The Consumer Contracts Regulations 2013
Andrew King advises on the incoming legislation and the impact this will have on businesses
The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 come into force on Friday 13th June 2014 and the potential consequences of failing to comply with them could be extremely damaging.
The Regulations apply to contracts between businesses and consumers; they cover contracts entered into at both the business’ premises and those formed away from the premises.
In both situations, the business must provide the customer with various pieces of key information before commencing work under the contract.
In contracts that are deemed to have been entered into away from a business’ premises, there are additional requirements, most notably, the need to provide the customer with details of their right to cancel the contract.
The Regulations give the customer power to cancel the contract within 14 days of it being formed, without needing to give a reason. Should they elect to do so, the customer will be entitled to have any payments they have made returned to them, even if works have already started.
Failing to give the customer the relevant details about their right to cancel carries severe consequences:
1. Firstly, the 14 day period is automatically extended:-
(a) to 14 days after the business eventually provides the customer with details of this right; or
(b) if the information is never provided, to 12 months and 14 days.
The reality of this for businesses is that if details of the right to cancel are not provided properly, the customer could give notice to cancel the contract a year after works started. Even if substantial works have been completed, the customer could demand and would be entitled to have any payments returned to them.
2. Secondly, this failure will now be treated as a criminal offence and the business is liable to being fined up to (currently) £5,000 for flouting the Regulations.
Do the Regulations go too far? Possibly. But the purpose of the Regulations is to offer enhanced protection to the end customer and in certain situations, that protection is needed.
So, what should be done?
Whilst the Regulations are clearly onerous, there is a simple solution – ensure you comply with them.
Businesses that already provide customers with terms and conditions upon being engaged will need to review these documents and update them in order to comply with the Regulations. This can, for the most part, be a template document featuring a number of standard clauses with only certain aspects left to be completed.
For businesses that do not typically provide any contractual paperwork to their customers, the Regulations will change that. Those businesses will need to ensure they have template contract paperwork available which is given to customers at the outset. Whilst this will undoubtedly be something of a culture shock, ultimately these businesses will just need to ensure that they confirm agreement of their quotation in a template contract document, designed to meet the requirements of the Regulations.
Although the Regulations grant customers a 14 day cancellation period, assuming details of this are provided by the business, this does not stop the business from starting work and being paid, so long as another box is ticked. The customer can expressly request the business to start work within the initial 14 day period and if they do – although the right to cancel is not lost – the business would in that circumstance be entitled to be paid for any work carried out up to the point of cancellation. The sensible advice would be to have a template page appended to the contract that the customer can sign, confirming that they wish for works to be carried out immediately.
How can Lennons Solicitors help?
We are able to advise businesses on their new obligations and what they should do, and we have designed three packages, in an effort to serve businesses of all types:
Option 1; Production of a template / skeleton contract and business terms, together with guidance notes for self-completion by you.
Option 2; Review of your existing contract and business terms and revision of the same to ensure compliance with the Regulations, together with guidance notes for self-completion.
Option 3; Production of a bespoke contract and business terms, together with guidance notes for self-completion of those clauses that require completion in each individual contract.
It is essential that you act now, as doing nothing is clearly not an option.
Andrew King is a director and heads up the firm’s Dispute Resolution department, and will be happy to discuss the Regulations with you as well as the options above, so that you can decide which is right for you and your business.
Contact Andrew today on 01494 773377 or by email at email@example.com.