Sale of goods
The CRA consolidates much of the existing statutory framework and harmonises the rules for all supply of goods, including the sale of goods, hire of goods, hire-purchase agreements and any conditional contracts. Contracts under which goods which are to be manufactured or produced and then supplied to the business will also be treated as sales contracts (for example where a tailor is hired to make a bespoke suit).
The following is a summary of the key provisions:
The CRA has introduced a new standard: any pre-contract information provided will now form implied terms of the contract in addition to the existing statutory standards as to satisfactory quality, description, fitness for purpose and other standards.
Where a sale is made on the basis of a model supplied to a consumer the goods must match that model unless any differences are brought to the consumer’s attention before the contract is entered into.
Where goods are installed as part of the contract (either by the business or someone under his responsibility), the goods will not conform to the contract if they are installed incorrectly.
- Remedies – new right to reject
The CRA has simplified the existing law on defective goods as the statutory remedies previously available to consumers were confusing, being a mixture of remedies available at several levels i.e. both under UK statue and under EU Law.
In addition to the usual remedies of damages and specific performance, consumers now have two ‘tiers’ of rights to reject the goods:
a) A short-term right to reject goods within 30 days, which is extended by at least 7 days if the goods have to be repaired or replaced during that time.
b) The business has one attempt to repair or replace the goods before the consumer is then entitled to a price reduction or a ‘final’ right of rejection and refund.
In order to reject the goods, the consumer must clearly indicate to the business he is rejecting the goods and treating the contract at an end, but this does not have to be in writing.
After six months, any refund to the consumer after exercise of the final right of rejection may be reduced to take account of the use of the goods since they were delivered.
The new CRA also clarifies the position in relation to delivery of goods, including the default position that unless otherwise agreed, the business must deliver goods to the consumer without undue delay but in any event no later than 30 calendar days after the contract is entered into. Subject to certain conditions, if goods are delivered late a consumer may have an immediate option to terminate the contract if time of delivery was essential (what we currently know as “time of the essence”).
Provision of services
The CRA has made the following changes in relation to the provision of services:
- Consumer protection
Only individuals can claim consumer protection and businesses can no longer claim consumer protection as they could previously in limited circumstances.
- Good transferred under a services contract
Where goods are transferred under a contract for services, the statutory provisions on goods will also apply to these contracts.
- Manufacture or production of goods
Any contract which involved the manufacture or production of goods will now be treated as sales contracts.
- Voluntary statements by a business
If a business makes voluntary statements about the service or the business, these will now form part of the contract.
- Ban on excluding liability
Businesses are now banned from excluding liability for failing to preform a service with reasonable care and skill, or failing to comply with information provided by the business about the service or the business.
- Ban on limiting liability to less than contract price
Businesses are now banned from limiting their liability to less than the price paid under the contract. The unfair contract terms provisions of the CRA may still apply.
- New statutory remedies
a. Right to repeat services
There is a new statutory right to repeat performance of a service where a business has not exercised reasonable skill and care or failed to comply with information about the service.
b. Right to price reduction
There is also a new right to price reduction if a service is not provided within a reasonable time or if it does not comply with information provided about the service or the business.
The CRA has also incorporated the Consumer Rights Directive rules in relation to any pre-contractual information that is provided to a consumer, so that such information will become binding provisions of a contract to supply services.
What do the changes mean for your business?
Businesses need to take pro-active steps to ensure that they are aware of their obligations and consumer rights and operate their business taking the changes into account, including:
- A thorough review of their existing sales literature, terms of business and contractual processes for the supply of goods and services and ensure that they fully comply with the above changes and set out consumer’s position clearly;
- A review of their refund policies to reflect the new rights and remedies;
- Informing their employees as to the effect of the changes, and in particular in relation to any pre-sales information which is provided to consumers, as these will now be implied terms of the contract.
- Taking care to ensure that where a model/sample is provided for a consumer to view before purchase, any differences between the model shown and the goods supplied are drawn to the customer’s attention before the contract is entered into.
If you would like new terms of business or a review of your current terms of business in light of the reforms, please contact our Commercial team on on 01737 854 500 or find out more here.