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Consumers and Businesses: Do you know your Rights and Obligations?

View profile for Jessica Nugent
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The time has come to reform the complicated rights of both consumers and businesses when buying goods and services.

On 13 June 2013, the Government published a new draft Consumer Rights Bill following the consultation period which ran throughout 2012. The proposed legislation aims to consolidate the rather complex existing consumer protection law, which is currently made up of eight overlapping and inconsistent pieces of domestic legislation and further complicated by the incorporation of additional EU regulations and requirements.

As it stands, the existing law is also considered to be outdated, particularly in respect of digital content. This new simplified Bill should streamline consumer laws into one accessible piece of legislation to replace the outdated system which is over thirty years old. In turn, both consumers and business will benefit:

  • Consumers will have an improved knowledge and opportunity to enforce their rights to fair standard; and
  • Businesses will spend less time and money on training staff for various scenarios resulting from unclear legal obligations and dealing with disputes.

In addition to setting out a simplified framework of statutory rules, the Bill also proposes the introduction of some new consumer rights, predominately in relation to sale of goods, supply of services and digital content.

Sale of Goods

Currently, consumers can reject goods as faulty within a “reasonable period”, which is interpreted by some businesses as 14 days and by others as 2 months, thus causing significant confusion and uncertainty for consumers. The Bill proposes a “tiered” remedy system which will apply to varies types of sale of goods, hire and hire-purchase contracts. The tiers are as follows:

Tier 1: the “early right to reject” within 30 days of purchase. This period can be extended at the discretion of the trader, but not reduced. In addition, if the trader has to repair or replace the goods during the 30 day period, the consumer has an extra 7 days to reject the goods. However, the 30 day period may also be shorter in respect of perishable goods.

Tier 2: If the early right to reject has expired, the consumer has the right to a single repair or replacement. The trader has one opportunity to repair or replace the item, before moving to the next tier of remedies.

Tier 3: If repair is impossible, or the first replacement is also defective or the trader’s first attempt at repair fails, then the consumer has the right to a price reduction or “final right to reject”. This final tier is not limited to 30 days.

Supply of Services

Presently, there are no statutory remedies in place for substandard provision of services or failure for businesses to exercise “reasonable care and skill” when providing services, as implied under the Supply of Goods and Services Act 1982. This area is mainly governed by case law and contract law principles. Rights relating to supply of services will largely remain unchanged. However, the Bill does propose a statutory guarantee, requiring services to be provided with “reasonable care and skill”, thus maintaining the current legal minimum standard expected of service providers but ensuring it is directly enforceable against providers who fail to comply. The new law will also prevent suppliers of both goods and services from excluding liability and contracting out of statutory rights when dealing with consumers.

Digital content

As the law stands, digital content purchased via intangible media is not considered as “goods”, nor is this a service. Consequently, customers of digital downloads are not protected by existing laws. The Government has sought to bring the sale of digital content into line with the sale of goods. There will now be a clear set of guidelines which consumers can rely on where there has not been before.

An example of how the Government intends for the new rules to work, has been set out in the Response to Consultations on Consumer Rights by the Department for Business Innovation and Skills (June 2013):

“You pay to stream a film over the internet, but it keeps freezing. Your broadband connection is working and you have previously streamed movies successfully from the same provider so there isn’t a problem with your media player. Under the new proposals, you would be entitled to a repair or a replacement of the movie. In practice this would probably mean a repeat of the streaming. If this still failed to work, then you would be entitled to some money back, and the amount would depend on how severe the fault was.”

Opinion

Generally, the clarification of consumer law within the new draft Consumer Rights Bill has been positively received. A more consumer-friendly set of rights and remedies should naturally lead to more effective enforcement of the existing, unnecessarily complicated provisions.

Some practitioners have criticised the Government for not taking advantage of the opportunity to implement the Consumer Rights Directive via the Draft Bill, which still leaves a significant part of consumer law unconsolidated. This means that businesses, consumers and enforcement authorities may still have to deal with a body of secondary legislation for key protection laws. However overall, it is hoped by the Government that the changes will ensure greater consumer confidence and provide economic growth. It is now important that businesses and service providers take note of stricter additions to rules regulating this area in order to align their practices accordingly before the law comes into effect, which is expected to be from June 2014.

This article was written with assistance from Amantha Seneviratne, Trainee at Goodman Derrick.

This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised this article please contact the author or call 0207 404 0606 and ask for your usual Goodman Derrick contact.