Business Law & Compliance

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How changes to contract rules could affect your business

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The Consumer Contracts (Information, Cancellation and Additional Charge) Regulations 2013 will substitute the current Distance Selling and Doorstep Selling Regulations, and implement a single set of rules for those who sell goods or services to consumers. The change comes as a result of a push to harmonise such rules across the EU.

All consumer contracts for goods and services will be affected by the new regulations. All contracts made on-premises (a sale made at your business premises), off-premises (door to door, sales made at a trade show etc.) and via distance sales (telephone or online sales, including downloads) are caught by the new regulations. The type of contract that you enter into with the consumer dictates what protections the consumer is given and what information you have to provide them with. There are some exceptions, but it is safest to assume that the new regulations are going to apply to your business.

Depending on how you already operate your business, the impact of the regulations could be dealt with by making some administrative and practical changes to your processes and the ways in which you interact with customers. For other businesses, the regulations could have a huge effect on current communications to consumers – including unaddressed or addressed printed matter; letters, press advertising with order forms, catalogues, telephone with or without human intervention, email, fax, and television (teleshopping) – with the resulting cost implications being significant.

The main changes, however, are to the information that a consumer must be provided with before they enter into a contract and to a consumer’s rights to cancel a contract once it has been entered into.

For many businesses this will be information that they already provide, similar to the information required under the Distance Selling Regulations. For example, a consumer ordering online must be given details of your complaints handling policy. There are some new requirements, however, such as a consumer ordering online must expressly acknowledge that placing an order includes an obligation to pay – even if this only comes into effect at the end of a free trial period.

The new regulations highlight that every contract to which they apply will be treated as a term that you have complied with the provision of information. Therefore, a consumer could argue that failure to provide this information was a breach of contract. Whether or not anyone chooses to run that argument remains to be seen, but even if you think that you are already compliant, you should check the information requirements and consider whether you do, in fact, bring the required information to the attention of your customers before they enter into a contract with you.

We are used to the fact that a consumer, who enters into a distance or off-premises contract, has a right to cancel it during a “cooling off” period. The period during which consumers can cancel such a contract for goods or services is being increased to 14 calendar days, which is a significant change to the current seven working days (for distance sales contracts) and seven calendar days (for doorstep sales contracts).

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