The Consumer Rights Act 2015

With the announcement of new consumer rights legislation, we look at the impact on tangible and digital purchases and your rights to a refund.
 The Consumer Rights Act 2015 (‘the Act’) received royal assent on 26 March 2015 and came into force on 01 October 2015. It aims to rectify the traditional complexities of UK Consumer Law by consolidating eight pieces of separate legislation in this area into a single piece of harmonised legislation.

As a result many of the statutory provisions as legal practitioners know them will no longer apply in the business-to-consumer context. The Act is expected to replace the Unfair Terms in Consumer Contracts Regulations 1999 (‘the UTCCRs’), the Unfair Contract Terms Act 1977 (‘the UCTA’) in relation to consumer contracts, the Supply of Goods and Services Act 1982 (‘the SGSA’) and the majority of the Sale of Goods Act 1979.

Broadly speaking, consumer’s rights in relation to the sale of goods and unfair terms will largely remain unchanged. However, significant alterations to the legal framework will be made to the law governing consumer remedies, faulty goods and to ‘relevant terms’; which are terms specifying the main subject matter of the contract or which set the price. The Act will also be the first piece of legislation to regulate the supply of digital content; the Act’s marquee modernising provisions.

Supply of Services

At present, the provisions relating to the supply of services are scattered across the various pieces of legislation cited above. The new Act is designed to pull together all of the necessary provisions into one central place so that consumers can more easily navigate the statutory framework. For financial services firms though, the new provisions will apply alongside various other industry-specific regulations which are generally imposed on businesses, mainly by the Financial Conduct Authority (‘FCA’) and in observance of industry-specific EU legislation. Any stricter requirements or duties imposed by vertical legislation will take precedence over applicable provisions contained in the Act though.

Changes to Remedies

Consumers will have statutory remedies of ‘repeat performance’ and ‘price reduction’ if a service does not conform to the contract. The new Act is designed to provide a menu of remedies which can apply in descending order of their compatibility and/or application. For example:

• If a trader breaches its duty to provide services with ‘reasonable skill and care’ or does not comply with the information that they have provided to the consumer about the service, the consumer is entitled to repeat performance or a price reduction for the services, first
• If the services are not performed within a reasonable time, or the trader does not comply with the information that it has provided to a consumer which does not relate to the service, then the consumer is entitled to a price reduction for the services.

A consumer will not be limited though to those statutory rights in practice; invoking an initial remedy does not exclude the consumer from seeking other remedies; such as damages or specific performance provided that there is no prospect of double recovery.

It is thought that the inclusion of specific ‘menu-style’ remedies is an improvement on the existing statutory framework and provides additional clarity to consumers about their rights.

Changes to the Contractual Position in Relation to Voluntary Statements

Statements made voluntarily, whether orally or in written form, can often be made by traders without necessarily incorporating those statements into the contract. They can now be deemed to be binding contractual terms and will be more likely to be held so when taking into account whether the statement, when taken into account by the consumer, had a bearing on them deciding to enter into the contract or making any decision about the service after entering into the contract.

In the current statutory framework, if a consumer is presented with misleading information and if that information is delivered post-contract, then that information will not generally be deemed as part of the contract. Effectively, that limits a consumer’s rights to an action in the law of misrepresentation. Misleading statements will now be caught and consumers will be entitled to raise a breach of contract claim – which is a salutary warning for traders.

Unfair Terms

The test for unfair terms will remain the same as contained in the Unfair Contract Terms Act 1977, which provides that a term is ‘unfair’ if is causes a significant imbalance in the parties’ rights and obligations to the detriment of the consumer.

New ‘Prominence’ Requirements

A significant change to the existing statutory framework comes in the form of changes to what the Act considers are the ‘relevant terms’. As long as terms are transparent and prominent (meaning brought to the consumer’s attention in such way that the average consumer would be aware of the term) then they will not be subject to the old ‘fairness test’ we are used to seeing in the Unfair Contract Terms Act 1977.

There will, however, be a ‘transparency’ requirement which means that businesses will have to be even more pro-active about ensuring that the terms are brought to the attention of consumers. The fact that a relevant term fails to meet that requirement, though, does not make it automatically unfair.

Other non-exhaustive changes brought about by the Act are:

• Further additions to the ‘grey list’ – which is a non-exhaustive list of terms in consumer contracts which will, typically, be regarded as unfair. For example, terms which have the object or effect of allowing a trader continuing discretion over the price of goods or services after the consumer is bound.
• The Act will regulate the supply of digital content. In the modern era, so many of us now purchase apps online, e-books and digital information on the world wide web. In the event of a contractual dispute consumers only have recourse to current, perhaps outdated statutory provisions to protect them.
• The supply of digital content will be regulated now when it is supplied for a price; or it is supplied free with goods and services which the consumer has paid for and such content would not generally be available to consumers otherwise.

There is a whole raft of changes to the current statutory framework governing this area which is not discussed here. If you would like to learn more about these, then please contact our Dispute Resolution Team who will be happy to provide you with further information as you require. Contact us on 01708 229 444.
This article is only intended to provide a general summary and does not constitute legal advice. Specific legal advice should be taken on each individual matter. This article is based on the law as at October 2015.