Consumer Contracts RegulationsPrint publication
The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (the Regulations) came into force on 13 June 2014. They place obligations on traders requiring inclusion of certain terms in consumer contracts and provision of particular pre-contract information. The Regulations also impose amended cancellation periods.
What contracts are affected?
The Regulations apply to distance, off-premises and on-premises contracts made on or after 13 June 2014, although not all parts of the Regulations apply to each type of contract. The Regulations take effect alongside the Consumer Rights (Payment Surcharges) Regulations 2012 (the Surcharges Regulations 2012) and they replace the Consumer Protection (Distance Selling) Regulations 2000 and the Cancellation of Contracts made in a Consumer’s Home or Place of Work Regulations 2008 (albeit these latter provisions still apply to contracts made before 13 June 2014).
The Regulations only apply to contracts between traders and consumers. While the ‘trader’ definition remains similar to before, ‘consumer’ is now defined as an individual acting for purposes which are wholly or mainly outside that individual’s business, trade or profession, which means that a consumer may still receive protection where their dealings with a trader involve a mixture of business and personal.
What are the key changes?
- The Regulations outline pre-contract information that must be provided. Notably, they introduce an extended list of pre-contract information for distance and off-premises contracts, including that a model cancellation form must be provided where the consumer has a right to cancel.
- Where this information is not provided, the trader will commit a criminal offence and could be fined.
Cancellation and returns
- The Regulations give consumers an extended ‘cooling-off’ period for distance and off-premises contracts. Consumers now have 14 days from receipt of the goods to cancel the contract (previously they had seven working days from receipt of the goods). For service contracts, consumers have 14 days from the day the contract was entered into. Therefore, the trader should not begin the supply of a service before the end of the cancellation period unless the consumer has made an express request and acknowledged that they will lose the right to cancel once the contract has been fully performed.
- The cancellation period is extended to 12 months if the trader has not provided appropriate pre-contract information. This 12-month period can be reduced to 14 days once the failure is corrected.
- Goods should be delivered without undue delay, which should be within (not more than) 30 days unless the consumer agrees otherwise.
- The rules regarding refunds are altered, including the opportunity for customers to obtain a refund earlier than the date that the trader receives the goods back by showing evidence of return. Consumers can be required to return goods within 14 days of cancelling the contract.
- Express consent must be obtained from consumers where extra payments will be charged in addition to the price paid for goods/services.
- A consumer will not be liable to pay any costs of which they were not informed before entering into the contract.
- For distance and off-premises contracts, traders must make clear the point at which proceeding with an online transaction will result in payment being taken.
- Traders are now restricted in the fees they may charge for use of certain payment methods (as provided for under the Surcharges Regulations).
- Calls to consumer helplines must be charged at basic rather than premium rate.
- Digital content, such as music downloads, are regarded as a different type of transaction, so traders must meet additional requirements.
Are there any exemptions or exclusions?
The list of contracts to which the Regulations do not apply has been extended to include contracts for medical products and contracts costing the consumer not more than £42. The Regulations do not apply to contracts to the extent they cover certain subject matter, including renting accommodation for residential use and package travel. They also do not apply to milkmen and other traders who supply foodstuffs/beverages/other goods for household consumption by undertaking frequent and regular rounds to a consumer’s home, residence or workplace.
There are certain exclusions from cancellation that are largely down to interpretation. For example, the right of cancellation does not apply where the goods are made to the consumer’s specification or are clearly personalised, nor to sealed goods that are not suitable for return for health protection or hygiene reasons, if they are unsealed after delivery. There is not yet any case law to assist in interpretation, but the Department for Business Innovation and Skills has published Implementing Guidance to help traders.
How to make the changes
Organisations with standard consumer contracts, including terms and conditions for website transactions, should ensure all their documentation complies with the new provisions.
It is important for anyone who trades with consumers to consider whether their business is subject to consumer protection legislation, as the consequences of getting it wrong could be severe. For more advice contact our Regulatory Team.