How changes to contract rules could affect your business

For a goods contract, the cancellation period is 14 days starting from when the goods are received. For the provision of services, the cancellation period is 14 days starting from when the contract is entered into, but, if the customer isn’t told that they have a right to cancel (including the procedures to exercise the right to cancel) as part of the pre-contract information, then the 14 day period is extended to 14 days from the date that you tell them about the right to cancel.

It might also interest you to know that not providing information about the right to cancel is a criminal offence.

As you would expect, some contracts are exempt from the cancellation rights, including urgent household repairs and bespoke and customised goods, but you should take care in checking what the exemptions actually cover.

The regulations state that a business must not begin to supply services until the cancellation period expires. If a business does supply services before this date, and the consumer cancels the contract, then they will have no obligation to pay for the work that has been undertaken.

You might find this to be counterintuitive in a world where consumers are looking for increasingly quick turnarounds, but there is a solution. A business can begin to supply services early if the consumer has made an express request in writing for them to do so. If you get an express request to start straight away (in circumstances where you have complied with the information requirements) and the consumer then cancels during the 14-day period, they will have to pay costs incurred up to the point of cancellation.

A whistle stop tour of some of the other changes includes:

  • Customers must be provided with a copy of the signed contract or with confirmation of the contract in writing;
  • Unless agreed otherwise, goods should be delivered with undue delay and within 30 days;
  • Goods remain at the risk of the trader until they are in the consumers? possession, or that of a person delegated to receive the goods (so no more leaving them on the doorstep!); and
  • Customers must be provided with a basic rate telephone number for post contract queries.
In this changing legal landscape, it is important to ensure that you have reviewed your business processes and documentation, including your contracts and communications material. A huge number of businesses will be affected and it will undoubtedly change how some have to interact with customers and the processes they will need to follow to make sure they are protected.

Diane Yarrow is Partner, Corporate & Commercial at B P Collins LLP.

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