The Consumer Rights Act 2015 (Act) came into force on 1 October 2015. It reforms and consolidates much of consumer law making it easier for businesses to be compliant.  The reform has been long overdue and the new provisions apply to supplies of goods and services alike.  Gavin Poole from Stephens Scown advises businesses to put the review of their contracts and terms and conditions higher up their agenda.

The key areas to look out for:

Ensuring fairness

The Act introduces various concepts, including a test of fairness.  Conscious of bargaining positions between consumers and businesses, the Act is able to address imbalances that are to the detriment of the consumer.  In the guidance issued by the Competition and Markets Authority on the Act, reference is frequently made to terms which have “the object or effect” of putting the consumer in a detrimental position.  This means that the bargaining position between the business and the consumer needs to be considered not just from the point of view of those determining business behaviour of the consumer (the object of imposing particular terms) but also the potentially unintended consequences of including certain provisions in a contract (the effect of imposing particular terms). An obvious detriment to a consumer may be measured in financial terms however other measures will also be relevant.

Be transparent

The Act also deals with the concept of transparency. The consumer must be able to make informed choices. To be able to make informed choices, it must have a proper understanding of the choices available. Therefore clarity and comprehensible language needs to be included. Examples that might commonly have been seen in the past but may not stand up to the test of transparency under the Act include expressions such as “your statutory rights are not affected” and “to the fullest extent allowed by law”.  It may also include expressions such as “indemnify” and “force majeure”. In the event of insufficient clarity, the courts are likely to find the interpretation that favours the consumer.

Think of every scenario

Other parts of the Act consider particular scenarios between business and consumers.  By way of example, limitations of liability are areas that are usually a favourite point for business.  The Act considers how such limits may be fairly and transparently applied. Another example concerns procedures for the delivery of goods.  Businesses may be optimistic on timetables as to when goods are to be examined (for the purposes of rejection) and these arrangements should be reviewed as to practicability from the consumer’s point of view. Other ways in which contracts may come under scrutiny by the court are where a consumer is required to observe particular formalities in the event that it wishes to make a complaint.

Pre-contractual negotiations

One of the more controversial concepts that is brought in by the Act concerns pre-contractual negotiations.  Businesses frequently seek to reduce all elements of the terms that they have agreed with the consumer to a written document so that all dialogue leading up to the contract is not to be relied upon by the consumer.  That practice may no longer be appropriate as unwritten (as well as written) terms may be brought into consideration by a court when evaluating whether the Act has been properly followed (particularly with regard to transparency and fairness). The result is that brochures and sales training programmes should be reviewed.

Gavin Poole is a partner in the corporate team.  If you need advice on any of the issues raised in this article please contact us by email or call 01872 265100.