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New legislation shifts how you contract with consumers

By Tim Fuell - May 22, 2014

If your business is B2C then you need to make sure that your contracts and the way you do business is compliant with new law coming into effect on 13th June of this year.

Image courtesy of Stuart Miles FreeDigitalPhotos.net

Image courtesy of Stuart Miles FreeDigitalPhotos.net

Back in December the Government gave approval to implement The Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013 – basically the new rules and information requirements required for those trader’s doing business with consumers on-site, via distance selling and any contracts made beyond a trader’s normal business premises. The Regulations also cover additional payments (pre-tick boxes) and helpline charges.

The changes mean if you sell to consumers  – whether online, via telephone, via catalogue, in-store or via home visits – you will need to review and probably update your sale processes, terms of business and cancellation and refund policies to make sure your procedures still fall within the law.

The Regulations will come into force on 13 June 2014 and can be found here: http://www.legislation.gov.uk/uksi/2013/3134/pdfs/uksi_20133134_en.pdf but they are a bit unwieldy even to those most hardened to legal documentation, so as ever it is best to invest a little time and effort into seeking some professional advice, to make sure you are not putting your business at risk. The Law Society’s free Find a Solicitor tool can help you find someone local to you if you don’t already have somebody in mind.

To help you understand the sort of changes you may need to make here’s a brief overview of some of the main requirements – although please be aware it is far from comprehensive:

Who is contracting?

There are new information requirements  a business must make readily available to consumers before they enter into a transaction with them including the name of the entity they are contracting with, any trading name, the registered address of the company and any trading address or address for complaints to be sent to if different, along with a telephone number (to which calls can be charged at no more than basic rate) and an email contact address if online.

What are they buying?

Particularly relevant to online sales, but applicable to each transaction, the business must make clear to the consumer the main characteristics of the product / service they are contracting to. That needs to include relevant information on functionality and compatibility (e.g. what hardware or software may also be required to make it work) and the focus appears very much to be on making things clear to the consumer.

What are they paying?

Under the new legislation actual costs need to be explicitly clear, including VAT inclusive prices where applicable and any ongoing costs. If actual specific costs likely to be incurred during the lifetime of the contract is not possible then a full breakdown of how that cost will be calculated must be provided in all but a handful of exceptions.

Confirmation they know what they are entering into

It must be clear to consumers not only what they are buying but how they are buying, including full arrangements for payment such as acceptable methods of paying before they are committed to buying. If ordering online the provisions are very specific to suggest that order buttons  simply names “submit”, “pay”, “continue” or even “order now” will not be sufficient to ensure the consumer has clearly understood they are entering into a contract to purchase. The suggested wording being “Order with obligation to pay”, although the practicalities of that specific wording are yet to be seen.

How they will receive the goods / services?

The legislation tightens up the delivery process too. At the time of ordering any potential restrictions on delivery times, additional charges etc need to be notified to the consumer before they enter into the transaction. Delivery to be within 30 days unless otherwise agreed.

What rights they have to cancel

Under the new law the current 7 day cooling off period is extended to 14 days for distance contracts such as over the phone and online orders. For these type of contracts there are also changes to the prescribed information required such as the who is contracting information noted above, but also including specific information on the procedures to cancel the contract and the time limits around the same

Post-event confirmation

One new requirement affecting distance contracts is the need for a retailer to supply no later than the time of the delivery of any goods or before performance of any service supplied under the contract, confirmation of the contract on a “durable medium” (e.g. by paper or by email). The information to be included in the confirmation to include in particular, the main characteristics of the goods/services; the total price of the goods/services (inclusive of taxes); all additional delivery charges and any other costs.

The changes are a further progression of a number of pieces of consumer legislation in recent years and whilst many businesses may already be operating to standards above the previous legislation, there are a few quirks in the new law that make it essential you check your current terms and conditions and practices alongside the new legislation.

This article is only an attempt to signpost some of the clauses you should be aware of if you are operating your business to consumers. For a comprehensive understanding you should refer to the regulations and to understand the relevance to your business it is always advisable to seek professional advice.