What? Yet more rights for

consumers? Friday, 23 January 2015

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The 2008 Regulations binned much well known consumer law

Average consumer

Transactional Decision

31 Banned Practices

Sorry, none left at £100 but we do have

this one for only £500!

Misleading Actions

Misleading Omission

FOR SALE

One previous owner

Aggressive Commercial Practice

Professional Diligence

Now brace yourself Rodney!

Criminal Conviction

Restraining Order

THE RIGHT TO MAKE A CLAIM

Jennifer Sewell

Consumer’s right to claim

Only relates to payments or contracts made after 1 October 2014

A consumer has a right to claim if three conditions are satisfied

Condition 1

• The contract must be one of the following;

– Consumer buying a service or product (which includes goods)

from a business

– Consumer selling goods to a business (part exchange scenario)

– Consumer making a payment to a business for the supply of a

service

Condition 2

• The business engaged in a prohibited practice in

relation to the product

• In relation to “goods” or digital content the business is

aware that it engaged in a prohibited practice or could

reasonably be expected to be aware of it

Condition 3

• The prohibited practice is a significant factor in the

consumer’s decision to enter into the contract or make

the payment

Condition 2 - Prohibited practice

1. Misleading actions

2. Aggressive practices

These can occur before during or after a transaction

with a consumer to give a consumer grounds to make

a claim

Misleading actions

1. Advertising in such a way that causes confusion

between the product being advertised and the product

of a competitor

2. A failure to comply with a Code of Conduct which the

business has undertaken to comply with and has

indicated on its advertising that it complies with it

Misleading Actions

3. A commercial practice which

i. Contains false information and is therefore untruthful; or,

ii. Its overall presentation deceives or is likely to deceive the

“average consumer” even if the information provided is

factually correct

Misleading Actions

iii. The false information or deception relates to;

– the existence or nature of the product;

– the main characteristics of the product;

– the extent of the trader's commitments;

– the motives for the commercial practice;

– the nature of the sales process;

– any statement or symbol relating to direct or indirect sponsorship or approval of the trader or the product;

– the price or the manner in which the price is calculated;

– the existence of a specific price advantage;

– the need for a service, part, replacement or repair;

– the nature, attributes and rights of the trader;

– the consumer's rights or the risks he may face

Misleading Actions

The action must cause or be likely to cause the “average

consumer” to take a “transactional decision” he would

not have taken otherwise

Aggressive Practices

The use of harassment, coercion or undue

influence to significantly impair or be likely to

significantly impair the average consumer’s

freedom of choice or conduct in relation to a

product.

Aggressive Practices

• Factors that will be considered in determining whether a

practice is aggressive include;

a) its timing, location, nature or persistence;

b) the use of threatening or abusive language or behaviour;

c) the exploitation by the trader of any specific misfortune or

circumstance of such gravity as to impair the consumer's

judgment, of which the trader is aware, to influence the

consumer's decision with regard to the product;

d) any onerous or disproportionate non-contractual barrier

imposed by the trader where a consumer wishes to exercise

rights under the contract, including rights to terminate a

contract or to switch to another product or another trader; and

e) any threat to take any action which cannot legally be taken

A few examples…

A few examples…

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REMEDIES

Rebecca Latus

Remedies

• There must be:-

– A contract

– A prohibited practice - a misleading action or an aggressive

practice

– The prohibited practice must be a significant factor in the

consumer’s decision to proceed

Remedies

• Three possible remedies

– Unwinding the contract

– Discount

– Damages

Business to Consumer Contract - right

to unwind the contract

• Available when

– The consumer states to the trader that they reject the product

– Within the relevant period

– At a time when the product is capable of being rejected

The relevant period

• 90 days starting from the later of either

– The day the consumer enters the contact; or

– The relevant day

Capable of being rejected

• A product may only be rejected if

– In the case of goods, these have not been fully consumed

– In the case of a service, this has not been fully performed

– In the case of digital content, this has not been fully consumed

– In the case of a lease, this has not expired

– In the case of a right, this has not been fully exercised

An example

Effect of unwinding a Business to

Consumer Contract

• The contract ends, releasing both parties from their

obligations

• The trader must give the consumer a refund

• If the contract is for the sale or supply of goods, the

consumer must make them available for collection by the

trader

Business to Consumer Contract - right

to a discount

• A discount may be claimed if

– The consumer has made one or more payments for the product

or at least one payment is still outstanding; and

– The consumer has not sought to unwind the contract

• A consumer may want to claim a discount where

– It is not possible to unwind the contract; or

– The consumer wants the contract to continue with the rest of the

terms unaffected

Consumer to Business Contract - right

to unwind

The same right to unwind applies in Consumer to

Business Contracts

• The consumer may

– Treat the contract as at an end

– Have their goods back, where the trader is able to return the

goods in the same condition as sold, in which case the

consumer must repay the trader what was paid for the goods; or

– If the goods cannot be returned in the same condition, be paid

the amount, if any, that the market price of the goods exceeds

the price the trader actually paid

Right to damages

• The consumer must have suffered

– A financial loss; or

– Alarm, distress or physical inconvenience or discomfort

… that would not have happened if the prohibited

practice had not taken place

What will the damages cover?

• These will compensate the consumer for

– Reasonably foreseeable losses

– Consequential losses only (i.e. there is no compensatory

element)

Defences for traders

These will only apply where the remedy claimed is damages, not where the remedy is unwinding or a discount

• The trader can avoid paying damages if he can prove that – The prohibited practice happened due to

• a mistake

• reliance on information supplied to the trader by another person

• the act or default of a person other than the trader

• an accident, or

• another cause beyond the trader’s control, and

– He took all reasonable precautions and exercised all due diligence to avoid it happening

How are the rights enforced?

• Consumers may bring civil claims

• Other claims such as breach of contract and mistake are

not affected, but no double compensation

George Coyle Rebecca Latus Jennifer Sewell

Partner

george.coylerollits.com

01482 337351

Associate

rebecca.latus@rollits.com

01482 337356

Associate

jennifer.sewell@rollits.com

01482 337368