Page 1 of 5

THE CONSUMER CONTRACTS REGULATIONS:

NEW RULES FOR YOUR TERMS & CONDITIONS. IS YOUR BUSINESS READY?

Do you have terms and conditions with your customers which deal with consumers?

If so, the chances are that the new Consumer Contracts Regulations 2013 will apply to

your business. Brian Miller and Clive Vergnaud of Stone King LLP explain why they

need to be compliant with the new Regulations.

On 13 June 2014, the Consumer Contracts (Information, Cancellation and Additional

Charges) Regulations 2013 (the “Regulations”) came into force. If you are a trader selling

goods, services or digital content to a consumer, these regulations will apply to you and you

may be required to make significant changes to the way you communicate and interact with

your customers.

The Regulations introduced new provisions governing the information required to be

provided to consumers and how that information should be given. They also set out new

rules relating to consumers’ cancellation rights, delivery and return of goods, additional

charges and post-contract customer help lines.

Many of these new provisions will automatically form part of any contract you now form with

a customer, irrespective of what your terms and conditions actually state. It may be that the

way you do business is already compliant with the Regulations, in which case: “business as

usual”. However, if that isn’t, you may find yourself at the wrong end of a claim for breach or

unenforceability of contract. Failure to observe certain of the new provisions may also

constitute a criminal offence or attract enforcement action from trading standard authorities.

Figure1

Page 2 of 5

What Contracts Are Affected?

The Regulations apply to distance contracts (contracts made by telephone, post or over

the internet where that is one or more of the trader’s usual trading practices), on-premises

contracts (contracts made in person at the trader’s business premises) and off-premises

contracts (contracts made in person in a place that is not the trader’s business premises,

for example doorstep sales).

Certain contracts are however exempt from the new provisions (eg package holidays,

timeshare contracts and purchase from vending machines). Unless your area of business

falls within one of these exemptions, your terms are likely to be subject to the Regulations.

What Are the New Provisions?

Provision of Information

Traders must provide consumers with certain information which will form part of the contract.

On-premises contracts are subject to different requirements than distance and on-premises

contracts, and these are set out in Schedules 1 and 2 of the Regulations. In addition to

basic information about the trader and the goods or services being sold, a trader must

include in his or her term and conditions information about total costs (including any

additional charges) and, where applicable, information about delivery, complaints,

cancellations, returns and post-contract assistance.

Much of this information was already required to be provided under the old rules, but there

are certain specific novelties – for example, the provision now of information about the

hardware or system requirements for digital content.

For all distance and off-premises contracts where cancellation rights exist, traders must

provide a cancellation form in the form set out in Schedule 3 of the Regulations.

In each case, information must be provided on a durable medium (letter, email, text

message, CD/DVD or via an online “personal account’).

A specific exemption from the obligation to provide information exists for small contracts

(value less than £42), passenger transport services, prescription medical products and on-

premise contracts for day-to-day transactions that are completed immediately (eg. buying a

cup of coffee or the weekly paper).

Cancellation Rights

Distance and off-premises contracts must now offer a cancellation period of fourteen

calendar days to allow customers to change their minds. This is known as a ‘cooling-off-

period. A consumer cannot contract out of this right. Amounts refunded to customers must

include the cost of outbound delivery but need not include the cost of returning the item

(unless the trader offered to bear this cost or failed to tell the customer that they would have

to).

Distance and off-premises contracts must now offer a cancellation period of fourteen

calendar days to allow customers to change their minds

Page 3 of 5

Delivery

Unless the trader and consumer agree otherwise, goods should be delivered without

undue delay and within thirty days. Risk will remain with the trader until the goods are

delivered to the consumer, unless the consumer selects and chooses a courier that is not

among those offered or named by the trader, in which case the risk passes to the consumer

at the moment the trader delivers the goods to the courier.

Figure

2

No Automatic Acceptance (Pre-Ticking of Boxes) It is no longer acceptable for traders to pre-tick boxes in order to get the customer to agree automatically, unless deselected, to certain costs or the provision of additional goods or services. The active consent of the consumer will be needed for all payments by getting them to tick empty boxes Costs Consumers will also no longer be liable for costs which they have not been told, pre-contract, that they must bear. This means that if a trader wishes, for instance, to make the consumer pay for delivery, or for the costs of returning the goods, this needs to be made clear in the contract, otherwise the trader could end up footing the bill for these costs.

Cancellation Charges

Where an individual is dealing as consumer, it is not now permissible to levy a cancellation

or administration charge. Where you have incurred some costs, eg. if you run courses or

training and a person cancels the day before, technically you have to take the hit on this,

unless you can include wording in your terms which describes the right to charge for work

carried out to date in processing the booking form, compensation in the event the place

cannot be filled (where it is last minute and the event is full) and be able to cost it quite

precisely. There is, however, no guarantee that the OFT (if complained to) would not seek

to categorise this as an administration or cancellation charge and order that it be struck from

your standard terms.

Membership Organisations

Many membership organisations are now asking themselves if their terms are subject to the

Regulations. The answer to the question will ultimately turn on whether or not the individuals

applying for membership or the existing members are to be treated as consumers.

‘Consumer” is defined in the Regulations as an individual acting for purposes which are

wholly or mainly outside that individual’s trade, business, craft or profession. This means

that the Regulations will not, for instance, apply to a membership organisation where the

Traders will need the active consent of the consumer for all payments – pre-ticked boxes

for additional payments, for instance, will no longer be permitted.

Page 4 of 5

sale of memberships or tickets for conferences are to persons attending or joining in their

working capacity.

Figure

3

So it is possible, despite the coming into force of the Regulations, to maintain administration charges or refuse to give refunds where a member, for instance, cancels his or her attendance for an event to be laid on for a fee, where the individual does not fall within the definition of a consumer, provided such charges are justifiable and not excessive. Note that the sale of memberships is likely to fall within the definition of “services” within the Regulations and therefore subject to them, unless the terms are exempt on the basis that the recipients of these services are not “consumers”.

Premium rate telephone lines

Where traders offer telephone help lines for consumers to contact them about something

they have bought, there should be a number available on which the consumer can call for

this purpose at no more than the basic rate.

If I Sell to Consumers from Abroad, Do My Terms Need to Comply with Foreign Laws?

The E-Commerce Regulations (another set of Regulations which may apply!) do not apply

what is called ‘the country of origin principle’ to the terms of consumer contracts. This means

that the terms and conditions of a UK-based website should meet the laws of every Member

State in which consumers can buy its products, not just UK laws, including translating them

where required. This is rather a tall order and most businesses aim to be compliant in key

territories only if they do take orders from abroad.

Please note that we are currently offering a free review of your terms and condition to check

compliance with the Regulations. If you are interested in this, please contact the author here.

You can no longer make a cancellation or administrative charge if a consumer cancels a

contract, eg. before an event commences. Where you have already started work, you can

only recoup this where the consumer has agreed in advance to pay for this.

Page 5 of 5

If you would be interested in attending a seminar on the Consumer Contracts Regulations,

please send an email using this form.

For a more detailed, in-depth analysis of the Regulations, please see associated article, the

Consumer Contracts Regulations 2013- A Guidance Note by Brian Miller, Solicitor.

If you would like further information about the Regulations or if you have any concerns or

queries in relation to them, please contact Brian Miller, solicitor and partner, IP/IT &

Commercial on 0207 324 1523 or email brianmiller@stoneking.co.uk.

Brian Miller is a solicitor at Stone King LLP, providing specialist advice in the fields of

intellectual property, IT, data protection and commercial law.

Disclaimer: This article may not be reproduced without the prior written permission of the author. This

article reflects the current law and practice. It is general in nature, and does not purport in any way to

be comprehensive or a substitute for specialist legal advice in individual circumstances.

1 UC Berkeley Law School Quote is reproduced with the kind permission of Ingrid Taylar under the Creative

Commons Attribution Licence 2 Fading technology is reproduced with the kind permission of Matthew Hester under the Attribution-NoDerivs

2.0 Generic Licence. 3 Technology Then & Now is reproduced with the kind permission of ilovebutter under the Creative Commons

Attribution 2.0 Generic Licence