If so, then you should be aware of the important changes being introduced later this month by the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (the "New Rules").
The New Rules come into force on 13 June 2014 and will supersede the Distance Selling Regulations and the Doorstep Selling Regulations. All forms of 'business to consumer' contracts will be affected. So whether you sell through a website, at your business premises or off site (for instance, at the consumer's home), the New Rules will apply to you.
Provision of information
The New Rules set out the information which must be provided to the consumer before the contract is entered into. The headline points are:
- the requirements for distance contracts are similar to those under the current regime. Where the contract is concluded by electronic means, certain information must be provided to the consumer directly before the order is placed. The trader must also ensure that the consumer understands that placing the order will oblige the consumer to make payment, with any order buttons labelled accordingly. If you do not do this, the consumer is not bound by the contract;
- the requirements for off premises contracts have been significantly extended. As well as information about the trader, the goods, the price and other key aspects of the contract, the consumer must be provided with information about the right to cancel the contract. Failure to give the consumer the required cancellation information is a criminal offence;
- for both distance and off premises contracts, the consumer must be provided with a statutory cancellation form;
- whilst the New Rules set out information requirements for 'on premises' contracts, these do not apply to a day to day transaction which is performed immediately (i.e. groceries);
- the information requirements for digital content apply to on premises, off premises and distance contracts, and concern information about the digital content's functionality (including technical protection measures) and its compatibility with hardware and software.
Cancellation rights
The cancellation rights apply to off premises and distance contracts, unless the contract falls into one of the excluded categories. The headlines here are:
- the duration of the 'cooling off' period has been extended. Where the business has provided the consumer with the required cancellation information, the cooling off period is 14 days. However, where this information has not been provided, the consumer has a period of 12 months in which to cancel the contract and get a refund;
- to cancel the contract, the consumer may (but is not obliged to) use the model form which has been provided by the trader;
- where the trader intends to supply digital content (which is not on a tangible medium) before the cancellation period expires, it must ensure that the consumer has given his/her express consent to this and has acknowledged that the right to cancel will be lost.
Is there any good news for businesses?
The New Rules are more business friendly on certain key issues. For instance:
- where the consumer is responsible for returning the goods, s/he must do so within 14 days of cancellation - the trader is not obliged to reimburse the consumer unless and until it has received the goods back or evidence that they have been sent;
- if the value of the goods has been diminished by the consumer's handling, then that amount may (in certain circumstances) be recoverable from the consumer and may be deducted from the amount to be reimbursed;
- in terms of delivery charges, the trader is only obliged to reimburse the consumer for the amount s/he would have paid for the standard delivery option. So if the consumer has chosen a gold plated express delivery option, the consumer is not entitled to be reimbursed for that additional cost;
- the circumstances in which the right to cancel will not apply have also been extended. For instance, the right to cancel will not apply where goods which are sealed for health or hygiene reasons, have become unsealed.
Next steps
The New Rules will place an administrative and operational burden on businesses. They will require businesses to consider the nature of their contracts (on premises, off premises and/or distance contracts), review the information which is currently provided to consumers and adjust their processes and documentation to reflect the new requirements. Leaving aside the risk of regulatory action, failure to comply could render your contracts unenforceable, leave you facing a lengthy 12 month cancellation period and, in the case of off premises contracts, expose you to criminal liability.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
