The Consumer Rights Act 2015 (the Act) came into force on 1st October 2015 and is intended to make UK consumer law easier to understand. Prior to 1st October, consumer law was found in many different statutes, which made it difficult for consumers and traders to know what their full rights and responsibilities were. With the introduction of the Act, consumer law can now essentially be found in one place. The Act largely restates the existing law but there are also important changes which traders and consumers should be aware of.
Who does the Act apply to?
The Act applies to contracts between traders and consumers. The definition of “trader” is relatively straightforward in that it includes any individual acting in his/her trade, business, craft or profession. As such, it therefore covers anything from online traders to plumbers and accountants. The definition of “consumer” includes individuals “acting for purposes wholly or mainly outside their trade, business, craft or profession”. Therefore, if a plumber buys a TV for his home from John Lewis then he is a consumer but if he buys a shower from B&Q for a customer’s new bathroom then he is not a consumer (and the Act would not apply).
What types of contract does the Act cover?
The Act applies to contracts with consumers for the (a) sale/supply of goods, (b) supply of services, and (c) sale/supply of digital content.
(a) Sale/Supply of Goods
The Act applies to both the sale and the supply of goods so would include hire contracts and hire purchase agreements in addition to sale of goods agreements. As such, it would therefore cover the sale/supply of any goods from jeans to computers and cars etc. It also applies to second-hand goods which are sold or supplied by a retailer (but not individuals who might sell on eBay).
(b) Supply of Services
The Act requires that any services are delivered with reasonable care after consultation with the consumer. The Act would therefore apply to services from decorating to financial advice and hairdressing etc.
(c) Sale/Supply of Digital Content
The Act also covers the sale/supply of software, music, computer games, apps, e-books and downloads etc. As with physical goods, digital content must be of satisfactory quality, fit for purpose and conform with the description provided by the trader. This has the potential to be an interesting area given the number of games and software which are released with significant problems and bugs.
Key changes introduced by the Act
(a) Faulty Goods
The following rules now apply to faulty goods:
• there is a 30 day period from purchase in which consumers can return faulty goods and request a refund or replacement;
• if a consumer returns faulty goods after 30 days but before 6 months then he/she is entitled to a repair or replacement. The retailer now only has one chance to make the repair after which the consumer can demand a refund;
• after 6 months, a consumer can still ask for a refund or replacement but the retailer now has the right to deduct some money for the use the consumer has had for the goods.
(b) Statutory remedies for supply of services
If a service does not conform to what was agreed between the parties then there are new statutory remedies for consumers to insist on repeat performance and/or price reduction. So where a decorator paints a wall the wrong colour then he/she would need to re-do the work to comply with what was agreed
(c) Unfair contract terms
Challenging unfair contracts should now be simpler as there is a new requirement that relevant terms are brought to a consumer’s attention. Therefore, if fees or important terms are hidden away in the small print and not brought to the consumer’s attention then a business may have difficulty enforcing them. In addition disproportionate charges which are levied by a business when a consumer ends a contract will also likely be considered to be unfair.
(d) Alternative Dispute Resolution (ADR)
ADR will be available to help with consumer disputes and could take the form of mediation, adjudication or arbitration and enables disputes to be settled outside of the court system. Traders do not have to use ADR but they will be required by law to give information about ADR to consumers once the trader’s internal procedures have been exhausted.
What actions should traders and businesses be taking?
The Act gives greater protection to consumers, and businesses need to be aware of these.
We recommend that traders:
• carry out a review of their terms and conditions to ensure that they do not exclude or limit the new statutory rights set out in the Act or have terms which are unfair to consumers;
• update any returns policies for goods sold;
• train staff on the new legislation; and
• consider whether Alternative Dispute Resolution would be appropriate to sort complaints with consumers.
While all reasonable care has been taken in the preparation of this document, no responsibility is accepted by for any errors it may contain. You are recommended to seek specific legal advice in respect of any of the issues raised in this document.