Are your Website Terms of Business ready for the new Consumer Regulations?

New regulations concerning the sale of goods and services to consumers come into effect in June. The great majority of businesses selling goods or services online as well as door step and other “off-premises” sales will be affected.

The Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013 come into effect on 13 June 2014. They replace the existing the Distance Selling Regulations and the Doorstep Regulations.

Although many of the existing regulations will continue, they have been updated in various ways and there are a number of changes that you will need to make to your terms and conditions.

So, be prepared to update your Terms of Business for online sales on your website as well as for off-premises sales. And remember, these Regulations apply to the sale of services as well as goods.

ContractStore’s Terms & Conditions for online sale of goods  (document A179) have been updated and are available to buy and download from our website.

Here are some of the key points in the new Regulations:

 Information     Lots of information must be given by the trader to the consumer before the contract is made.  This pre-contract information will be treated as information forming part of the contract. If this information is not provided, the consumer may not be bound by the contract.

Schedule 2 of the regulations details 24 separate bits of information to be provided. These include:

  • the main characteristics of the goods or services
  • the identity of the trader and his address and contact details
  • if the trader is selling on behalf of someone else, the address and identity of that other trader is also needed
  • the total price of the goods or services including taxes or, if this cannot be calculated in advance, an explanation of how it will be calculated
  • where applicable, any additional delivery charges or  other costs
  • where the contract is open ended or the consumer is paying a subscription, the total monthly or other regular payments
  • arrangements for payment, delivery, performance and timing
  • where there is a cancellation right, details concerning this
  • when applicable, the terms of any after sales service
  • the duration of the contract and if this is open ended, the conditions for terminating and the minimum contract period, if there is one.

Making the Contract.   In the case of online business, the information items in italics above are the minimum that the trader must provide ‘in a clear and prominent manner’ before the consumer places an order.

Also the website must have wording that ensures the consumer, when placing an order, explicitly acknowledges the obligation to pay for the goods or services being ordered.

Unless the trader complies with these requirements, the consumer is not bound by the contract..

Once an order is placed, the trader must confirm the contract within a reasonable time and before the delivery of goods or start of services.  email confirmation is acceptable.

Sales by Phone.  Anyone making a phone call to get a contract must at the beginning of the conversation identify the trader’s identity, the purpose of the call and the identity of any third party on whose behalf the call is being made.   

Delivery.     The contract will automatically contain an implied term requiring retailers to deliver goods and services without delay and in any event within 30 days from the contract date

 Risk.   Until goods come into the physical possession of the consumer, risk of loss or damage remains with the trader. This will not apply if the consumer arranges transportation with a carrier who has not been recommended by the trader.

Cancellation Rights.  Consumers will have 14 days in which to cancel a contract. This period replaces the existing period of 7 working days.  The 14 day period starts the day after the contract is made in the case of a service contract or contract for the supply of digital content online.

In the case of goods, the cancellation period ends at the end of 14 days after the day on which the last of the goods came into the physical possession of the consumer (or someone identified by him – e.g. the person to whom a gift is being delivered).

The Regulations contain a model cancellation form and consumers should be given the option to use this, but any clear statement of cancellation will be effective provided it is given within the 14 day period.

If the trader does not spell out the consumer’s cancellation rights, then the consumer has the right to cancel the contract at any time within 12 months. It is also an offence, punishable by a fine.

Refunds.   If the consumer cancels the contract and returns the goods, the trader must make a full refund within 14 days.  This includes the basic cost of delivery if the consumer paid for the goods to be delivered to him. Where there is no delivery of goods, the refund must be within 14 days after the trader is informed of the cancellation.

If the value of the goods has been reduced by the consumer’s handling, the trader can deduct an appropriate amount from the refund.

Return of Goods.  The trader is responsible for collecting the goods if:

  • he has offered to collect them or
  • the goods were delivered to the consumer’s home and they cannot, by their nature, normally be returned by post.

In other cases, the consumer is responsible for sending the goods back to the address specified by the trader. The consumer is responsible for the cost of returning goods unless either the trader has agreed to meet those costs or he failed to tell the consumer about the consumer bearing the cost in the information provided at the beginning.

Services in Cancellation Period.   The trader must not start services within the cancellation period unless he is asked to by the consumer. If services are then performed in full, the consumer’s cancellation right is lost. If services are partly performed and the consumer cancels within the 14 day period, the trader is entitled to payment on a proportionate basis for those services.

Supply of Digital Content.    Where there is a contract online for the supply of digital content, the trader should not supply the content before the end of the cancellation period unless the consumer has given express consent for early delivery and the consumer has acknowledged that the right to cancel the contract will not apply.  So, if you are selling downloads of music or maps, you need wording to ensure that the consumer agree to waive his cancellation rights as he goes through the buying process on your website.

Helpline Charges.    If it trader operates a helpline, this must not involve the consumer in phone charges above the basic rate. If it does, the trader is obliged to refund the extra cost to the consumer.

 Excluded Contracts.   These Regulations do not apply to certain contracts including: financial services and insurance; leases of property and contracts for the sale of land; contracts for construction of new buildings or conversion of existing buildings.

 Exclusion of Cancellation Rights.   The right to cancel a contract does not apply in some circumstances including:

  • goods that are tailor-made for the consumer or personalised in some other way;
  • goods that are liable to deteriorate or expire rapidly, such as fresh food;
  • goods or services where the price is dependent on fluctuations in the financial markets;
  • newspapers and magazines;
  • sealed goods which, after delivery, are unsealed and are no longer suitable for  return due to health or hygiene reasons – e.g. underwear;
  • audio or computer software that is supplied sealed and then unsealed after delivery;
  • goods that become inseparably mixed after delivery – e.g. sand mixed with cement.

For ContractStore’s template Terms of Business for the Sale of Goods Online click here

For more detailed information, the Regulations are available online and are quite easy to read.  Also there is Guidance published by the Department of Business Innovation & Skills.

 

 

This entry was posted in Business Contracts, Guidance Articles, Internet Law, Online Legal Templates, Running an SME, UK Law and tagged , , by Giles. Bookmark the permalink.

About Giles

Giles is the founder and managing director of ContractStore. It was his idea to set up a company selling documents online and he has played a major part in the company's development. He is an English solicitor, with over thirty years' experience of drafting and negotiating commercial and construction contracts in the UK and overseas. Giles has long been convinced that there is a quicker and simpler approach to the delivery and supply of most contracts, and he is an active proponent of the use of plain English in legal documents. He specialises in the drafting of construction and engineering contracts and as well as contributing contracts to the ContractStore website, he is co-author of the JCT Constructing Excellence Contract and of 'Exporting Made Easy' with Simon Bedford.

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