The Consumer Rights Act 2015 has been described as “the biggest shake up of consumer law for a generation” and is intended to streamline existing U.K. consumer law by consolidating eight existing pieces of consumer legislation into a single new Act, the main provisions of which come into force on 1st October 2015.
The new Act is split into three parts and ten schedules: Part 1 deals with consumer rights and remedies in respect of goods, services and digital content; Part 2 deals with unfair terms in consumer contracts and consumer notices and Part 3 includes a number of general and miscellaneous provisions, for example the consolidation and simplification of the investigatory and enforcement powers of public enforcers (across more than 60 pieces of consumer legislation); the introduction of additional remedies for consumers (enhanced consumer measures) which public enforcers can impose on businesses and the introduction of consumer collective redress for anti-competitive behaviour.
The Consumer Rights Act applies to any contracts and notices between a “trader” and a “consumer”, both of which terms are defined specifically in the Act itself and the “consumer” definition covers individuals who enter into contracts in any mixed business and personal capacity, as well as where just in their personal capacity.
The new Act introduces new statutory remedies for consumers of “repeat performance” and price reduction if a service does not conform to the contract, for example where a trader breaches its duty to provide services with reasonable skill and care, or does not comply with information that they have provided to the consumer about the service or if the service is not performed within a reasonable time.
Spoken or written voluntary statements made by the trader to consumers in relation to itself or its services can now be deemed to be binding contractual terms and potentially subject to a breach of contract claim from the consumer – which is generally easier for a consumer to bring than an action in misrepresentation.
The test for “unfair terms” under the new Act remains the same as that provided for in the Unfair Contract Terms Act 1977 and the fairness test for unfair notices (i.e. any notice that relates to rights or obligations between the trader and the consumer or restricts the trader's liability, which now also fall within the scope of the new Act) essentially mirrors that test. The Act treats consumer notices in much the same way as contract terms and traders will therefore have to ensure that the content of such notices complies with the fairness test.
Perhaps the most significant change introduced in Part 2 of the Act relates to “relevant terms” - which are terms specifying the main subject matter of the contract or setting the price. These terms will not be subject to the “fairness” test provided that they are both “transparent” (i.e. plain and intelligible) and “prominent” (i.e. brought to the consumer's attention in such a way that the average customer, who is deemed to be well informed, observant and circumspect for such purposes, would be aware of the term).
This goes further than the existing law and businesses will need to be even more careful to ensure that any “relevant terms” are clearly brought to a consumer's attention.
The new Act also provides that a term can be deemed to be unfair even if it has been individually negotiated with the consumer.
The Act also adds three further categories of terms to the “grey list” (which is an indicative and non-exhaustive list of terms in consumer contracts which may, but not necessarily will, be regarded as being unfair without any justification being provided). These new categories cover terms which have the object or effect of either (a) allowing the trader to decide the characteristics of the subject matter after the consumer is bound; (b) allowing disproportionate charges or requiring the consumer to pay for services which have not been supplied when the consumer ends the contract or (c) allowing the trader discretion in respect of the price after the consumer is bound.
Courts are now under an obligation to consider contractual terms for fairness, even if neither party to the proceedings raises fairness as an issue, so it is likely that contract terms will come under increasing scrutiny by the courts in future.
The new Act brings the supply of digital content within its scope and essentially treats the supply of digital content in a similar way to the supply of goods, such that it must be of satisfactory quality, fit for purpose, and conform with any description provided by the trader.
The new Consumer Rights Act should, in theory at least, help make compliance with consumer protection laws more straightforward for businesses in the future. However, as the Act does introduce some changes to contractual relationships and the ways in which products must be offered to consumers, some adaptation will be required at the outset. Any businesses that supply goods or services to consumers should therefore review and where appropriate update their product terms and conditions and procedures to ensure compliance with the new Act.