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.

 

 

What You Need To Know About Cleaning Contracts

Setting up a new Cleaning Services Company – or expanding your existing one?  Make sure you have some proper Terms of Business.

Make sure your cleaning contract is spotless

Make sure your cleaning contract is as professional as the work you do

 

Terms of Business do not need to be long-winded – and having them not only protects you and your business, but also helps to give your business a professional look, especially when you are bidding for work from a new client.

As well as having a document with the right terms, it is sensible to prepare the documentation in a user friendly format. My usual approach is to have the contract in three parts:

  1. Printed Terms of Business which you can show to a potential client if he asks for them;
  2. A Schedule prepared for each client that specifies the job location, services, hours, charges and other relevant information and
  3. A short one page agreement (or letter) confirming the appointment, start date etc., to be signed by you and the client – with the other two documents attached.

What terms should you include in the Terms of Business? Here are the basics:

Services 

Briefly describe the services you provide – e.g. specify the general cleaning services, with details for each client set out in the separate schedule.  It can also give comfort to a client to see that the Terms state that you take care to vet/check the competence of any new staff, that they will be required to comply with any client security procedures etc.

Duration & Notice

This will say what the minimum contract period is – maybe 6 or 12 months, whether it continues if not terminated at the end of that time and how much notice needs to be given to bring it to an end.

Charges & Payment

Either set out the agreed charges here or put them in a schedule.  In addition you should say how often invoices will be issued and the payment date – e.g. weekly with payment due 7 days from the invoice date.  It is sensible to refer to VAT and to reserve the right to increase charges on an annual basis.  You may also state that interest can be claimed on late payment (for B2B contracts the law allows you to claim 8% above Bank of England base rate).

Sometimes rates for extra services are set out in a schedule.  And remember to specify any expenses that are payable in addition to the charges.  The right to suspend services for late payment (as a softer to alternative to ending the contract) is sometimes included, usually after a 7 day notice period.

Client’s Obligations

Practical matters can usefully be covered here – e.g. the client to allow access during agreed working hours, explain all alarm and other security arrangements (and any changes), provide storage for your equipment etc.

Damage or Loss of Property

Make it clear that your liability for loss or damage to client’s property is limited to cases where you or your staff were at fault and you may want to state your liability for claims (above a certain amount) will be limited to the amount you can recover from your public liability insurers.

Client Complaints

It can be useful to insert a complaints procedure in the Terms – making it clear that complaints have to be made promptly, say within 48 hours, and that they will be properly investigated and dealt with by you.

Termination

Be sure to include a clause that allows you to terminate at any time by giving notice if the client does not pay, breaches the agreement or becomes insolvent.  Sometimes clients like to see this clause written on a mutual basis.

Force Majeure

It can be useful to include a ‘force majeure’ or unforeseeable events clause so that if this occurs you will not be treated as failing to perform the contract – although you will need to give notice and do whatever you can to overcome the problem.

No Poaching Your Staff

The risk of a client offering good cleaners a job is a real risk for cleaning companies and it is a good idea to make it clear this would be a breach of contract – both during the life of the contract and for a period after it finishes. Sometimes the Terms will require a client to pay a fee – equal to say 3 months’ salary – as damages if the obligation is broken.

Limit of Liability

It is always wise to limit liability – but be sure the limit is reasonable. Often the clause will firstly exclude liability for loss of profit and other indirect losses incurred by the client and secondly by capping the liability at a fixed amount.  Sometimes this will be related to the fees that are payable under the contract.  Since it is not permissible by law to limit liability for death or injury, this risk has to be unlimited and identifies as such.  While the contract may not require it, your firm should take out public liability insurance to protect against risks and you can then limit that liability to the amount you get form your insurers.

Disputes and Law

If a dispute occurs, it can be useful to have a three-stage process for dealing with the problem.  First, direct negotiation between senior executives, secondly, if this does not resolve the matter, the dispute can be referred to mediation.  Only after these processes can a dispute be referred to the courts.

ContractStore offers various templates that can be used for cleaning contracts, including: