The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (2013 No 3134)
Now as I’ve said before, you’re a bright and well-informed bunch, and have no doubt heard about the Distance Selling Regulations (Consumer Protection (Distance Selling) Regulations 2000) which covered Distance Selling – basically selling things to people without meeting them, normally by internet or mail order. You may also have heard about the Cancellation of Contracts Regulations (Cancellation of Contracts made in a Consumer’s Home or Place of Work etc Regulations 2008) which really don’t need much explanation once you’ve read the title.
Well, you can (shortly) forget them, because from 13th June 2014 they have both been replaced by the regulations listed above, which I will call the CCR.
Now this isn’t some neat consolidating exercise, that just bundles the two sets of Regs into a new one. That would be far too easy. The CCR make important amendments to them, and adds in some new stuff too. And, most importantly, they apply to ALL contracts made between traders and consumers, in both cases as defined in the CCR, apart from the exempted transactions, which I’ll mention below. This includes transactions made face-to-face in your office or shop, and because of the definitions some of these face-to-face transactions are treated as if they were made off-site, in a consumer’s home etc and have cancellation rights. So it matters to most of us one way or another.
I will concentrate in this piece on how this affect professional services, especially for solicitors, as it’s an area of particular interest to me. But I may come back and cover more of it later if the muse takes me.
I apologise if this isn’t one of my most engaging pieces, although I have tried my best. However, it is one of my most important, as it might affect my own income, and that of most other lawyers.
Please note that I haven’t always used the full definitions etc in order to make this more readable. If it matters, read the CCR. And remember this is journalism, not legal advice. If you want to know more, the Law Society have produced a very helpful Practice Note.
The main exemptions are set out in r6 and include many of the usual suspects – gambling, banking & financial services, conveyancing, letting residential property, construction of new buildings, delivery rounds, package holidays, timeshares etc vending machines and automatic commercial premises (the mind boggles, but I assume this is car-parks and the like). There is also exemption for certain things to do with telephones (which you will have to read of you want to know more) and for goods sold by way of execution. And there are also exemptions from some of the obligations in certain circumstances – eg there is no right to cancel for medicinal products prescribed by a health care professional (not just Doctors, it seems). If this all matters to you you will have to read the CCR for the details.
The important point however is that the vast bulk of services provided by most professionals, including lawyers, to consumers, will be covered, and all those of us who thought that because we saw people in our offices we could ignore all this rubbish will have to think again.
Trader – person acting for purposes relating to that person’s trade, business, craft or profession. This includes acting through agents/employees, and actions not exclusively for the trade etc.
Consumer – individual acting for purposes wholly or mainly outside that person’s trade, business craft or profession. So can’t be a company or partnership, but may include transactions by sole-traders outside their trading field – eg personal tax advice.
There are lots more, mainly in r5, which are worth looking at. But some of them are so important that they need a section of their own.
On-Premises, Off-Premises and Distance Contracts
On-Premises Contracts – any contract between a trader and a consumer that is not a distance contract nor an off-premises contract. So read on.
Off-Premises Contracts – contracts that are either
- made face-to-face off the trader’s premises.
- where the consumer made an offer face-to-face off the trader’s premises.
- made immediately after the trader had addressed the consumer face-to-face off the trader’s premises, and whether made on the premises or by distance communications.
- during an excursion organised by the trader to promote his goods or services.
Note that the consumer’s offer may have been made some time previously – I’d like you to prepare my will – OK I’ll make you an appointment and we can discuss this at the office when I return from holiday. And how soon is “immediately” for the next scenario? Clearly if you meet a client at court and ask them to come back to the office with you to discuss their problem this counts. What if they come in next week? And what is an “excursion”? Would a visit to a client in hospital count?
An awful lot of transactions that would naturally be considered as on-premises contracts may turn out not to be – especially if there is a series of discussions leading up to signed instructions. And it matters – see below.
Distance Contracts – made under “an organised distance sales or service-provision scheme”, without any meetings up to the point when the contract is made.
Note that the portion in quotes isn’t defined. It clearly covers tele-sales and mail-order, and orders via the internet. Does it include a client who gives instructions entirely by letter and telephone, or by email? Quite probably, but we don’t know.
Why this matters
Part 2 of the CCR sets out different sorts of information that the trader must provide to the consumer before the consumer is bound by the contract. The information is set out in Schedule 1 for on-premises contracts, and Schedule 2 for off-premises and distance contracts. So if you don’t give the consumer the info in Sch 2 because you think it’s an on-premises contract and you’re wrong then they aren’t bound by it, and this can be serious. Not only can’t you sue them for the price, but you may have to repay them any money paid up front. They probably have a right to cancel the contract at no cost to them. And it may even be a criminal offence – more details in Right to Cancel below.
The information for On-Premises Contracts
This information is only needed in so far as it isn’t apparent from the context. For example if you are working in an office with Bloggs & Co Solicitors on the door, you can take it that the client knows your business’s name. And there is an exemption for “day-to-day transactions entered into immediately” although this is not defined. Presumably a barber would be exempt, as would be most transactions in shops. And administering an oath.
The info which must be given “in a clear and comprehensible manner”
- the main characteristics of the goods or services – ie what you are supplying
- the trader’s identity (eg trading name) address and telephone number – you have to give your telephone number to all clients whether they ask for it or not.
- the price, or if this can’t be calculated in advance, how it is calculated.
- any delivery charges.
- arrangements for payment, delivery and the time involved.
- the trader’s complaints handling policy.
- in sales contracts, confirmation that the trader must supply goods in accordance with the contract.
- any after-sales service or guarantees.
- how to terminate the contract.
There are extra requirements if there is digital content.
There is nothing particularly unexpected here, but it does mean the end of the single-visit-and-no-paperwork transaction. You will always have to supply the information which would normally be set out in any client care letter or business agreement, and may as well do so that way, although it would be possible to set all this out in notices and leaflets, or indeed orally. But remember that these things can be difficult to prove later.
The big danger is the extra information that has to be given to off-premises contracts, and which may be missed if you don’t realise that you are dealing with one at the time. The safest course is to provide all that as well.
The information for Off-Premises Contracts
More comprehensive. Includes all the information needed for an On-Premises contract plus:
- any fax or email addresses.
- if trader is acting on behalf of another trader, the other trader’s details.
- the other trader’s business address if different.
- details of cost per billing period or any monthly charges .
- details of any increased phone or other communication charges.
- where a right to cancel exists, details in accordance with regl 27-38.
- cost of returning any goods if cancellation.
- if there is no right to cancel, information about this, or how it has been lost.
- details of any codes of conduct and how copies may be obtained.
- any minimum duration for the contract
- any deposits required or other financial guarantees to be paid by the consumer
- where applicable, any technical requirements or compatibility problems for digital content
- any relevant out of court complaints schemes and how to access them
Much of this won’t apply for a legal business. But the cancellation rights may, and are set out below. And if they do then you must give the consumer a prescribed cancellation form. All this information and a copy of the signed contract (or confirmation of its terms) must be given to the consumer on paper, or another durable medium” (eg email) if the consumer agrees, before any services are provided under the contract. And the burden is on the trader to prove that they did all this, in any dispute with the consumer.
The Right to Cancel
This generally applies to all Off-Premises and Distance Contracts, although there are a number of exceptions, such as medicinal products, products trading on financial markets, and a number of exceptions relating to goods, repairs, auctions, holidays and so on. The only relevant one for a (cheap) lawyer is that there is an exception for transactions when the total to be paid by the consumer does not exceed £42 (or the current equivalent to €50).
Otherwise the consumer has a right under r29 to cancel any distance or off-premises contract, without giving any reason, at no basic cost to the consumer at all, apart from some delivery charges, or when the consumer requests early supply. The cancellation period starts when the contract is made and normally runs for the next 14 days ie 15 days including the day of the contract (an increase from the 7 days previously). However, the period is extended until 14 days after the cancellation information is supplied, or 12 months and 14 days after the contract if sooner.
To cancel, the consumer has to give the trader “a clear statement setting out the decision to cancel the contract”. This does not have to be in writing, but as it is for the consumer to prove that they gave it clearly the best option. It doesn’t have to be on the form supplied by the trader but it can be. And if it is sent it only has to be sent within the cancellation period – it can arrive later.
Once the contract is cancelled all obligations come to an end and the trader has to return all monies paid by the consumer within 14 days. Any ancillary contracts are ended too. Any goods have to be returned or collected, and there are complicated provisions for the cost of this. More relevantly, nothing need be paid for any services supplied in the cancellation period unless
- the consumer has requested the trader to do so beforehand in a durable medium, and
- the consumer has been informed that they would have to pay the reasonable cost of this, and
- the consumer has been given proper notice of their right to cancel.
The amount must be a proportionate part of the total cost, and the right to cancel is only lost if the service has been fully supplied and the consumer has been informed that this would happen.
It is a nightmare. Fortunately Schedule 3 consists of an approved form of notice giving details of the right to cancel, and the prescribed cancellation notice which can be adapted and completed and given to the consumer, although the information can be provided elsewhere if you want to take the risk.
If this isn’t bad enough, failing to give the consumer details of all the cancellation rights on an off-premises contract is a criminal offence under r19 punishable with a fine of up to £5,000, both on the trader and any individuals concerned, including directors of corporate bodies.
I won’t go through these in detail as anybody who is intending to do serious business in this way will have to read the words in the CCR and the guidance very carefully anyway, and the rest of you will just get confused, or bored.
However, briefly, the trader has to provide the same information as for an Off-Premises contract, adapted for distance/electronic mediums. This includes any “Accept” button being labelled “ORDER WITH OBLIGATION TO PAY” “or a corresponding unambiguous formulation”. And again the burden is in the trader to prove that they have complied with all this.
Just in case this wasn’t enough, the government took the opportunity of tacking on some amendments to the law on the delivery of goods to consumers, (within 30 days unless otherwise agreed) and the passing of risk on sales of goods to consumers (on delivery to consumer, or their own delivery service) in rr42 & 43. Plus some more provisions on inertia selling, additional payments under a contract (consent needed and a pre-ticked box won’t do) and prohibiting telephone help lines at premium rates – rr39-41.
Will it do any good?
Well, it will be good for paper manufacturers, and the likes of Brother, Canon, Epsom and HP. Clients will have lots more information, some of which will be useful to them. Some of the sharper practices will be banned, and some of the worst operators will be dragged up to the level of the better ones. But there will be more box-ticking and things to trip over, and I have my doubts on how much good this does in the end. We’ll have to see.
What do we do now?
We need to look at our way of working and not just our terms of business.
- Consider your clients. Are they ALL businesses, and attending for business purposes? What about the will for the MD, or the tax advice for the partner?
- Do you always see any consumers in the office and never elsewhere? Or discuss things with them elsewhere and ask them to come in?
- What about the consumers who live at a distance and who you don’t see at all, but handle by email/post/Skype/phone?
Unless you are certain that all your consumers are going to enter into On-Premises contracts then you need to get lots of paperwork organised and supply it at the appropriate time. You are going to have to get used to the right to cancel and not starting work until the paperwork is in order and the client has requested you to do so in writing. You may choose to treat all clients as being off-premises consumers for safety, or rigorously divide them up into the different sorts. But you need to start NOW as you have 10 days left as I write this.
There is useful advice from the Law Society as mentioned above (here’s the link again) and two helpful and comprehensive pieces by Kerry Underwood here and here. There are many more out there so look at some of them because it’s very important.
And the Regulations apply for all contracts entered into on or after 13th June 2014.
UPDATE – for details of a case on the old regulations see here.