PUMP DISTRIBUTORS ASSOCIATION Presentation The Consumer Rights Act - - PowerPoint PPT Presentation

PUMP DISTRIBUTORS ASSOCIATION Presentation The Consumer Rights Act 2015

William Stebbings Solicitor/Consultant The Legal Director Limited

1. OVERVIEW OF CRA

• a. The Consumer Rights Act 2015 (“CRA”) came into force on 1st October 2015 (except for

provisions on consumer transport services, letting agents and secondary ticketing sales)

• b. CRA consolidates and reforms following key area of consumer law;
• consumer rights and remedies in respect of the sale/supply of goods and services;

and

• unfair contract terms in consumer contracts and notices
• c. In addition there are a number of miscellaneous provisions, including:
• consolidation and simplification of investigatory and enforcement powers of public

enforcers; and

• introduction of collective consumer redress
• d. CRA applies to all contracts with consumers (see below) whether or not in writing or

partly in writing

• e. CRA covers England, Wales, Scotland and Northern Ireland (though there are specific

provisions unique to remedies applying in Scotland only) NOTE: CRA also includes provisions about the supply of digital content but this presentation does not deal with these

2. KEY DEFINITIONS

• a. “TRADER” means a person acting for relating to that person’s trade, business, craft or

profession, whether acting personally or through another person actin in the trader’s name or on the trader’s behalf (section 2(2) CRA)

• b. “CONSUMER” means an individual acting for purposes which are wholly or mainly
• utside that individual’s trade, business, craft or profession (section 2(4) CRA)
• c. “GOODS” mean any tangible moveable items

NOTE: the use of the words “person” and “individual”. In the UK a “person” includes a sole trader, partnership or limited company; an “individual” is just that - an individual who is not carrying on a trade, business, profession or craft. So are the following consumers or not?

• a solicitor (who is a sole practitioner) ordering a pump for use in his new fishpond
• a plumber ordering a central heating pump for installation in a customer’s house
• a partner in a firm of accountants ordering a pump for use in the fish tank in his

firm’s reception

• a butcher ordering a pump for fitting in one of his refrigeration units in his shop

(would your answer be different if he was ordering the pump to fit in his domestic refrigerator?) In Overy v Paypal (Europe) Limited [2012] the High Court decided (in a case under the old Unfair Terms in Consumer Contracts Regs 1999) that anything more than a non-negligible business purpose can put an individual outside the definition of a consumer O organised a lottery to sell his house and paid the proceeds of ticket sales into a Paypal account; he also used the account for receipts from a photographic business. When Paypal closed the account for breach of their conditions of use, O sued claiming he was a consumer HELD: the use of the account to receive proceeds from the photographic business meant O was not a consumer

• 3. SALE AND SUPPLY OF GOODS
• a. Substantive law on consumer rights and remedies contained in Part I of the CRA:
• Only business to consumer contracts are covered
• All sales or supplies of goods are covered
• Applies to “mixed contracts”: ie contracts for more than one thing, typically goods

and services, eg contract for installation of goods

• Sale of Goods Act 1979 dealing with ownership of goods, risk and other limited

areas continues to apply

• b. Standards applying to goods
• must be of satisfactory quality (section 9)
• must be fit for a particular purpose (section 10)
• must be as described (section 11)
• must match a model or sample seen or examined by the consumer unless trader

has brought differences to the attention of the consumer before contract is made (sections 13 and 14)

• if goods are installed as part of a contract (either by trader or someone for whom

he is responsible) the goods will not conform to the contract if they are installed incorrectly (section 15)

• c. Implied Warranties
• a. trader has right to sell or transfer the goods or to transfer possession
• b. goods will be free from encumbrances
• c. consumer to enjoy quiet possession of goods (all section 17)
• d. goods to be delivered at agreed time or at most within 30 days of contract

(section 28)

• d. Risk
• To remain with trader until delivered to consumer, a carrier of consumer’s

choosing or a person of consumer’s choosing (who was not suggested by trader) or

• therwise identified by the consumer to take possession of the goods (section 29)

• e. Remedies
• Right to reject (section 20): there are two rights to reject:

(i) short term right to reject limited to 30 days (section 22) – the period can be extended by the trader but cannot be reduced and the period extends by 7 days if the trader has to repair or replace the goods; and (ii) final right to reject – Rejection need not be in writing but however it is done, it must be clear.

• Tiered remedies – trader has one opportunity to repair or replace faulty

goods before moving to the next tier or remedies. Once the short term right to reject is lost, consumer has the right to repair or replacement; if the trader’s one opportunity to repair or replace fails the consumer has the right to a price reduction or final right to reject

4. Supply of Services

• a. In contracts for the supply of services, following terms are implied:
• trader must perform the service with reasonable skill and care (section 49)
• unless expressly stated or the method of fixing it is set out in the contract,

consumer must pay a reasonable price for the services (section 51)

• unless expressly stated or the method of fixing it is set out in the contract,

trader must perform the services within a reasonable time (section 52) b. Anything said or written about the trader or the service to the consumer (by the trader or on his behalf) and which is taken into account by the consumer when deciding to buy the service is to be taken as a term of the contract BUT trader can qualify those statements by clear statements to the consumer

• c. Remedies: these are new –
• if the service is not performed in accordance with the contract or in breach
• f section 49 (see above) the consumer has the right to require repeat

performance;

• if that is “impossible” or not done in a reasonable time, the right to a price

reduction;

• where the services are not provided in a reasonable time, the consumer

has a right to a price reduction.

5. Controls on Restrictions of Liability

• a. CRA contains provisions on liabilities that a trader cannot exclude or restrict

in a contract with a consumer:

• death or personal injury arising from negligence (section 65(1) CRA);
• breach of consumer’s statutory rights under 3(a) and (b) and 4 above

(sections 31 and 57 CRA);

• b. CRA prevents the inclusion in a consumer contract of any term which:
• excludes or limits trader’s liability in respect of the relevant right;
• excludes or limits a right or remedy of the consumer in respect of the

relevant right;

• makes the exercise of such a right or remedy subject to restrictive or
• nerous conditions;
• puts the consumer at a disadvantage as a result of pursuing a right or

remedy; or

• excludes or restricts rules of evidence or procedure

Examples

• a term requiring a consumer to pay a fee for testing a defective product
• r handling a complaint
• requiring a consumer to use a complicated complaints procedure (eg

using certain forms supplied only by the trader or requiring consumer to complain to a certain outlet of the trader) c. Attempts by traders to exclude or limit liability can be subject to public enforcement

6. Voluntary Statements

• a. Voluntary statements by traders, about the trader or the trader’s service, can

now be deemed to be binding contractual terms where the statement is taken into account by the consumer when:

• deciding to enter into the contract; or
• making any decision about a service after entering into the contract

b. Previously consumers’ only remedy was for misrepresentation but as contractual terms, easier for consumers to bring action as easier to prove and damages be awarded on the basis of what the consumer’s position would have been if the contract performed.

7. Unfair Terms

• a. Test for “unfair terms” is the same as that in the old law: a term is unfair if,

contrary to the requirements of good faith, it causes a significant imbalance in the parties’ rights and obligations to the detriment of the consumer b. But terms specifying the main subject matter of the contract or setting the price are not subject to the “fairness” test provided they are:

• transparent: in plain and intelligible language and, if in writing, legible;
• prominent: brought to the consumer’s attention in such a way that the

average customer – who is well-informed, observant and circumspect – would be aware of the term. However, courts tend to construe this very narrowly: see the Foxtons and Ashbourne cases below

• c. Goes further than the old law by adding the “prominence” requirement

d. The fact that a relevant term does not meet these requirements does not make it automatically unfair but it exposes it to additional scrutiny

• e. A term can be deemed unfair even if it has been individually negotiated with the

customer (although few consumer contracts are individually negotiated) OFT v Foxtons Ltd [2009]

Decided under old legislation but still applicable. Concerned clauses in letting agreements between Foxtons and various landlords. Agreements related to a letting only service rather than a full property management service provided for commission to be payable when Foxtons introduced a tenant. The agreement also provided for commission to be paid where tenants renewed or extended their tenancy even if Foxtons had no part in the re-letting; where a new tenant took over who was in some way connected with the old tenant; where tenants subsequently purchased the property and where the landlord assigned their rights to a third party. In each case the clauses were in small print in the body of the agreement. Held: the terms relating to renewals or extensions were not core to the agreements and were unfair as they were not drawn sufficiently to landlords’ attention. Additionally, the term relating to renewals of the tenancies was not written in plain and intelligible language.

OFT v. ASHBOURNE MANAGEMENT SERVICES [2011]

Ashbourne acted for over 700 gyms in the UK (at the lower end of the market) providing services including recruitment of gym members, collecting membership fees on behalf of gyms and providing standard form membership agreements for use with gym members (“the Ashbourne contract”). The contract imposed minimum membership periods of between one and three years; some provided that the full fees for the minimum period be payable immediately if membership was terminated early; some provided that even for minor breaches

• f the agreement the contract could be terminated and the balance of the membership fees

became payable. If a gym member was late in paying fees, Ashbourne threatened to register a default report against them with credit reference agencies even where payment disputed. Ashbourne had registered 17,000 credit default reports. HELD: the terms were held unfair and/or imposed penalties as they were weighted in favour of the gyms and, in the case of the provisions for payment of fees resulted in gyms collecting more fees than they would be entitled to under a contractual claim for damages.

8. “Grey List”

• a. “Grey List” is an indicative and non-exhaustive list of terms in consumer

contracts contained in the old consumer legislation which may be regarded as unfair unless their inclusion in a contract can be justified – for list see appendix to handout b. CRA adds three additional terms to the grey list, namely terms:

• allowing trader to decide the characteristics of the subject matter after

the consumer is bound;

• allowing disproportionate charges or requiring consumer to pay for

services that have not been supplied when the consumer ends the contract;

• allowing the trader discretion over the price after the consumer is bound
• c. A court is now required to consider contractual terms generally for fairness even

if neither party to the proceedings raises fairness as an issue