Law Works Talk on Consumer Rights 14 th November 2006 Jason Freeman - - PowerPoint PPT Presentation

Law Works Talk on Consumer Rights 14th November 2006

Jason Freeman Barrister Office of Fair Trading

Aims of this Talk

8 Introduction to consumer law

8 In particular

8Proper execution of consumer credit agreements 8Bills of Sale 8Unfair Contract Terms 8Sale of Goods 8Cancellation Rights

Consumer Law

8 A broad area –interference with ‘traditional’

English law of Contract

8 A lot of EC input –eg UTCCRs, Guarantees 8 A huge amount of ignorance of the law, on

part of consumers, traders and lawyers! Eg Consumer Credit Act 1974

8Changes on the Horizon –eg UCPD, Consumer

Credit Act 2006 -Coming into force through 2007

Consumer Credit Agreements

8 CCA 1974 covers credit up to £25,000,

unless a 1st legal charge on a home (FSA)

8 Typical examples: mail order catalogues

–buy now pay later; car finance; loans

8 Heavily regulated: CC (Agreements)

Regs

8 Strict compliance vital: CCA s. 61, 65

and 127 –Court Order required to enforce; Court cannot enforce unless all prescribed terms + signed by debtor

CCA s.61 61 Signing of agreement (1) A regulated agreement is not properly executed unless: (a) a document in the prescribed form itself containing all the prescribed terms and conforming to regulations under section 60(1) is signed in the prescribed manner both by the debtor or hirer and by or on behalf of the creditor or owner, and (b) the document embodies all the terms of the agreement, other than implied terms, and (c) the document is, when presented or sent to the debtor or hirer for signature, in such a state that all its terms are readily legible.

65 Consequences of improper execution (1) An improperly executed regulated agreement is enforceable against the debtor or hirer on an order of the court only. (2) A retaking of goods or land to which a regulated agreement relates is an enforcement of the agreement.

127 Enforcement orders in cases of infringement (1) In the case of an application for an enforcement order under: (a) section 65(1) (improperly executed agreements), or …. the court shall dismiss the application if, but (subject to subsections (3) and (4)) only if, it considers it just to do so having regard to: (i) prejudice caused to any person by the contravention in question, and the degree of culpability for it; and (ii) the powers conferred on the court by subsection (2) and sections 135 and 136. (2) If it appears to the court just to do so, it may in an enforcement order reduce or discharge any sum payable by the debtor or hirer, or any surety, so as to compensate him for prejudice suffered as a result of the contravention in question.

CCA s.127(3) The court shall not make an enforcement order under section 65(1) if section 61(1)(a) (signing of agreements) was not complied with unless a document (whether or not in the prescribed form and complying with regulations under section 60(1)) itself containing all the prescribed terms

• f the agreement was signed by the debtor or

hirer (whether or not in the prescribed manner).

What do the Regulations require? 8Strict rules on content, order, no

interspersing

8Handout sets out the basic order 8The handout is for guidance only, and is

not a definitive legal statement

8The current rules have been in force

since 31 May 2005. Before this there were different rules.

The Core Prescribed terms

8Without these, the agreement is

irredeemably unenforceable (until 6th April 2007)

8Set out in Sched 6 of the Agreements

Regs

8The document must be signed!

8 amount of credit or credit limit

8 rate of interest 8 how the debt is to be repaid

A note on Bills of Sale

8Used to circumvent ss. 90, 99 &100 of CCA, as not Hire

Purchase

8S.90: once debtor has paid 1/3 of total price, creditor

cannot recover possession without Court Order

8S.99: Debtor can terminate agreement at any time 8S.100: never liable to pay more than either the sum

already due or half the total (whichever is greater)

8Eg –if total is £500, have paid £260, can’t be forced to pay

more; if have paid £200, must pay £50. If in default, creditor can’t seize the goods unilaterally.

Bills of Sale requirements

8Acts of 1878 and 1882 8Strict Form and Content Requirements of the

bill –a Security instrument (see handout)

8The bill must have been registered at the RCJ

within 7 days of execution

8If fail to comply with either, the instrument is

void.

8Must also comply with the CCA Agreements

Regs –the loan

Can I challenge a Bill of Sale?

8Usually arises where debtor is in default and creditor

seeking repossession

8Check CCA compliance, incl that security included and bill

given to debtor with credit agreement

8Check for any unfair terms 8Is bill in correct form? 8Was the bill registered? 8Has CCA s.87 default notice been served in prescribed form? –

gives debtor 7 days to remedy default

8Apply to court under CCA s.129 for a Time Order at once!!

Unfair Terms

8Unfair Terms in Consumer Contracts Regulations 1999

(implementing EC Directive 93/13/EEC)

8Applies to terms in consumer contracts which have not

been individually negotiated (esp. pro-forma contracts)

8All such terms must be in plain and intelligible language,

and are construed in favour of the consumer

8Terms defining the main subject matter of the contract or

the price cannot be impugned further

8All other terms are unfair if (1) cause significant imbalance

in parties’ rights, (2) to detriment of the consumer, (3)contrary to good faith.

8Effect of unfair term: not binding on the consumer

When is a term unfair?

8Not if inserted to comply with the law 8Schedule 2 ‘grey list’ –indicative and non-

exhaustive

8 Eg.1 Exclusion clauses for Death or Personal Injury 8 Eg.2 Making consumer overcompensate for breach

8See the OFT Unfair Contract Terms Guidance

February 2001 OFT 311. It is on the OFT Website; analyses terms and gives examples of unfair and fair terms.

8See also OFT Guidance on Unfair terms in:

Tenancy Agreements (OFT 356), holiday caravans (OFT 734), care homes (OFT 635), consumer entertainment.

Sale of Goods Act 1979

8Read alongside Supply of Goods and Services

Act 1982

8Implies terms into all contracts

8 Title, Description, Satisfactory Quality, Fitness for purpose

8Terms can’t be excluded from consumer

contracts

8If defect within 6 months of purchase,

presumption that it was not of satisfactory quality at date of purchase

Sale of Goods (Cont…)

8Special remedies for Consumers

8Repair or Replacement 8Price reduction or Rescission

8Guarantees –bind seller as well as

manufacturer

8See handout for more details

Cancellation Rights –Distance Selling

8Consumer Protection (Distance Selling) Regs 2000

(Directive 97/7/EC)

8Exclusive use of distance communication up to conclusion

• f contract (no face to face contact)

8 Eg telephone sales; mail order catalogues

8Some exclusions (check regs 5 &6) 8Reg.7 information to be provided in writing before

contract concluded, or soon after (eg on price, delivery costs etc) + info on right to cancel

8Cancellation period is 7 days from receipt of info or 3

months & 7 days from receipt of goods (where info not given) (reg 11)

Cancellation Rights –Doorstep Selling 8Consumer Protection (Cancellation of

Contracts Concluded away from Business Premises) Regs 1987 (Directive 85/577/EEC)

8Essentially where contract made off

business premises and consumer ‘surprised’

8Unenforceable against consumer unless

given the cancellation form in the correct form (4(1)). Also criminal offence

Questions??

8For a good overview of Consumer Law,

get Lowe & Woodroffe, Consumer Law & Practice