If your business involves selling goods to customers you will, inevitably, need to deal with a percentage of customers that want to exchange items, or are seeking a refund.
As a small business, it’s really important to know what your legal rights and duties are when it comes to customers that have bought your goods.
In the UK, the Consumer Rights Act 2015 consolidates and clarifies several other statutes with regard to what it means when someone purchases goods or services.
Purchase of Goods
For example, it has been the case for quite a while, that if someone buys an item that is faulty and returns it within a reasonable period of time with a receipt, then the retailer is legally bound to give a refund.
This is still the case, but the 2015 Act makes it very clear now about exactly what this means. The Consumer Rights Act 2015, specifies three standards that need to be met in respect of a bought item:
- Satisfactory Quality
- Fit for purpose
- As described
Let’s examine each separately;
1. Satisfactory Quality
Items purchased should not be damaged or faulty when received. This is an objective test since a low value sale item may not be perceived to have the same high standard that a luxury item would have.
2. Fit for Purpose
Any item bought must be fit for the purpose for which it was purchased or, alternatively, for which you made known to the buyer.
For example, a computer adaptor: if the retailer was informed that it will be used on a Mac prior to purchase, and it was affirmed that it would be suitable, but it turns out not to be compatible then it is not fit for purpose.
3. As Described
This is self-explanatory. If goods supplied do not match the description or any samples shown at the time of purchase, then it can be rejected.
Returning of Goods
There are also clear time stipulations and deadlines by which items or goods can be returned with a receipt:
Within thirty days
If the product falls into any of the above categories, then a full refund has to be given
Outside of thirty days
Aretailer is not legally bound to offer a refund, although it is at their discretion, but an opportunity should be given to the retailer to repair or replace the item. If this is not successful, then a refund or price reduction should be considered
The first six months
The retailer must be given the chance to repair or replace since the fault is deemed to have been present at the time of purchase, subject to contrary evidence provided by the retailer. If repair/replacement fails, then either a full refund or part refund should be offered (the latter only if the purchaser wishes to retain the item)
Six months or more
This is where it becomes tricky for the purchaser since they have to provide evidence that the fault was there when they took ownership. This could be via expert evidence and could escalate into a costly dispute on both sides.
The Supply of Services
This category covers a broad spectrum of services that a business may supply to individual consumers both inside or out of their homes, such as building work or hairdressing. Some services may include the purchase of goods also.
The Consumer Rights Act 2015 covers all contracts for services and includes:
- Taking reasonable care and skill in the performance of the service
- Being bound by written or spoken information if relied upon by the consumer
- Charging a reasonable cost for work done if not agreed beforehand
- Completing within a reasonable timescale if not agreed beforehand
If the trader or business performing the service does not comply with any of the above, then it should be given the chance to put things right at no extra cost or inconvenience to the consumer.
Failing this, or if not possible, then a reduction of up to 100% of the cost should be given (dependent on the extent of the failings) and this should be, once agreed, refunded within 14 days.
But businesses please be aware that even though there may be no specific mention of points 1-4 above in any agreement with your customer, the 2015 Act will nevertheless infer these into any services you perform for a client. It’s therefore good practice to ensure that these matters are specifically referred to in any contract.
The ‘Small Print’
Some businesses charge extra fees or try to limit their customers’ legal rights by hiding them in the small print. These may be considered unfair under the 2015 Act. If a customer believes a term to be unfair, they can complain to you.
It is at this point, as a small business or start up, you decide whether to concede or to stand firm. Making the right decision could be crucial to the way you do business in the future and to building a customer/client base.
As a business, it may be a good idea, prior to start-up, to have a really good protocol in place about customer service relating to these legal matters. Following the letter of the law is all very well, but at the end of the day, you need to establish a customer base and sustain your business.
Consider Your Business Reputation
Some high street retailers go the extra mile to satisfy their customers when they don’t legally have to do so, and have, as a result of that, built up a very good reputation with their customers over many decades.
With regard to ‘hidden’ terms, it is well to consider how transparent you are in your relationship with your customers. Telling them about any possible ‘extra’ charges or what you will not be responsible for, prior to starting any work, could belay any future disputes. However, best practice would suggest that getting expert assistance from the start about your ‘Terms and Conditions’ could be invaluable.
You don’t necessarily need to go to a solicitor for help, a Licensed Paralegal that specialises in contract or company law, can be a lower cost option.
About the author
This article has been written for ByteStart by Amanda Hamilton, Chief Executive of the National Association of Licenced Paralegals (NALP), a non-profit Membership Body and the only Paralegal body that is recognised as an awarding organisation by Ofqual (the regulator of qualifications in England).
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