16 June 2014
How will new regulations consume your business?
The new EU Consumer Rights Directive came into force in June, impacting many businesses. The Consumer Contracts Regulations 2013 implement a single set of rules for those who sell goods or services to consumers, including by way of distance selling and contracts formed away from the seller’s business premises.
All contracts made on-premises (a sale made at your business premises), off-premises (door to door, sales made at a trade show etc.) and via distance sales (telephone or online sales, including downloads) are caught.
Diane Yarrow, partner in the corporate and commercial practice, warns: "There are some exceptions, but it is safest to assume that if you deal with consumers, the new regulations are going to apply to your business and to find out more by contacting us."
Diane explains that depending on how you already operate your business, the impact of the regulations could be dealt with simply by making some administrative and practical changes to your processes and the ways in which you interact with customers.
For other businesses however, the regulations could have a huge effect on current communications to consumers – including unaddressed or addressed printed matter; letters, press advertising with order forms, catalogues, telephone with or without human intervention, email, fax, and television (teleshopping) – with the resulting cost implications being significant.
"There are a number of changes that could affect your business, but in short, these apply mainly to the information that a consumer must be provided with before entering into a contract and then to the rights that a consumer has to cancel," Diane explains.
The regulations list the information that a business has to provide to a consumer at the pre-contract stage. For many businesses this will be information that they already provide. For example, a consumer ordering online must be given details of your complaints handling policy. There are however some new requirements and you should check the regulations or speak to us. Every applicable contract will be treated as including a term that you have complied with the provision of information. Therefore, a consumer could argue that failure to provide this information was a breach of contract.
Right to cancel
It is also important to note that not providing information about the right to cancel is a criminal offence. The "cooling off" period during which consumers can cancel a contract has now been increased to 14 calendar days - a significant change to the previous seven working days (for distance sales contracts) and seven calendar days (for doorstep sales contracts).
Some contracts are exempt from the cancellation rights including, urgent household repairs and bespoke and customised goods, but you should take care and check whether any of the exemptions cover the work that you are doing.
The regulations state that a business must not begin to supply services until the cancellation period expires. If a business does, and the consumer cancels the contract, then they will have no obligation to pay. This may be considered as counterintuitive in a world where consumers are looking for quick turnarounds, but Diane says there is a solution.
"A business can begin to supply services early if the consumer has made an express request in writing for them to do so. In this instance, if the consumer cancels during the 14-day period, they will have to pay costs incurred up to the point of cancellation."
Some of the other changes include:
• Customers must be provided with a copy of the signed contract or with confirmation of the contract in writing.
• Unless agreed otherwise, goods should be delivered with undue delay and within 30 days.
• Goods remain at the risk of the trader until they are in the consumers’ possession, or that of a person delegated to receive the goods (so you may want to reconsider leaving them on the doorstep!).
• Customers must be provided with a basic rate telephone number for post-contract queries.
"Not only can B P Collins help to guide you through the changes so that you understand the impact of these on your business, we can review your existing documentation to ensure compliance. We will also do the bit other lawyers miss out," concludes Diane.
"We will work with you to ensure your terms of business are properly incorporated in your contracts with consumers and can provide training to your sales and contract teams, giving you the confidence to carry out your normal day-to-day business without worry."
To arrange a review of your current consumer contracts call a member of our commercial law team on 01753 279022 or email firstname.lastname@example.org