Consumer Contracts Regulations

13th June 2014

The new Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 came into force on 13 June 2014 and replaced the old distance selling and door to door selling laws.

Businesses which form distance, off-premises or on-premises contracts with consumers must comply with the changes in order to avoid the sanctions set out in the regulations.  Distance contracts refers to contracts concluded between traders and consumers when they are not physically together (e.g. purchase made online or by telephone).  Off-premises contracts include those contracts formed between traders and consumers at places which are not the usual business premises of the trader and on-premises contracts cover those contracts which are neither distance or off-premises contract.

The main changes introduced by the new regulations are the pre-contractual information requirements and the cancellation periods.

The pre-contractual information requirements vary depending on whether the parties are forming a distance, on-premises or off-premises contract. There is an implied term that the trader has complied with the pre-contract information requirements and failure to comply will mean that the trader is in breach of contract.  The consumer could potentially bring a breach of contract claim against the trader and/or an enforcement authority could apply for an injunction to secure compliance.  In addition, specific consequences apply for failures to comply with certain rules set out in the regulations.

One of the main information requirements for distance contracts is an obligation to be transparent in respect of payment obligations. Businesses will need to disclose the total cost of goods, services or digital content upfront. Furthermore, they will need to seek the consumers’ express agreement of the obligation to pay before they can be bound by the contract. This consent should be obtained by the use of an ‘order with obligation to pay’ button on the businesses’ website.

The old distance selling law required businesses to offer a seven day “cooling off period” during which consumers could cancel distance contracts for any reason. The “cooling off” period has now been extended to 14 days and failure to inform the consumers of this right may result in the cancellation period being extended to up to 12 months. In addition, the new regulations include model cancellation forms which can be used by consumers to cancel distance and off-premises contracts for the supply of goods and/or services.

In summary, the new regulations increase the rights of consumers when forming distance, on-premises and off-premises contracts. Although the concepts of “cooling off” periods and pre-contractual information are not new, they have been extended and must be carefully reviewed by businesses to ensure that their current terms and conditions are compliant.

If you wish to discuss any of the issues raised in this article, would like assistance reviewing your current trading terms or preparing trading terms or for information on any other commercial matters, please contact Rebecca Anforth on 01872 226999 or rebecca@murrellassociates.co.uk.