The Consumer Rights Act 2015: Part 1 What are the Key Changes for Businesses?
Since the introduction of the Sale of Goods Act in 1979 the way we buy goods and services has changed beyond all recognition.
For example, you can buy a coffee by waving your phone over a card terminal and make in-game purchases for apps. The 1979 Act could not have envisaged these types of developments.
The Consumer Rights Act 2015 came into force on 1st October 2015. The new Act helps bring consumer law into the 21st century. It is one of the most significant legislative reforms of the year, overhauling various pieces of UK consumer legislation and replacing a regime which is in some places over forty years old. It is hoped that consolidating and updating many existing rules will make compliance easier for businesses and the law more user friendly for consumers. If your business supplies goods, services or digital content to consumers, now is a good time to review your trading terms and consider how the Act will impact your business.
Requirement of transparency and prominence
The new Act requires consumer contracts to be transparent. Contract terms should be in plain and intelligible language: in other words easy for consumers to understand. Key terms, such as price and subject matter, should also be shown prominently. Businesses should, therefore, take a good hard look at their consumer contracts and determine if they comply with these new requirements.
Standard of Goods: new implied terms
The new Act retains the implied terms from the old regime and introduces additional terms:
- Goods must match any model or design shown to the consumer prior to purchase;
- Information given to a consumer prior to purchase will form part of the contract;
- Where goods are to be installed failure to do so correctly will result in the goods not conforming to contract; and
- If the goods contain digital content this must conform to contract.
Standard of Services: new implied terms
Any statement from the supplier to a consumer will be considered an implied term where the consumer relied on the statement to make a decision about whether to enter into the contract or to make a decision about the service after the contract has been concluded. Suppliers should be extra careful of doing or saying anything which could potentially mislead consumers.
Digital content is a considerable change in the 2015 Act and will be discussed in detail in our follow-up e-Update.
The 2015 Act “blacklists” terms which attempt to exclude liabilities relating to the implied terms for the standard of goods, digital content or services. Such attempts will be subject to public enforcement. Schedule 2 to the Act also provides a “grey list” of terms which may be regarded as unfair. This list is indicative and non-exhaustive. Although the terms listed are not automatically void they may be scrutinised by a court when reviewing a contractual term for fairness as required by the Act. Businesses should be forewarned and take appropriate account of such when reviewing their terms.
The 2015 Act introduces enhanced consumer remedies set out in a hierarchical structure to make clear when they can be exercised. The right to reject goods that do not conform to contract, previously only a common law remedy, is now a statutory right. After an initial thirty day rejection period, the consumer has a right of replacement or repair. If, after repair or replacement, the goods do not conform to contract, the consumer has a final right to reject. If this is done after six months of the initial purchase the trader can make a deduction from the price paid for use. These enhanced remedies place increased pressure on suppliers.
Many businesses will already follow practices compliant with the new Act. However, it would be prudent to take a closer look at the changes and how they might impact upon your business.
MacRoberts advises on various aspects of consumer law, including business to consumer contracts. For further information, please get in touch with David Flint or David Gourlay.