Consumer Contracts Update

October 2009

Peter DarraghSolicitor

Email: peterdarragh@chadlaw.co.ukPhone: 01484 519999

The aim of this presentation is to provide you with general information about the law as at the date of the presentation and as it applies in England & Wales, not specific legal advice. To ensure that you have appropriate advice for your particular circumstances you should instruct a solicitor.

Topics for discussion

• Overview of Contracts

• B2B -v- B2C

• Distance Selling Regulations

• Doorstep Selling Regulations

• Failure to Comply with the Regulations

Overview of a Contract

• Acceptance - makes the contract legally binding - must be of the terms offered

• Offer (order)- proposal to enter into the contract - not the same as an advertisement

Eg, M&S Online Terms and Conditions

Acknowledgment and Acceptance of your Order

If you have supplied us with your email address, we will notify you by email as soon as possible to confirm receipt of your order. Our acceptance of your order will take place upon despatch of the product(s) ordered.

For Food to Order, orders are accepted when we pass your details to our suppliers.

Incorporation of Ts and Cs

Do your customers positively accept your Ts and Cs?

Ts and Cs provide the following benefits:

• Expectation Management

• Risk Management

• Regulatory Compliance

• Professional Image

What’s wrong with this?

“Before signing this order, the customer should carefully read the terms and conditions of sale on the other side of this order form.”

“I/We have read the Conditions of Sale overleaf and agree to be bound by them.”

Differences between B2B and B2C

• Consumers may ask for a refund, repair or replacement of goods

• It is up to you to prove to a consumer that a fault was not a factory or fitting fault in the case of B2C • Satisfactory quality and reasonably fit for purpose (the old ‘merchantable quality’) – can’t get away from it under B2C contracts

• Very difficult to limit your liability in B2C • Consumers can sometimes cancel a contract because they’ve changed their mind!

• Only apply to standard Ts and Cs (not individually negotiated terms)

• Unfair if terms cause a significant imbalance in the rights of the consumer

• Terms are unfair if they are not written in plain language

• Unfair terms are not binding on the consumer

Unfair Terms in Consumer Contracts Regulations

• No face-to-face contact between you and consumer

• You must provide the buyer with information including:- a description of the main characteristics of the goods- the price of the goods (inc. tax and any delivery)- the existence of a right of cancellation (unless exception applies)- information about conditions and procedures for exercising the right to cancel- where any complaint should be made

• Information must be clear, comprehensive and in writing (or email)

Distance Selling Regulations

Distance Selling Regulations Rights granted to consumersRight to cancel

- Generally if the consumer gives notice of cancellation to you within the cancellation period the contract is cancelled

Cancellation period- begins with the day on which the contract is concluded, ends 8 working days after the consumer receives the goods- if the required information is not provided, the period ends 3 months(!) and 8 working days after the consumer receives the goods

Effect of cancellation- consumer must be refunded all monies paid within 30 days

EXCEPTIONS• where performance of the contract has begun with the consumer's agreement before the end of the cancellation period; or • where the goods are made to the consumer's specifications

• Solicited and unsolicited visits covered

• Notice of the right to cancel MUST:- be prominently displayed in the contract- be set out in a separate box with the heading “Notice of the Right to Cancel”

• Cooling off period = 7 days from receipt of a notice of the right to cancel

• Cancellation notices are taken to have been served when they are sent

Doorstep Selling Regulations

Cancellation of Contracts Made in a Consumer’s Home or Place of Work etc Regulations 2008

If you wish to cancel the contract YOU MUST DO SO IN WRITING and deliver personally or send (by post or email) this to the person named below. You may use this form if you want to but you do not have to.(Complete, detach and return this form ONLY IF YOU WISH TO CANCEL THE CONTRACT.)

To: Joe Bloggs of 3 Blind Fitters Ltd

I/We (delete as appropriate) hereby give notice that I/We (delete as appropriate) wish to cancel my/our (delete as appropriate) contract for your products and services.

Reference Number: 001456

Name and Address: ______________________ Signed:______________________ Date:

Example Cancellation Form

• Can agree to begin performing the contract before the end of the cooling off period BUT agreement must be in writing

• The notice of the right to cancel must include a statement that payment may be required if the contract is subsequently cancelled

Doorstep Selling RegulationsBespoke Goods

I would like to have the above products made and installed as quickly as possible. I therefore wish 3 Blind Fitters to proceed with their manufacture before the end of the 7 day cooling-off period. In doing so, I accept that if I do wish to cancel my order during the 7 day cooling-off period I will be liable to pay a reasonable charge for whatever work has already been carried out by 3 Blind Fitters in relation to its performance of this contract.

Name______________ Signed ______________

WORDING APPROVED BY TRADING STANDARDS

3 Blind Fitters Limited Tel: 01234 5678910 etc

Order Details

Notice of Cancellation ------------------

Customer Details

Notice of wish to commence production

----------------Signature for Order and Incorporation --------------

So What?

• Investigation by OFT / Trading Standards (hassle & bad PR)

• Fine (£5,000 – strict liability)

• Injunction (forced to stop trading)

• Consumer can cancel the contract (defeats the purpose)

• Bring the trade into disrepute (tsk tsk…)

Questions?

EXCELLENT RESOURCES:www.consumerdirect.gov.ukwww.berr.gov.ukwww.businesslink.gov.uk

The aim of this presentation is to provide you with general information about the law as at the date of the presentation and as it applies in England & Wales, not specific legal advice. To ensure that you have appropriate advice for your particular circumstances you should instruct a solicitor.

Email: peterdarragh@chadlaw.co.ukPhone: 01484 519999