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What Businesses need to know under the new Consumer Contracts (Information Cancellation and Additional Charges) Regulations 2013

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Relevant Contracts

With the exception of certain specific contracts, which are either exempt or only partly covered by the CCR; the CCR’s apply to the following contracts for goods and/or services formed between a business and a consumer on or after the 13th June 2014: 

  • “On Premises” contracts: those formed ‘in store’ at the business premises;
  • “Off Premises” contracts: those concluded (or offered by the consumer) in the physical presence of both parties away from the business premises e.g. door step sales;
  • “Distance Selling” contracts: those formed via an organised distance sales service provision scheme where neither party is physically present e.g. online sales. 

Each contract type is defined in more detail within the CCR, which draws together and expands upon many of the definitions found in the previous legislation. For example, off premises contracts include those formed during an excursion organised by a business, as existed previously, but the CCR expands on the definition in terms of the “aim or effect” of the excursion; the latter being potentially open to debate. The element of “physical presence” has now been included in off premises and distance contracts. It is possible that a blurring of the boundaries between and ‘on’ and ‘off’ premises contracts may arise where a business makes an initial telephone call to a consumer and follows-up with a sales visit. 

The effect of the CCR's on trade stands at a fair or exhibition is not entirely clear. The distinction between ‘on’ and ‘off’ premises turns on whether the contract is formed in a place that is “not the business premises of the trader”. By the CCR's definition of ‘business premises’, this can be either the immovable and permanent premises of a business (e.g. a shop) or the “moveable retail premises where the [business] activity is carried out on a usual basis”. The interesting words are ‘usual basis’ as opposed to for example, ‘ordinary course of business’ or ‘regular basis’. ‘Usual’ is subjective i.e. for how many years would the exhibitor of a product falling within the regulations, need to have a trade stand at an annual exhibition, for that stand to be considered a moveable retail premises operating on a usual basis? The product being sold may also be a factor in determining whether the trade stand was operating on a ‘usual basis’. For example, an off premises contract may exist where an exhibitor has retailed goods or services for 5 years at an annual exhibition directly related to that retailers business sector; but may not exist for a business trying to sell entirely unrelated goods at the same event purely as a marketing experiment. 

It is therefore important for businesses to be certain of the time, location and manner in which the contract was formed.

Consumers

Consumers have usually been considered as non-business customers e.g. the general public walking into a shop. However, the CCR now defines a consumer more widely as an individual acting “….wholly or mainly outside that individual’s trade, business, craft or profession”. Businesses should carefully consider the application of the CCR to situations where the potential customer might appear to be a business, but in-fact the business owner has a greater personal interest. This may not be immediately apparent, but sufficient to place the contract within the scope of the CCR.

Key Changes Affecting Businesses

  • Provision of Information:The CCR's prescribe an increased list of information that must be provided in a “…clear and comprehensible manner…” by a business before a consumer will be committed to the contract. The information to be provided varies depending on the type of contract. In off-premises and distance selling contracts, the information must be provided in a “durable medium”, which means paper, e-mail or anything that can be personally addressed to the recipient, stored and then reproduced unchanged. 
  • Cancellation Rights in Off Premises and Distance Selling Contracts:The cancellation or ‘cooling off’ period is extended to 14 calendar days. The type of contract determines the point at which the day-count starts.If cancellation rights exist, the consumer must be provided with a clear notice of that right. An example notice is provided by the CCR albeit a business may use its own version provided it is clear. If a notice is not provided, the cancellation period extends to 12 months after the day the original 14 days period would have expired. If the business provides notice to the consumer during that extended period, the cancellation period reduces to 14 calendar days from the date the notice was received. Certain goods and services fall outside the cancellation rules such as personalised goods and the sale of newspapers and magazines that are not sold by subscription. 
  • Refunds:Where the consumer exercises a legal right to withdraw from or cancel the contract, the business must reimburse all payments received from the consumer (except for non-standard delivery costs) within 14 calendar days. 
  • Helplines:Where a helpline is provided by a business to allow consumers to query aspects of their contract, calls must be charged at the basic rate. 
  • Confirmation of Distance Selling Contracts:Businesses trading in this way must be aware of the greater requirements imposed by the CCR than existed under the old Distance Selling Regulations. A business must now provide the consumer with confirmation of the contract in a durable medium and must meet specific information requirements. 
  • Additional Payments:Of particular interest to businesses providing online sales; consumers will now be protected from having to pay any additional payment(s) arising from a ‘pre-ticked’ box on a website. A business must expressly agree all charges with the consumer before they will be bound by the contract.Protection for BusinessesWhilst most of the CCR are targeted towards the protection of consumers, they do serve to provide new elements of protection to the business in the areas of cancellation and the return of goods. For contracts in scope of the CCR, the consumer must now return any goods within 14 calendar days of a cancellation and the business is allowed to withhold any refund until receipt or evidence of the goods’ return is provided. Additionally, where the goods may have been devalued, the business may make a deduction to the refund. SummaryWhilst the above highlights some key points, the full scope of the CCR is very much wider. Businesses should already have reviewed their sales contracts and relevant policies such as those for complaints, cancellation, returns and refunds, in order to have been compliant in contracts formed on or after the 13th June 2014. A failure to comply will potentially void a contract and could result in criminal conviction. Positively, the CCR’s bring together much of the previous law into one place. Negatively, the obligations placed on businesses are now wider and potentially more complex. The nature and extent of challenges arising in court, will perhaps provide an indication of the success or failure of these new rules. 

This has most recently presented itself in The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (‘CCR’), which came into force on 13th June 2014. The CCR replaces the Distance Selling Regulations 2000 and the Doorstep Selling Regulations 2008.

At Gepp & Sons Solicitors we can advise on all aspects of commercial and contract law. The above is not legal advice; it is intended to provide information of general interest about current legal issues.