The Government has published the draft Consumer Rights Bill. The Bill represents the most significant change to business to consumer law in many years. It consolidates lots of legislation into one place, so consumers and businesses who supply to them will only have to look in one place – or at least that was the aim! The reality is that there are various pieces of laws such as Distance Selling Regulations, Doorstep Selling Regulations and most of the new Consumer Rights Directive which are not covered there. They will appear in separate Regulations – soon to be published. So if the aim was to simplify and put things in one place – which has largely been achieved – then why stop half-way?
There are many changes to existing laws in the Bill. Here is a summary of the main points:
- New rules are introduced for “digital content”. For a long time, there has been debate about whether digital content falls within the category of protection offered for “goods” – or is it “services”? Now, this legislation would create a third category, and in many instances, the obligations and rights and remedies are very similar to goods, but not in every case.
- The Bill replaces consumer provisions in the Sale of Goods Act 1979, Supply of Goods (Implied Terms) Act 1973, Supply of Goods and Services Act 1982, Sale and Supply of Goods to Consumers Regulations 2002, the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999.
- There are reforms and consolidations to the ways in which consumer law will be enforced. This includes Trading Standards and other enforcers giving reasonable notice of routine inspections.
- There are certain key definitions that are worth becoming familiar with. A “trader” is someone acting for purposes of their trade, business or profession, and it includes public sector authorities; “goods” are tangible movable items; “digital content” is data produced and supplied in digital form; and “consumer” is an individual acting for purposes wholly or mainly outside of his trade, business or profession, and it is for a business to have the burden of showing that someone is not a consumer rather than someone proving that they are a consumer.
- The Bill applies to business to consumer contracts, and not consumer to consumer nor consumer to business contracts.
- A lot of existing law surrounding standards for goods are preserved, such as satisfactory quality, conformance to description and sample, and title to supply. In addition, pre-contractual information will form part of the contract.
- There are two rights for consumers to reject goods:
- The “early right to reject” is limited to 30 days (although shorter in case of perishable goods and longer either if agreed to be longer by the trader or to the extent that the goods have been repaired or replaced during that period); a consumer may lose that right to reject if they have had a reasonable chance to examine the goods and accepted them.
- There is an additional right to reject – the “final right to reject”, which applies if the supplier has not repaired or replaced within one opportunity or could not do so; this right to reject effectively extends the rejection right for an indefinite period of time, for as long as the goods are expected to last. There is a price adjustment to take account of any use during that time, but the provisions are not clear.
- Deliveries are presumed to be made within 30 days, unless the parties agree otherwise.
- Risk passes to the consumer when the consumer receives the goods, unless the consumer organises their own carrier – this is in line with the existing position.
- For digital content, the remedies are very similar as with goods, but there is no right to reject or even requirement to remove the digital content from a device.
- Consumers may have the right to repair or replacement or receive financial awards even if they did not pay for the digital content but they paid for additional things in relation to that digital content. For example, this may happen where someone obtains a game, which fails to work properly, but in the meantime they have paid for in-app purchases or additional content.
- Regardless of any other remedies, consumers are entitled to compensation if digital content – whether paid or free – causes damage to something such as virus damage to a computer, and this would not have occurred if the trader had used reasonable skill and care. It is worth noting that this is not a strict liability obligation to ensure no viruses but only what is reasonable to have expected.
- Services must be provided with reasonable skill and care. This standard is now going to be compulsory and non-excludable.
- Anything said about the trader or service in advance of the contract will be deemed to form part of the contract.
- A consumer will have rights to require the supplier to do various things if the services are not adequate. This includes asking for repeat performance. Another option will be to ask for a reduction in price. Interestingly, if repeat performance is possible, but very costly to the service provider, repeat performance may still be needed. This is different from remedies for problems with goods, where the right to repair or replace is not available where it would be disproportionate.
- Many of the rights and remedies regarding issues with goods, digital content or services cannot be excluded by contract terms.
- The Unfair Contract Terms Act and Unfair Terms in Consumer Contracts Regulations are largely repeated from the current position, but merged. There are some changes. For example, the price or subject matter contract terms are exempt from assessment for fairness only if they are transparent and prominent; prominent means brought to the consumer’s attention in a way that a reasonably well-informed and observant and circumspect consumer would be aware of it; the more onerous or unusual the term, the more prominent it needs to be. In addition, all written terms must be transparent – ie in plain and intelligible English.
The Bill will no doubt undergo Parliamentary scrutiny and it will not remain in its exact current form. However, these broad principles are unlikely to change significantly. It will be important for any businesses that supply to anyone who may be considered by the legislation to be a “consumer” to stay on top of these developments and be ready for the changes. In addition, more on the implementation of the Consumer Rights Directive is expected in the next few weeks, so watch this space!