence of EU law. Regulations introduced under EU law have superseded most of the former UK trade descriptions legislation.

What is a 'trader' and a “consumer”?

In the CRA:

* 'Trader' means 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 trader’s name or on the trader’s behalf;

* 'Consumer' means an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession.

If a trader claims that an individual was not acting for purposes wholly or mainly outside the individual’s trade, business, craft or profession, the trader must prove it.
.

Auction sales: A person is not generally treated as a consumer in relation to a sales contract if the goods are second hand goods sold at public auction, and individuals have the opportunity of attending the sale in person. However, such a peron is so treated in relation to:

* information mentioned in paragraph (a) of Schedule 1 or 2 to the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013;

* the rules about delivery and passing of risk in CRA ss.28-29

(CRA s.2)

Supply of goods and digital content and services to consumers

Introduction

The Consumer Rights Act 2015 was enacted on 26 March 2015. Its purpose is mainly to clarify and ‘tidy up’ the law relating to the sale and supply of goods and services to consumers. The Consumer Rights Bill was described by the government as ‘the biggest overhaul of consumer law for a generation’.

Existing UK consumer law has become exceedingly complex and fragmented. This has come about due to piecemeal changes in the UK legislation in this area, covering business as well as consumer sales followed more recently by the introduction of additional measures deriving from EU consumer protection law which have been introduced largely by self-standing regulations rather than part of a cohesive code of consumer protection.

The law relating to the supply of goods and services was developed in English common law by judicial decisions in a series of cases. The first statutory intervention was in the Sale of Goods Act 1893. Since then, this area of law has been gradually modified and extended by a number of different legislative measures including the:

* Supply of Goods (Implied Terms) Act 1973;

* Sale of Goods Act 1979;

* Supply of Goods and Services Act 1982;

* Sale and Supply of Goods Act 1994;

* Sale and Supply of Goods to Consumers Regulations 2002;

* Unfair Contract Terms Act 1977;

* Unfair Terms in Consumer Contracts Regulations 1999 (replacing the 1994 regulations);

* Competition Act 1998;

* Enterprise Act 2002

The Sale of Goods Act 1979 (as amended) requires goods to comply with certain standards as to satisfactory quality, description, fitness for purpose and other standards. The Consumer Rights Act 2015 (CRA) will supersede the 1979 Act in respect of business to consumer sales with effect from 1 October 2015.

.

The CRA did not supersede the following regulations which derive from EU consumer protection legislation:

*             the Consumer Protection from Unfair Trading Regulations 2008 (as amended in 2014) which regulate misleading or aggressive practices in marketing and selling to consumers;

*             the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 which replaced the following regulations:

            -  the Consumer Protection (Distance Selling) Regulations 2000 (amended in 2005)   which revoked the Mail Order Transactions (Information) Order 1976;

            -  the Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008 which themselves replaced the Consumer Protection (Cancellation of Contracts Concluded away from Business Premises) Regulations 1987;

            -  the Consumer Rights (Payment Surcharges) Regulations 2012

In addition to the objective of consolidation and clarification of existing consumer rights legislation into one comprehensive source, the CRA implements certain aspects of the EU Consumer Rights Directive and makes a number of significant changes as summarised below.

Rights and remedies in sale of goods contracts

The Sale of Goods Act 1979 (as amended) requires goods to comply with certain standards as to satisfactory quality, description, fitness for purpose and other standards. The CRA supersedes the 1979 Act in respect of business to consumer sales and in addition to the foregoing standards, sellers or ‘traders’ in the language of the CRA must ensure that:

* if goods are sold by reference to a model of the goods that is seen or examined by the consumer before entering into the contract, the goods will match the model except to the extent that any differences between the model and the goods are brought to the consumer’s attention before the consumer enters into the contract;

* he provides certain information as set out in the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.

The CRA provides that the buyer has two express rights to reject goods if they do not conform to the sale contract: a short-term right to reject of 30 days (or reasonable life in the case of perishable goods) and a final right to reject. The short-term right to reject extends by at least seven days if the business has to repair or replace the goods during that time. Once the short-term right to reject is lost, the consumer has the right to a repair or replacement. The business has one opportunity to repair or offer one replacement, but if repair or replacement are impossible, or the business’s one attempt at repair fails, or the first replacement is also defective, the consumer has the right to a price reduction or a final right to reject.

Rights and remedies for digital content

The CRA aims to introduce consistency in consumer protection law for digital content (i.e. data produced and supplied in digital form) whether on a disk or by download. The applicable standards are similar to those for goods except that a consumer has no right to reject digital content. If the digital content does not comply with such standards, the consumer has a right to a repair or replacement, but if that is not possible or the fault goes unresolved, the right to a price reduction up to the full amount of the price.

The trader must have the right to supply the digital content and if he does not have such right, the consumer has a right to a refund. A consumer is also entitled to compensation for damage caused to the device or to other digital content.

Rights and remedies for the supply of services

The Supply of Goods and Services Act 1982 implies (i.e. ‘writes in’) certain terms in a contract for the supply of a service where the supplier is acting in the course of a business. These include terms that the supplier will carry out the service with reasonable care and skill and within a reasonable time, and that the customer will pay a reasonable charge. The CRA implies the same terms into contracts for the supply of services to a consumer but in addition it implies a term that certain information about the trader or service is binding.

The information which is treated as binding is anything that is said or written to the consumer, by or on behalf of the trader, about the trader or the service, if it is taken into account by the consumer when deciding to enter into the contract or when making any decision about the service after entering into the contract. However this is subject to anything that qualified the information on the same occasion, and any change to the information that has been expressly agreed between the consumer and the trader before or after entering into the contract.

In case of non-conformity with the contract, the consumer will have the right to require repeat performance, or, if that is ‘impossible’ or not done in a reasonable time, the right to a reduction in price.

One of the options for reform prior to the Consumer Rights Bill being introduced to Parliament was the introduction of a so-called ‘outcomes-based liability standard’, that is, a requirement that services be of satisfactory quality, in a similar way as the standard required for goods. However, the Government chose not to include such an obligation in the Bill, and despite the criticism of the House of Commons Business, Innovation and Skills Committee, the right was not included in the CRA.

Unfair terms in consumer contracts

In relation to business to consumer contracts, the CRA consolidates the provisions of the Unfair Contract Terms Act 1977 (UCTA) with the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR), which were considered to be inconsistent, complex and difficult to apply. The parts of UCTA relating to issues other than business to consumer contracts remain in force, but the UTCCR will be fully revoked.

On=premises off-premises and distance selling

The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 replaced  for all contracts made since 13 June 2014. for all contracts made since 13 June 2014 the:

* Consumer Protection (Distance Selling) Regulations 2000 (amended in 2005)  which revoked the Mail Order Transactions (Information) Order 1976;

* the Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008 which themselves replaced the Consumer Protection (Cancellation of Contracts Concluded away from Business Premises) Regulations 1987;

* Consumer Rights (Payment Surcharges) Regulations 2012

Although there are many similarities, there are also important differences in the new Regulations, which apply both to contracts made on and away from business premises, and introduce new rules for businesses providing digital content. These Regulations affect most businesses that contract with consumers, irrespective of where and how the contract is entered into. The Regulations do not apply to contracts where traders buy goods or services from consumers, nor do they apply to contracts between consumers.

On-premises sales

No statutory cancellation rights (or 'cooling -off period' applies for consumers when buying on business premises. However, there is a list of of information which consumers must be provided with before they enter into a contract. In addition, the Regulations prohibit the use of premium-rate telephone helplines and the use of oipt-outs to sell additional products to consumers that are incidental to the main contract.

The Regulations also deal with the time that you take to deliver goods and who takes the risk when goods are being delivered to a consumer.

Off-premises sales

Where a sales contract is made (broadly) away from the trader's premises, or following a visit to a consumer in a place that is not the trader's business premises, the consumer has a statutory right of cancellation, in addition to the on-premises rights.

Distance sales

A 'distance contract' is one which is made between a trader and a consumer where they are not together, which is negotiated and agreed by one or more organised means of distance communication. Again, the consumer has a statutory right of cancellation, in addition to the on-premises rights.

Further information is available from the Chartered Trading Standards Institute guidance for businesses that sell goods and/or supply services to consumers

Consumer sales law applicable prior to 1 October 2015

Before the CRA changes take effect on 1 October 2015, the following statutory provisions aremain in effect.

Unfair terms


The Unfair Terms in Consumer Contracts Regulations 1999 (“UTCCR”) were introduced as a result of EU legislation. The regulations apply in relation to “unfair terms” in contracts concluded between a seller or a supplier and a consumer. A contractual term which has not been individually negotiated is be regarded as “unfair” if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer. Read more

Limitation and exclusion clauses


Clauses in contracts which limit or exclude business liability against consumers must in general meet the “requirement of reasonableness” test in UCTA. Read more

Unreasonable indemnity clauses


A contract term may not require a person dealing as consumer to indemnify another person (whether a party to the contract or not) in respect of liability that may be incurred by the other for negligence or breach of contract, unless the term satisfies the [“requirement of reasonableness]” (UCTA s.4).

Guarantee of goods supplied for private use or consumption


Defective goods: In the case of goods of a type ordinarily supplied for private use or consumption, where loss or damage:
(a) arises from the goods proving defective while in consumer use; and
(b) results from the negligence of a person concerned in the manufacture or distribution of the goods;

liability for the loss or damage cannot be excluded or restricted by any contract term or notice contained in a guarantee of the goods (UCTA s.5).

Terms of guarantees:


Where goods are sold or supplied to a consumer which are offered with a consumer guarantee, the consumer guarantee takes effect at the time the goods are delivered as a contractual obligation owed by the guarantor under the conditions set out in the guarantee statement and the associated advertising.

The guarantor must ensure that the guarantee sets out in plain intelligible language the contents of the guarantee and the essential particulars necessary for making claims under the guarantee, notably the duration and territorial scope of the guarantee as well as the name and address of the guarantor.

On request by the consumer to the guarantor or supplier, the guarantee must within a reasonable time be made available in writing or in another durable medium.

If the goods are supplied within the United Kingdom, the consumer guarantee must be written in English (Sale and Supply of Goods to Consumers Regulations 2002 reg. 15).

[Page updated: 18/06/2015]

 

 

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