Unfair terms and consumer rights

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The Government recently published its draft Consumer Rights Bill (the Bill) – which is intended to reform consumer law in the UK and assist the legislature in implementing parts of the Consumer Rights Directive (although the bulk of this will be implemented by secondary legislation). The Bill, when introduced, would consolidate a number of existing consumer rights laws into one single legal framework and increase the rights and remedies available to consumers.

The Bill is expansive in scope – which is unsurprising considering the plethora of existing law that exists and is being consolidated – but includes measures such as:

  • introducing specific rights and remedies for consumers buying digital content
  • updating the rights and remedies available to consumers buying goods or services
  • enhancing consumer protection from unfair contract terms
  • clarifying the powers of enforcers to investigate potential breaches of consumer law
  • introducing enhanced measures to give consumers greater potential for effective redress
  • making it easier for consumers and businesses to challenge anti-competitive market practices.

Particular measures worthy of note are the provisions relating to the supplying of goods or services. Currently, consumers who buy goods can reject those goods as faulty within a “reasonable period”; however, what is considered “reasonable” has varied from business to business. The Bill gives businesses the benefit of a consistent approach and makes clear that consumers who buy goods will have the right to a full refund if they return faulty goods within 30 days, after which they will be able to get some money back after one failed repair or replacement of faulty goods.

On the other hand, businesses which provide services to consumers must currently comply with certain statutory warranties regarding quality, timeliness and reasonableness in charging for the services. Suppliers of services to consumers will continue to be prevented from contracting out of these basic statutory rights, but there are also enhanced provisions for consumers such that they will be able to demand that substandard services are re-performed or reduced in price.

The Bill also seeks to modernise existing consumer protection by introducing a new category of digital content with a bespoke set of rights and remedies appropriate for the nature of digital content. Consumers will have a range of statutory rights automatically included in contracts for the supply of digital content that they have paid for, or were provided free with goods, services or digital content that was paid for, including that the content must:

  • be of satisfactory quality
  • be fit for a particular purpose, and
  • match the description provided.

There will be remedies available if these rights are breached, such as a right to an immediate refund or compensation for damage to consumer property which was caused by digital content.

Finally, also noteworthy are the enhanced enforcement powers; the Bill grants public enforcers, such as Trading Standards, enhanced investigatory, redress and compliance measures (known as “enhanced consumer measures”). These include the power to request undertakings from breaching businesses to require them to comply with these enhanced consumer measures including offering consumers compensation or other redress in respect of any loss sustained or offering consumers the right to terminate the contract. These measures must be just and reasonable as considered by the enforcement body or the court. If a business refuses to comply, the public enforcer may escalate the matter to the court.

WM Comment

As noted, the Bill is comprehensive and the information above covers only some of the key points. The deadline for the Consumer Rights Directive to be incorporated into national law is December 2013, with the provisions coming into force in June 2014.

Businesses will need to pay close attention to the upcoming changes which will be brought in under the Bill and start preparing for the transition as soon as possible.