The Consumer Rights Act 2015 and the Potential Litigation Risks

Consumer-facing businesses have less than six months to prepare for the new Consumer Rights Act (CRA) and the increased risk of complaints and litigation which could result from the new laws, says leading law firm Irwin Mitchell.

In March 2015, the CRA received Royal Assent, with the effect that, when its terms come into force later this year, 2015 will see a dramatic overhaul of consumer protection law.

Consumer protection law governs the relationship between a “trader” (a person, partnership or corporate entity acting for purposes relating to their trade, business craft or profession), and a “consumer” (an individual who, in their dealings with a trader, is not acting for the purpose of a business but acting in their own personal capacity).

Consumer facing businesses will need to be aware of the changes coming into force later this year, and the potentially fundamental changes to their business practices that may be required.

The CRA replaces eight existing statues, including the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982. It introduces major reforms to a number of areas, including:

• Supply of goods - Goods must: be of satisfactory quality; be fit for purpose; match the description, sample or model; and be installed correctly. Consumers will also have a short-term right to reject goods that are faulty or not as described within 30 days; a right to request that faulty or not as described goods are repaired or replaced; or, if repair or replacements is not available or is not provided, the consumer can claim a price reduction.

• Supply of services - Services must: be carried out with reasonable care and skill; provided at a reasonable price (where the price is not agreed beforehand); be carried out within a reasonable timeframe (again, where not agreed beforehand). Further, information provided to the consumer (e.g. quotations, timescales) will be binding where relied upon. If a trader fails to meet these required standards, the consumer is entitled to repeat performance, to be carried out at no cost to the consumer, within a reasonable timeframe and without causing significant inconvenience. Where this is not possible, a price reduction can be claimed.

• Digital Content - Digital content (defined as “data which are produced and supplied in digital form”) must be: of satisfactory quality, fit for a particular purpose, and as described. If a trader fails to meet these required standards a consumer will initially have the right to repair and replacement, and secondly (if the remedies of repair and replacement are not possible, or not carried out within a reasonable time without significant inconvenience) the right to a price reduction. The consumer may, in the alternative, be able to: (1) claim for damages, (2) receive a refund, (3) force the trader to fulfil the contract, or (4) withhold payment for the product.

• Unfair Contract Terms - A term is deemed to be unfair: “if, contrary to the requirement of good faith, it causes significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer”. Any written terms must also be “expressed in plain and intelligible language and to be legible”.

Highlighting the litigation risks that businesses should be aware of, Leigh Callaway, Commercial Litigation Associate comments: