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The Consumer Rights Act 2015 – 7 Key points for small businesses

March 7, 2016

As all businesses and traders selling to consumers should know, the Consumer Rights Act 2015 (CRA) came into force on 1 October 2015 and overhauled the UK’s legislation on selling goods and services to consumers.

It also introduced legislation on the sale of digital content for the first time (distinguishing digital content from goods and services) and re-clarified contractual terms that could be considered unfair when dealing with consumers.

In response to the Consumer Rights Act, all businesses should be updating their terms and conditions to ensure they reflect the new legislation. Other key points those selling to consumers need to consider, include;

1. Is it a good, service or digital content?

Identifying whether what you are selling is a good, service or digital content can help determine the exact rights you need to make available to consumers.

Goods

Goods are defined under the Consumer Rights Act as “means any tangible moveable items, but that includes water, gas and electricity if and only if they are put up for supply in a limited volume or set quantity”.

Services

Services, whilst not defined under the Consumer Rights Act, are described as being subject to the Consumer Rights Act where there is a contract for a trader to supply a service to a consumer.

Digital content

Digital content is defined under the Consumer Rights Act as “data which [is] produced and supplied in digital form”.

It is quite possible that all three could apply to one contract, in which case the rights a consumer has will depend on the circumstances. For example, the provision and installation of a boiler by a trader will constitute a goods and services contract.

2. Selling goods – a 30 day right to return for a refund

A new and automatic 30 day period now exists whereby a consumer can return the goods to you if they do not meet the implied terms of the Consumer Rights Act (including of satisfactory quality, being fit for purpose and as described) unless the expected life of the goods is shorter than 30 days. Exercising this right entitles the consumer to a 100% refund.

3. Providing services – any terms of providing the service may be binding

When quoting for a job or providing a description of the services, it is imperative to state what will and will not be completed.

Under the Consumer Rights Act, every contract to supply a service includes anything that is said or written to the consumer, by or on behalf of the trader, about the trader or the service if:

(a) It is taken into account by the consumer when deciding to enter into the contract; or

(b) It is taken into account by the consumer when making any decision about the service after entering into the contract.

The key point here is: be clear, and specific!

4. Faulty digital content – who is at fault?

Like goods, digital content provided to consumers has to be of satisfactory quality, fit for purpose and as described. In the event that such content is supplied and it fails to be any of those, under the Consumer Rights Act the trader will need to offer to repair or replace the content.

However, if the trader in supplying such content does not use reasonable care or skill to supply the content, the trader could also be liable for any damage caused to consumer’s device as a result.

For example, if the trader does not adequately vet its download servers for viruses or other malicious code and such content is downloaded onto a consumer’s computer, the trader could be liable for the cost to repair that computer.

5. Don’t get caught by potentially unfair terms

In the event you try to place potentially unfair terms on a consumer in your terms and conditions/contract, there is a real risk that the term does not apply to the contract at all meaning that no restriction will apply.

It is therefore much more prudent to take into account the nature of the goods/services being provided, the proposed buyers of said good/service and the exclusion you are attempting.

There is a list of the proposed terms that may potentially be unfair, the Government’s Legislation website here.

6. Point of sale wording

If you sell goods in a store it can be difficult to incorporate terms and conditions into the contract. Point of sale wording is usually an opportunity to give consumers an idea of their rights to return goods in the event they are faulty.

Provided that the wording is sufficiently visible and complies with legislation, such wording is usually effective in incorporating such into the contract for sale.

A guide on point of sale wording can be found on the Government-endorsed Business Companion website.

7. Other legislation to be aware of

Whilst the CRA should be first port of call for understanding your obligations to consumers when selling goods, services or digital content, it is also important to be aware of the following:

  • Industry specific laws and regulations – such as food safety laws, laws relating to the sale of restricted products or labelling regulations;
  • Additional provisions when selling goods door-to-door or by phone, such as the Consumer Contract Regulations 2013 (CCRs) which requires you to give additional details regarding your identity as a trader and pre-contract information; and
  • Additional laws when selling goods, services and digital content online – such as the CCRs (see b) above) and obligations in respect of providing details of alternative dispute resolution providers and the existence of the new EU-wide consumer disputes portal (see Wright Hassall’s consumer rights guide).

About the author

This guide has been written for ByteStart by Thomas Coe, a commercial law solicitor with Wright Hassall LLP

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