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Commercial Contracts

Seller Beware: Change in Consumer Contract Regulations from 13 June 2014

From 13 June 2014, new Consumer Contract Regulations will replace the existing regulations which are commonly known as the distance-selling and doorstop-selling regulations.  Find out whether your business is ready. 

  • Why the change?

      The idea behind the changes which will implement the EU Consumer Rights Directive is to give consumers clarity about their rights when buying and selling in Europe.   It is particularly important for the growing online selling market; any business trading online should take careful note.

  • Will it affect my business?

      The regulations will impact contracts made between traders and consumers.  A ‘trader’ includes those who sell goods, services or digital consent to a consumer.  A ‘consumer’ is defined as an individual acting for purposes that are wholly or mainly personal – it therefore will not catch an individual acting within the scope of their trade or profession. 

      The law will have implications for traders who sell to consumers:

      • by distance contracts, such as by phone or online;
      • off-premises, including the consumer’s home; and
      • on-premises, such as in a shop.  
  • What are the changes?

      The significant changes are as follows:

      Cancellation and Cooling off

      Consumers must be informed of their right of cancellation.  If they are not informed, any cancellation period will be suspended until the customer is made aware.  If the customer is not told at all, they will have an automatic right to cancel the contract for up to one year.  There will also be a 14 day ‘cooling off’ period, which has extended the existing 7 day period. 

      Provision of information

      Online order buttons must be labeled with wording to the effect that an order will result in an obligation to pay.  There will also be a prohibition on use of pre-ticked default boxes for additional payments. 

      There are detailed provisions regarding information about the goods which have to be relayed to the consumer and how this is to be provided.  The amount of information that needs to beprovided has more than doubled for distance and off-premises sales when compared with the existing distance selling regulations. 

      Refunds

      Refunds to consumers must be made within 14 days of receipt of the goods. 

      Digital Content

      For sales of digital content, information such as the functionality and compatibility of the digital content must be provided, including any restrictions on the content. 

      Premium rate helplines

      These are no longer permitted and customers can only be charged at the standard rate.  

  • What does it mean for my business?

      It is strongly advised that your existing standard consumer contracts and terms of business are reviewed to ensure they are in compliance with the new regulations.  Pay particular attention if your business is largely in the medium of online retail.  The law is catching up with this fast paced growth area.  

  • What if I don’t comply?

      Failure to comply with the new regulations might make your contracts unenforceable as against the consumer.  Non-compliance could also result in the right of the customer to cancel a contract being automatically extended to one year beyond the date at which it would have ended.  This would mean a great deal of uncertainty over the return of goods.