The Consumer Rights Act 2015

What are the main changes?

The CRA:

• strengthens and aligns consumer remedies for substandard goods
• introduces some brand new consumer rights and remedies for substandard services or digital content
• requires that contract and notice terms must be “transparent” as well as fair
• strengthens and aligns public enforcers’ powers for breaches of consumer law.

A consumer is defined as “an individual acting for purposes which are wholly or mainly outside that individual’s trade, business, craft or profession”, and so the CRA applies even where there is some business use of the goods, services or digital content. It is for the trader to prove that an individual is not a consumer.

The new rights and remedies apply automatically to consumer contracts.

How do the changes affect goods?

Under the CRA, consumers’ rights for goods are preserved and extended. Goods must be of satisfactory quality, fit for any particular purpose the consumer has, be as described and must match any sample seen or examined before purchase.

New rights include a requirement that goods must also match any model seen or examined before purchase, for example in store.

Where the trader is responsible for installation, the goods must be installed correctly.

The CRA strengthens the remedies for goods to include:

• a 30-day right to reject substandard goods and obtain a full refund
• the right to a repair or replacement, and
• the right to a price reduction or the final right to reject.

There is a limit on the number of repairs to or replacements of substandard goods before the trader must offer some money back.

If goods cannot be repaired or replaced during the first 6 months, the consumer will be entitled to a full refund in most cases.

How do the changes affect services?

Under the CRA, anything said or written to the consumer, by or on behalf of the trader, about the trader or the service, that the consumer takes into account in deciding whether to enter into the contract or when making a decision about the service afterwards (additional information), is a term of the contract.

This is subject to:

• any qualification (written or verbal) made by the trader on the same occasion, and
• any change expressly agreed between the parties.

If the price has not been paid or fixed through the contract and the additional information does not fix it either, the price of the service must be reasonable.

If the time for performance has not been fixed through the contract, and the additional information does not fix it either, the time for performance of the service must be reasonable.

If the service is substandard, consumers can ask for the service to be repeated or for a price reduction.

How do the changes affect digital content?

Under the CRA, digital content is any data produced and supplied in digital form, whether on a CD or online, and so covers things like e-books and online films and music.

Digital content that came free with goods, services or other digital content that a consumer has paid for is also included in the scope of the new laws.

The CRA says that digital content must be of satisfactory quality, fit for any particular purpose the consumer has, and as described. If it is substandard, consumers can ask for a repair or replacement, and may be entitled to a price reduction.

If the digital content damages a device or other digital content belonging to the consumer, such as via a virus, the trader must repair the damage or compensate the consumer if the trader hasn’t taken reasonable steps to prevent the damage occurring. The consumer can go to court to enforce this right.

How do the changes affect contract terms?

The CRA consolidates and extends the existing unfair terms legislation that applies to consumer contracts and consumer notices. The definition of a notice is extremely wide and includes announcements and communications.

There are two requirements for terms in consumer contracts or notices: fairness and transparency.

Fairness:

• An unfair term is one that puts the consumer at a disadvantage, by limiting the consumer’s rights or disproportionately increasing his obligations as compared to the trader’s rights and obligations.
• An unfair term (in a contract or a notice) is not binding on the consumer, but the consumer can rely on it if he wishes.
• There is a fairness test for the courts to apply in determining whether or not a term is fair, and an extended “grey list” of potentially unfair terms to assist the courts in applying that test.

Transparency:

• As well as being fair, written terms must be transparent: in plain, intelligible language and legible.

Enforcers have the power to require traders to provide information and, if a term is unfair, can also seek remedies such as an injunction. The CRA places a duty on the courts to look at the fairness of terms even if the parties do not specifically ask the court to do so.

What do businesses need to do?

The Competition and Markets Authority has produced the “top-tips” set out below for avoiding unnecessary disputes:

• Respect consumers’ interests when choosing terms and notices. Don’t use terms you wouldn’t like to sign up to yourself.
• Deal openly and fairly with consumers – don’t hide important wording away or use ‘small print’ that might surprise or mislead them. Wording that has a significant impact for consumers should be particularly drawn to their attention.
• Avoid using legal language or jargon. Use plain language that an ordinary person would understand – put yourself in the shoes of your consumer and make sure the language is at their level.
• Use clearly set out written contracts for complex transactions.
• Allow consumers time to read and understand the terms before the agreement is made, and explain wording that is important and may be difficult to understand.
• Take particular care with wording that, for instance, limits the extent of your liability, transfers risks on to the consumer that they can’t control, allows you to make changes to the contract, imposes financial sanctions (for instance by charging cancellation fees) or allows you to keep prepayments or automatically renew the contract.

How can I find out more?

The CRA introduces a number of changes to how companies transact business with consumers and may involve your looking again at your terms and conditions and practices.

For further information on how Ward Hadaway can help with this or on how the CRA could affect your business, please get in touch.