The Consumer Rights Act 2015 (“the Act”) comes into force on 1 October 2015, and, according to a government press release, is “predicted to boost the economy by £4 billion over the next decade by streamlining complicated law from 8 pieces of legislation into one place.
Businesses, especially those involved in e-commerce, should take note as the Act expands the definition of unfair terms in contracts and provides new requirements for traders who sell goods which qualify as digital content.
Due to the expansion of consumers’ rights under the Act, businesses should review the below to ensure they are in compliance by 1 October:
Terms and conditions
Business practice assessments
Standard web and app terms
Limitation of liability clauses
Pre-contractual information (including notices)
Cancellation and return policies
The Act is divided into three parts:
Consumer contracts for goods, digital contents and services;
Unfair terms; and
Miscellaneous and general (such as enforcement powers).
Important new definitions and digital content
The definition of ‘Consumer’ is expanded to include an individual who enters into contracts for a mixture of personal and business reasons, whereas previously a consumer could only rely on the Act if they were trading for personal reasons.
This is the first time that rights on digital content are set out in consumer legislation. Digital content is defined as: “data produced and supplied in digital form”. This would include online films, games, music downloads and eBooks. The definition also includes content that is provided for free with an online purchase.
Businesses involved in e-commerce should specifically pay attention to the new quality standards of digital content, which must be: of satisfactory quality, fit for purpose, and match any descriptions given by the trader to the consumer. If not, consumers will have a right to repair or replacement, or a reduction in price. For example, if an e-book a consumer downloaded to their computer did not perform as described, he or she may have a right to replace it or receive a reduction in price.
Moreover, if the digital content corrupts a consumer’s device, a consumer will be entitled to claim compensation or require repair for the damage, so long as the consumer can show that the trader did not exercise reasonable skill and care.
The Act introduces new statutory consumer remedies in regards to good and service contracts.
Importantly, the Act clarifies that a consumer has 30 days to reject substandard goods and be entitled to a full refund, whereas the previous short term right to reject had been unclear.
In regard to service contracts, a consumer has a remedy of ‘repeat performance’ and price reduction if a service does not conform to the contract. This would arise in circumstances in which a trader breaches its duty to provide ‘reasonable skill and care,’ does not comply with information they provided about the service, or does not perform within a reasonable time.
Also, voluntary statements about the trader or traders’ service may now be considered binding contractual terms if a consumer decides to enter into the contract, or makes any decision about the service after entering into the contract, based on those voluntary statements.
A consumer who has been presented with misleading information will now be able to bring a breach of contract claim, which is generally easier to prove and changes the amount of damages available to award. This is a departure from previous practice where a consumer would only have been able to rely on an action of misrepresentation.
The Act introduces a ‘prominence’ requirement, where the ‘relevant terms’—terms that specify the main subject matter of a contract or the determination of price—must be brought to a consumer’s attention in such a way that the average customer would be aware of them. As a result of this higher level of scrutiny for unfairness, businesses should be extra vigilant to guarantee relevant terms—for example ancillary fees in a contract—are clearly brought to a consumer’s attention.
In light of the above changes, businesses should ensure that they are in compliance with the Act by October 1. For any questions or further clarification of how these changes could affect your business, please contact Joanna Stephenson or Francesca Shepherd.
By intern Claudia Zeng and JWSS