Digital products are now a fact of life, and new legislation is catching up
The new Consumer Rights law coming into force on 1st October 2015 is significant: it introduces new rights for consumers as well as consolidating a lot of existing legislation, and it applies to almost all contracts between traders and consumers. And for the first time, digital products are included specifically in the law.
These new provisions will affect everything from smartphone apps to streamed songs, movies, e-books, games, and business products such as design templates and even our own editable ready-made contracts.
A ‘consumer’ is an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession.
A ‘trader’ is a person acting for purposes relating to that person’s trade, business, craft or profession and it includes public sector authorities and government departments.
Digital Content – A New Type of Product
This is the first legislation to establish standards for the supply of digital content which is defined as: “data which are produced and supplied in digital form”. (A somewhat circuitous definition, with questionable use of the word ‘data’ as a plural noun).
The law applies whether the digital content is paid for or is supplied free of charge with other goods and services which are paid for by the consumer.
Every contract for supply of digital content will now be treated as including a term that the digital content:
- is of satisfactory quality,
- matches its description and
- matches any trial version that has been supplied and
- complies with other information supplied by the trader – e,g. with regard to main characteristics, functionality and compatibility and
- the trader has the right to supply it.
“Satisfactory quality” is the standard that a reasonable person would consider satisfactory taking account of the description, price and ‘all other relevant circumstances’ (which include any advert, labelling or public statement made by the trader, his representatives or the original producer of the digital content). The quality includes:
- its state and condition
- fitness for the purposes for which that kind of digital content is usually supplied
- freedom from minor defects
If, before the contract is made, a consumer makes known to the trader a particular purpose for which the digital content is required, then it has to be fit for that purpose even if it is not usually supplied for that reason.
If the trader has the right to modify the digital content, then the satisfactory quality and other standards mentioned above apply also to the modifications.
Traders are required to provide a lot of pre-contract information to consumers – including price, payment, delivery, performance etc. under The Consumer Contracts (Information etc.) Regulations. All that information is now treated as a term of the contract. (See our previous article on those regulations)
Remedies where Digital Content does not Comply with these Terms
If digital content does not meet these standards, a consumer has a number of potential remedies:
- Repair or replacement (unless this is not possible or is disproportionate compared to other remedies
- A price reduction if (a) the trader has been asked for repair or replacement and failed to comply or (b) repair or replacement is not possible or is disproportionate. The reduction could amount to a full refund where appropriate.
- A refund if the trader did not have the right to supply the digital content
- A right to recover costs (up to the purchase price) incurred by the consumer as a result of the trader failing to supply all the pre-contract information required by the law
- If the digital content causes damage to a device of the consumer or to other digital content of the consumer, the trader either has to repair the damage or pay compensation
These remedies do not prevent a consumer from claiming damages or some other remedy in court such as an order for specific performance of the contract. But recovering twice for the same loss is not allowed.
- The Consumer Rights Act can be found here.
ContractStore offers ready-made contract terms for digital products here: