Consumer Contracts Regulations 2013

With effect from 13 June 2014, new legislation will take effect to govern trading relationships between traders and consumers where contracts are concluded off business premises, on business premises and at a distance. What the change will see in June 2014 is an increase in the amount of information that needs to be supplied.

It will also see the cooling off period increase from 7 to 14 days.

The Law up to and including 12 June 2014

There is currently a seven day cooling off period allowed to consumers under the Consumer Protection (Distance Selling) Regulations 2000 and the Cancellation of Contracts made in a Consumer’s Home or Place of Work Regulations 2008.  These pieces of legislation remain applicable for all contracts made up to midnight on 12 June 2014.

On 13 June 2014, these regulations cease to apply and will be replaced by the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (“the Regulations”).

Businesses need to plan for this change and we have set out an outline of some of the issues that the new regulations will create with effect from 13 June 2014.

Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013

The Regulations are intended to apply to consumer contracts made at a distance, off premises and on premises. The Regulations apply to a contract on or after 13 June 2014, you are concerned with the 2013 Regulations.

Some of the Key Changes

For all consumer contracts, a trader is going to need to do the following:

1              Seek the consumer’s express prior consent before taking any additional payments (for example for delivery costs, insurance etc.  Pre-ticked boxes will not be permitted).

2              The trader must, unless the customer agrees otherwise, deliver any goods purchased within 30 calendar days.

3              The trader must not make the consumer use a premium rate telephone line to contact you about an existing contract.

4              Traders must not impose excessive payment surcharges when consumers pay by certain means, such as credit or debit cards.

On Premises Contracts

If the contract is made on business premises/in store, new rules are introduced for a new list of pre-contract information that must be given to the consumer.

The Regulations only apply to contracts between traders and consumers.  A consumer is an individual acting for purposes which are wholly or mainly outside that individual’s trade, business, craft or profession.  A consumer must also be an individual, i.e. a natural person.

Distance Selling

The Regulations will apply to sales made at a distance, with online sales an obvious category where businesses will need to plan (unless the products fall within the exemptions).

Many online sellers will be familiar with providing information to their customers, but the Regulations require the model information at Schedule 2 to be supplied and to provide a link to the cancellation form set out in Schedule 3.

Many websites will require alterations to ensure that commitments to pay by the consumer are explicit, with pay buttons marked “Order with obligation to pay”.

Off Premises Contracts

An off-premises contract within the Regulations means a contract between a trader and a consumer which is any of the following:

1              Concluded between the trader and a consumer in a place which is not the business premises of the trader.

2              The contract for which an offer was made by the consumer in the presence of the trader, and in a place which is not the business premises of the trader.

3              A contract either concluded on the business premises of the trader or through any means of distance communication immediately after the consumer was personally and individually addressed in a place which is not the business premises of the trader.

4              A contract concluded during an excursion organised by the trader.

Therefore, this is mainly concerned with circumstances where the trader visits the consumer in their home. Urgent repairs or urgent maintenance are not subject to a right to cancel.

Rules applying to off premises contracts

The trader is obliged to provide the consumer with certain pre-contract information. The information is set out in Schedule 2 of the Regulations. If the consumer has a right to cancel, a model cancellation form set out in the Regulations, but which does require modification, must be provided.

What information does the trader need to provide?

1              The main characteristics of the goods or services.

2              The identity of the trader.

3              The address and contact details of the trader.

4              The address and identity of any other trader for whom the trader is acting.

5              The place of business of the trader and other trade for whom the trader is acting.

6              The price or how it will be calculated.

7              Additional delivery charges and other costs or how they will be calculated.

8              Costs where the contract is of an indeterminable duration or a subscription.

9              Communication costs which are not base rate.

10           Payment, delivery and performance arrangements.

11           Complaint handling policy.

12           Information about the right to cancel.

13           The consumer’s obligation to pay for the return of goods.

14           Consumer must pay for services received if he agrees to their supply during the cancellation period.

15           No right to cancel or how it can be lost.

16           Reminder of trader’s legal duty re: quality of goods.

17           Details of after sales services and guarantees.

18           Details of applicable codes of conduct.

19           Contract duration and conditions for terminating.

20           Minimum duration of contract.

21           Details of any consumer deposits and finance agreements.

22           Digital contents functionality and technical protection.

23           Digital contents compatibility.

24           Complaints and redress mechanisms.

This is a long list, and traders need to draft their model information carefully and take legal advice if applicable.

How can the trader satisfy the requirements?

A trader can satisfy its obligations to provide the information in schedule 2 by using the model instructions on cancellation. If the trader chooses to use the model instructions, there is certain information which needs to be completed.

If the consumer has a right to cancel an off-premises contract, the trader must give or make available to the consumer, the model cancellation form.  This can be provided in paper or in another durable medium. This means primarily email.

For off-premises contracts, the trader needs to provide to the consumer one of the following:

1              A signed copy of the contract; or

2              Confirmation of the contract.

The copy or confirmation of the contract must be provided within a “reasonable time” after the contract is formed. Therefore, the trader could send it to the customer after the contract was concluded which would be on paper or, if the customer agrees, by email.

There are clearly a substantial number of hoops to jump through and documentation to prepare. If a trader fails to comply with the Regulations, the consumer may be able to bring a claim for breach of contract.  There are also other consequences if specific aspects of the rules are breached. For example, where there is a right to cancel, a failure to provide pre-contractual information will extend the cancellation period, prevent the trader from making a deduction for use and prevent the trader from charging for the services provided during the cancellation period.

Please note, some contracts are excluded from the Regulations, and a list is available with the Regulations and on the helpful guide produced by the Department for Business, Innovation and Skills: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/310044/bis-13-1368-consumer-contracts-information-cancellation-and-additional-payments-regulations-guidance.pdf

For example, contracts with a value of less than £42 are exempt.

If you would like to discuss the Regulations and how we can  assist you in preparing the appropriate documentation in readiness for the changes due to taken place on 13 June 2014, please contact Greg Hollingsworth or Asit Jansari on 0116 204 7260 or email asit.jansari@hlegal.co.uk

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The Hollingsworth team will be happy to discuss your legal requirements in the first instance please fill in the form or call us on 0116 204 7260.

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