The Consumer Rights Act 2015 offers protection to consumers when they enter into contracts for the supply of goods, services and digital content. It also offers protection in relation to unfair terms in a contract. Business owners should ensure that they are aware of their obligations under the Act to minimise the risk of disputes and avoid litigation.
Carly Borne (pictured), Solicitor from the Dispute Resolution team at Stockport law firm, SAS Daniels, explains what business owners need to know about the Consumer Rights Act when providing goods and services to their customers.
According to the Act, a consumer is “an individual acting wholly or mainly outside of that individual’s trade, business, craft or profession.”
Conversely, a trader is “a person acting for purposes relating to that person’s trade, business, craft or profession, whether acting personally or through another person acting in the trader’s name or on the trader’s behalf”
Supply of Goods and Statutory Quality
Goods supplied must meet five statutory requirements as outlined in the Act:
1. Goods must be of satisfactory quality. This does not mean that the goods have to be perfect, but rather that a ‘reasonable person’ would consider them of satisfactory quality, bearing in mind their price, newness, etc.
What Satisfies ‘Satisfactory Quality’?
When determining whether goods meet the ‘satisfactory quality’ criteria, the courts will consider:
- whether the goods are fit for the purpose for which they are commonly supplied;
- free from minor defects;
- safe and durable;
- their appearance and finish; and
- any relevant claims made about the goods by the seller (for example in advertising materials).
The seller may have a defence if it drew the defect to the buyer’s attention, or the buyer examined the goods, prior to the sale
2. Goods must be fit for the specific purpose for which they were supplied.
3. Goods must be as described. If the description is significant enough to become a term of the contract, i.e. if it identifies the subject matter of the contract and is relied upon by the buyer when deciding to purchase the goods.
4. Where a sale is by sample, or by reference to a model seen or examined, the goods must match the sample or the model. Where installation of the goods forms part of the contract, they must be installed correctly.
5. The seller must have the right to supply the goods.
Supply of Digital Content
Every contract to supply digital content for a fee offers buyers rights. Generally speaking, these mirror those relating to the supply of goods in that digital content must be of satisfactory quality, fit for purpose and as described.
Supply of Services
Contracts for the supply of services covered by the Act require the supplier to perform the service with reasonable care and skill. A supplier must work to the same standard as any reasonably competent person in that trade. All services ought to be provided for a reasonable price, if no price has been agreed, and within a reasonable time if there is no specific time agreed.
Any information about the service provided to the buyer forms a term of the contract if it was relied upon by the buyer when deciding whether to enter the contract, or when making a decision about the service after entering the contract.
What Is an Unfair Term?
Unfair contract terms are unenforceable in consumer contracts. A term or notice will be deemed unfair if it causes a significant imbalance in the rights and obligations of the seller and the buyer, to the detriment of the buyer. Some exclusions and limitations of liability will automatically be unenforceable against the buyer, for example a term which states that a seller can decide on the characteristics of the subject matter after the buyer has already entered into a contract.
If a business uses unfair terms, consumers can challenge these through the courts and the Competition and Markets Authority and Trading Standards can also commence court proceedings against the business to stop their use.
Remedies Under the Consumer Rights Act 2015
The Act sets out the statutory remedies available to a buyer when there has been a breach of the buyer’s statutory rights.
Remedies for Defective Goods
Within 30 days of the contract being completed and the goods being delivered, a buyer has an automatic right to:
- reject the goods for a full refund
- elect to ask the seller to repair or replace the goods (for which the 30 day period will be paused whilst the repair takes place or the replacement is provided)
Following expiry of the 30-day period, the automatic right is lost and the buyer must first allow the seller to repair or replace the goods. Thereafter, if the repair or replacement is also defective, the buyer can reject the goods or keep them and ask for a price reduction. Repairing or replacing the goods must be done within a reasonable period of time without significant inconvenience to the buyer and any costs must be paid for by the seller. If the cost of repair is disproportionate to the cost of a refund, the seller can choose to provide the latter.
When exercising their right to reject the goods within the first 30 days, the buyer must be able to prove that any alleged fault or defect was present at the time of their delivery.
If the 30 days has expired and either:
- an attempted repair has failed; or
- the goods cannot be repaired or replaced within a reasonable period of time or without significant inconvenience to the buyer;
the buyer has a right to ask for a price reduction and this can amount to a full refund. At this stage, if the buyer would prefer to reject the goods, they can return them to the seller and will be entitled to a partial or full refund, depending on how much use they have had of the goods.
After expiry of the initial 30-day period, the court will automatically assume that the alleged fault was present at the time of delivery and the evidential burden to prove otherwise, will fall upon the seller.
Following expiry of a 6-month period from completion of the contract and delivery of the goods, this automatic assumption falls away and the court will expect the buyer to prove that the fault was present at the time of delivery.
Remedies for Insufficient Quality of Services
If services are supplied, but not within a reasonable time, at a reasonable charge or to a reasonable standard, depending on the problems faced, a buyer has the right to:
- have the services repeated (if possible) at the cost of the seller and without any significant inconvenience; or
- Receive a price reduction.
Scope of the Act
The Act only applies to business-to-consumer contracts entered from 1 October 2015.
Business-to-consumer contracts entered prior to 1 October 2015, and business-to-business contracts, are governed by the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982. These both contain different provisions to the Act and it is important to obtain legal advice at an early stage to determine which regime applies and to adopt a strategy that minimises risk to the business.
The Act and COVID-19
On 7 May 2020, the UK Government published non-statutory guidance relating to the performance and enforcement of contracts impacted by the Covid-19 pandemic, which seeks to encourage parties to act fairly and responsibly to support the national response to COVID-19 and protect the economy.
However, it is clear from the document that it merely is just guidance, and has no direct legal implications, so there is no ‘watering down’ of contractual rights at this time.