If you sell goods or services to the public, be aware of your legal obligations under the Consumer Rights Act 2015
Consumers are more likely to speak out about any negative experiences they have had with your business rather than the positive ones. As a small business you therefore need to be able to deal with consumer complaints fairly and in line with legal obligations. This can help protect your reputation and ensure your business grows. It is therefore important for all small businesses to understand consumer rights.
The CRA was introduced to consolidate existing legislation in relation to consumer rights, and to provide new protection. It came into force on 1st October 2015. The key reforms are to improve consumer rights and remedies in respect of goods, services and consumer notices, but also to stop the inclusion of unfair terms in consumer contracts.
Under new consumer rights legislation a “trader” is defined as a person acting for purposes relating to their trade, business or profession; whether personally or through others acting in their name. A “consumer” means an individual acting for purposes which are wholly or mainly outside that individual's trade, business, craft or profession. This means even if you are self-employed if you purchase a product for your business you are a trader and the Consumer Rights Act would not apply.
This distinction is therefore important; a trader will have far less rights than a consumer. However, remember if you want to maintain a business relationship, arguing over this point may cost you in the long run.
The following terms are implied in every consumer contract:
1. That the services will be provided with reasonable skill and care;
2. The services will be performed in line with the information provided about the service and in line with information provided about the business;
3. That a reasonable price will be paid for the services;
4. That the services will be performed in a reasonable time;
5. That goods will be of satisfactory quality;
6. That goods will be fit for the purpose they were sold;
7. That goods will be as described.
This is broadly similar to the position on consumer rights prior to the CRA. However, important changes relate to the provision of information to consumers. Any information said to or written down for the consumer, and which the consumer relies on when entering into the contract, will be contractually binding; even if it is not in any contract signed by the parties later on.
This means that any sales pitch you provide to a consumer could form part of the contract. If you have sales representatives working on your behalf, it is extremely important you provide them with training to ensure that they do not say something they shouldn't, that you are then bound by.
The CRA also provides new statutory remedies, namely:
1. the short term right to reject and receive a full refund. This option must be exercised within 30 days of purchase;
2. the right to receive a replacement or repair. The consumer only needs to allow you one opportunity to repair or replace. The consumer cannot insist on one or the other, so if they seek a replacement but a repair is cheaper, you may be able to undertake the repair;
3. the right to a reduced price if the consumer wishes to keep the product or final right to reject where the replacement or repair is still faulty.
Note that within the first six months of purchase, the consumer does not need to prove the fault was there at the time of purchase. Therefore you cannot reject a complaint on the basis that you do not believe the fault was present at the time of purchase.
Prior to the CRA it was unclear whether digital content was goods or services and the CRA helped clarify this. Digital content is any data produced or supplied in a digital format. This therefore applies to music produced on a CD (tangible) or a download for an MP3 player (intangible). The implied terms are similar to the supply of goods, in that digital content must be of satisfactory quality, fit for purpose and as described. The remedies for digital content are the right to a replacement or repair or the right to a price reduction.
The Trading Standards Institute has produced very helpful guides for traders in relation to consumer rights legislation that can be found here https://www.businesscompanion.info/en/in-depth-guides
So, be aware of the CRA and ensure, as with any business situation, that you don't over-claim (even just verbally!) and then under-deliver.
Laura Pearce, Senior Solicitor at JFH Law