Consumer Law

Sale of goods, Supply of services, Consumer credit, Unfair contract terms

The Consumer Rights Act came into force in October 2015 and replaced much of the existing consumer protection legislation including the Sale of Goods Act, the Supply of Goods and Services Act and the Unfair Terms in Consumer Contracts Regulations. Many of the rights provided by the old legislation are however carried through into the new Act.The purpose of the new law is to give people clearer rights when they purchase goods, and to strengthen and modernise the law.  The law is now clearer and easier to understand.

Just as with the Sale of Goods Act, all products purchased by a consumer must be of satisfactory quality, fit for purpose and is described. This now applies to digital products, and all products, whether physical or digital, must meet the required standard. As before, the protection provided applies only to contracts between traders and consumers, but now includes goods purchased for a mixture of business and personal purposes.

The law now provides a specific time frame for rejecting faulty goods and obtaining a refund. Goods can be returned within 30 days of purchase, if found to be faulty, and a full refund obtained. It will be presumed that goods returned within this 30 day period were faulty at the time of purchase.

The right to a refund does not apply to purely digital goods such as apps, games and music, although there is a right to a replacement, if faulty. The 30 day rejection period can be shorter for perishable goods.

If you are outside of the 30 day period, you must give the seller the opportunity to replace or repair the goods, and will only be entitled to reject and claim a refund if the repair or replacement is unsatisfactory.  Should you wish to keep the goods, you may request a price reduction and partial refund. If the trader fails to repair or replace faulty goods, there is a right to a full refund, price reduction or further repair at no charge. Except in the case of motor vehicles, there can be no deduction within 6 months from monies refunded for use of the goods.

After 6 months from purchase it will be for you to prove that goods were faulty when purchased. Usually, this will require evidence from an expert or some evidence of inherent problems across the range of the goods.

Just as with the Sale of Goods Act, all products sold must be match the description given, be of satisfactory quality and fit for their purpose. This now applies equally to digital products.

Faults which were known about at the time of purchase, or should have been apparent on reasonable inspection will not be covered however, and there is no remedy for fair wear and tear, misuse or accidental damage or no longer requiring the goods.

A seller is responsible for goods until they are in your possession. This means that a retailer will be liable for non delivery and failure by a courier they employ to deliver goods purchased. Unless agreed otherwise, all goods must be delivered within 30 days of purchase. If a delivery date specified is not met, you will be entitled to a full refund and to cancel the contract.

Supply of services

Services, whether or not provided in conjunction with the sale of goods, are covered by the Consumer Rights Act. There is a requirement that a trader providing a service should perform that service with reasonable care and skill, and within a reasonable time and at a reasonable price.

Where services are not carried out satisfactorily, the trader must carry out the service again at no additional cost, providing this is possible and does not unduly inconvenience the consumer. If this is not possible, a full refund must be given, which could be for the entire cost of goods and the service included.

Unfair contract terms

Terms within a contract must be fair and reasonable, unless they have been prominently displayed, were transparent and agreed beforehand. A term will not be considered fair if it shows a significant imbalance between the rights of the trader and consumer to the detriment of the latter or where the term has not been included in a fair and open way. Such could be hidden charges in the small print of a contract, penal default or termination charges, or attempts to limit legal rights.

Contracts which contain the following terms are likely to be considered unfair and the term be unenforceable:

  • A term which has the object of requiring a consumer who decides not to conclude or perform the contract, to pay the trader a disproportionately high sum in compensation for services which have not been supplied.
  • A term which has the object of permitting the trader to determine what is to be done after the consumer has become bound by the contract.
  • A term which has the object of giving the trader the discretion to decide the price payable under the contract after the consumer has become bound by it.

Consumer credit

The Consumer Credit Act gives legal rights to those who have entered into credit agreements for less than £25,000. A right is provided to cancel within a certain period, if the agreement was signed in your home and not at the seller’s premises.

Providing you have paid a third of the total price of the goods under a HP agreement, then the creditor cannot take the goods back without first getting a court order. Even if they apply for a court order, you can ask the court to suspend the ‘return order’ and accept your offer to pay the outstanding amounts by installments.

If a credit agreement is unfair, then you can apply to the court and ask them to look at the agreement and put in place a new agreement or alter the old one. However, the court will only do this if it can be shown that the agreement is ‘extortionate’. To decide this, the court will look at such things as your age, experience, ‘business knowledge’, state of health and the amount of financial pressure put on you when you entered the deal. The court also considers the creditor’s position, such as the level of risk accepted by the creditor, including the value of any security, the creditor’s relationship to you, and with any other relevant matter, whether the creditor deliberately inflated the cash price to make the credit charges seem reasonable.

A seller can be the person who grants you credit or who arranged for you to get credit from a third party. Alternatively, it may be the third party who arranged to supply the goods to you. Your protection is that you can choose who to sue. You can either sue the seller or the provider of the credit, or both. This helps you because if the seller goes out of business, you can try and get your money from the credit provider instead.

You have an entitlement to a copy of the credit agreement, which must show the total charge for credit, the annual percentage rate (APR), and the cash price for the goods.

The Consumer Credit Act lays down strict rules about lending and borrowing money, where the amount borrowed is less than £25,000. In particular, the Act provides:

  • that all lenders of money are licensed;
  • that lenders show the buyer the true cost of credit;
  • protection against unfair credit agreements and allows the court to reduce extortionate rates of interest;
  • cooling off period when a credit agreement is made at home. This will usually be for seven days, but will not apply to loans arranged by post or telephone;
  • that if you pay off a loan early you will get a rebate.

The Act also allows people who have purchased faulty goods to claim against the finance company who lent money for the purchase of the goods. This can be a very useful remedy if a seller goes out of business or is unable to compensate you under the Sale of Goods Act. With hire purchase agreements, the goods retailer sells the goods to a finance company, which then hires or sells them to you, so the finance company is both the supplier and the lender. It will therefore be fully responsible if the goods are faulty.

A company providing credit cannot demand early payment, try to get the goods back or end the agreement without serving a written notice, giving seven days notice of their intention to take such action. Such is known as a default notice. If the purchaser has paid a third of the total price of the goods under a hire purchase agreement, then the creditor cannot take the goods back without first getting a court order.

If a credit agreements is unfair, then an application can be made to the court, who have power to put in place a new agreement or alter the old one. This will only be done, however, if the court considers that the agreement is extortionate.

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