Welcome to the first edition of our Red Tape newsletter

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Red Tape

In this issue:

Commercial Legal Update for the month ended 31 August 2015

A Legal Health Check for Your Business

New consumer rights legislation and its impact on your business

Commercial Legal Update for the month ended 31 August 2015

Supply of Digital Content – If you are supplying any digital content (such as software

and apps etc.) to consumers then it is important that you are up to date with new

consumer legislation coming into force in October 2015. The legislation covers,

amongst other things, the rights of the consumers with regard to quality and “fitness for

purpose” and the various remedies that the consumer may have against you for failure

to satisfy their rights.

Alternative Dispute Resolution – From October 2015, where there is a dispute with a

customer that is a consumer that cannot be resolved internally, you will be required to

give information to such customers of the name and website of an organisation

providing Alternative Dispute Resolution (ADR) services. If your organisation is already

obliged (by law or because you belong to a particular trade association) to use ADR

services, details of such services must be provided on your website and in your terms

and conditions with consumer customers.

Advertising – The Committee of Advertising Practice (CAP) lays down rules for

advertisers, agencies and media owners to follow. These have recently been updated

and, if you are an advertiser, it is important to be familiar with the new content. The

main changes concern “banned advertising practices” and the need for clarity so that

consumers can make informed decisions with all material information clearly available

to them.

Data Protection – In the 2015 annual report from the Information Commissioner’s

Office (ICO), it is reported that failures to deal properly with subject access requests

continue to represent nearly fifty percent of all complaints. If you do not have proper

procedures in place to deal with them, subject access requests can be very demanding

to respond to adequately and within the prescribed time limit. The report also showed a

rise in complaints with regard to electronic marketing, in particular unsolicited

marketing, including nuisance calls and spam text messages. As the ICO has been

given greater powers to impose fines, this is a particular area in which care needs to be

taken.

Cyber-Crime – Cyber-crime is increasingly in the news and the UK has been identified

as the second most “at risk” country for cyber-attacks. It is, therefore, well timed that a

new free downloadable cyber security guide for businesses has been issued by the

International Chamber of Commerce (ICC). It is written for lay persons, not IT

specialists, so takes a more practical and commercial view of the subject, with some

useful guidance for all businesses.

The Bribery Act – The government has recently completed a report looking at UK

businesses awareness of the requirements of the Bribery Act. From the report it is clear

that many small businesses have little or no awareness of the requirements of the Act

and in particular that if anyone performing services on your organisation’s behalf bribes

someone then your business could be liable. The Act is unique in that the only defence

available to you is that you have adequate procedures in place to prevent bribery

occurring. Useful guidance on what constitutes such measures is available but the

report showed that awareness of this guidance was low.

Legal Health Check

We have prepared a health check pack that seeks to address all the major areas of the law

of which your business should be aware and highlight the commercial significance of

these. As the checklists are generic there may be specific areas of legislation that apply to

your particular business that are not covered and so these should not be taken as

completely comprehensive.

There are nine checklists, each of which will address a different area of the law and the

responses to each point will determine where there are major gaps to be filled or issues to

address. As far as possible, they are written in plain English. All areas covered relate to

English companies only and applicable English law.

The areas covered are:

1. Information Disclosure – Certain information must be displayed or given by a

company; and lesser details displayed by individuals or partnerships.

2. Employment – The law requires that certain minimum requirements are included in all

employee contracts. A general awareness of key employment and pension legislation is

important. Identifying who is actually an employee in your organisation is also key and

not always straightforward.

3. Intellectual Property (IP) – This predominantly includes trade names (including

domain names), trademarks, copyright, design rights and patents. An organisation’s IP

is often a valuable “off the balance sheet” asset that needs protecting.

4. Health and Safety – The law recognises that different businesses have different risks,

but, all businesses require some basic provisions to be in place.

5. Data Protection – There are eight basic principles of data protection for all businesses;

this health check focuses on security and electronic marketing, which are highly

regulated.

6. Bribery – A new act of parliament on this came into force in 2010 which made clear

that if a business did not have “adequate procedures” in place to prevent bribery by a

member of your organisation, it would have no defence if a case was taken against it.

7. Websites – Apart from information disclosure requirements (see section 1), an

organisation should post terms of sale (if selling goods or services online), terms of use

(including guidance on what is acceptable use), cookies and privacy of user’s

information on its website in order to ensure compliance with the applicable areas of

law.

8. Consumer Protection – When a business deals directly with consumers (as opposed

to businesses), there are standards and legislation to protect consumers which need to

be incorporated into business practices.

9. Other – Most businesses must have certain insurances in place, but others may be

worth considering. Certain types of business may need to acquire a licence or register

to trade or be subject to specific pieces of legislation or regulation.

If you feel from reading this list that there are areas in your business or organisation which

need addressing, we offer a Free Health Check, carried out by one of our consultants. If

this is of interest, please contact Brian Miller for further information.

New consumer rights legislation and its impact on your business

The Consumer Rights Act 2015 (the “Act”) received Royal Assent on 26 March and it is

currently proposed that its main provisions come into force on 1 October this year. The Act

is relevant to all consumers and any person or organisation that sells goods or services

directly to consumers. If your business offers goods or services to consumers, the

implementation of the Act provides a good opportunity for you to review your current terms

and conditions and ensure that they are compliant.

Background

Before the Act, consumer law in the UK was very complicated and difficult to navigate for

lawyers and even more complex for the average consumer to understand. There were no

fewer than ten pieces of legislation relating to domestic consumer law ranging from the

Sale of Goods Act 1979 to the Enterprise Act 2002. Consumer law was also not up to date

with technological changes in the market place and did not sufficiently address issues

arising from internet shopping and downloading of digital content such as apps, music, and

films.

The Act seeks to amalgamate in one place the rules governing consumer rights in the UK.

The Act is split into three parts: Part 1 Consumer contracts for goods, digital content and

services; Part 2 Unfair Terms; and Part 3 Miscellaneous and general provisions. Below is a

summary of the key provisions.

Consumer contracts

In relation to goods, the Act sets out the standards that must be meet (e.g. that goods

must be of satisfactory quality, as described, fit for a particular purpose and so forth) and

the remedies available to consumers for goods supplied under different types of contract

(previously such remedies were inconsistent). Consumers will have thirty days in which to

reject substandard goods and if they reject goods within this time period, they will be

entitled to a full refund. Limits have been placed on the number of times replacement

goods and repairs can be offered before the provider must offer money back to the

consumer and on the extent to which a provider can reduce the amount of a refund where

the goods are not initially rejected (for example, if the final right to reject is exercised by the

consumer in the first six months, no deduction to the refund can be made).

The Act also sets out consumer rights in relation to the provision of services. A service

must be performed with reasonable care and skill, a reasonable price is to be paid for it

and it must be provided within a reasonable time. The consumer has statutory remedies of

repeat performance and price reduction if a service does not comply with the contract. In

addition, information about the service provider or service is now binding. For example, if a

salesperson says something about the service and the consumer then relies on that

statement, that information will be binding (even if it is not included in a written contract).

The Act introduces a new category in consumer law namely, digital content, and sets out

the statutory remedies available to consumers if their digital content rights are not met.

The rights and remedies which are available to consumer cannot be excluded or limited.

Unfair terms

The second part of the Act consolidates, but also adds to, the current laws on unfair

contract terms. If a term of a consumer contract is deemed to be unfair, it will not be

binding on the consumer. A term is considered unfair if, contrary to the requirement of

good faith, it causes a significant imbalance in the parties’ rights and obligations under the

contract to the detriment of the consumer. Schedule 2 of the Act also sets out a non-

exhaustive list of terms which may be regarded as unfair (for example, a term which has

the object or effect of excluding or limiting the trader’s liability in the event of the death of

or personal injury).

Certain terms in a consumer contract are excluded from the “fairness” test. Terms which

specify the main subject matter of the contract or relate to the price of the contract cannot

be assessed for fairness provided that they are transparent (in plain and intelligible

language and (in the case of a written term) are legible) and prominent (if brought to the

consumer’s attention in such a way that an average consumer would be aware of the

term).

Summary

So if your business is providing a service or selling goods directly to the consumer, we

would urge you to review your terms and conditions of sale to check that they are

compliant with the relevant provisions of the Act before it comes into force later this year.

Upcoming

Events

A seminar on the Consumer Contracts

Regulations is planned for the autumn.

Watch this space for more information.

Stone King runs a range of workshops

and seminars on current legal issues.

Click below to see all our upcoming

events.

For further advice, please contact Brian Miller, solicitor and partner in the Corporate &

Commercial Team via email or call 020 7324 1523.

Click here to see all upcoming

events

DISCLAIMER

Please note that RED TAPE legal updates do not constitute, and are not a substitute for,

professional legal advice. Action should not be taken based on these updates without

taking specialist legal advice in individual circumstances.

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© Stone King LLP 2015

This publication is for guidance only. The law and practice

referred to has been paraphrased or précised and should not

be construed or relied upon as legal advice.

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