Consumer Rights Bill

June 2013 saw the publication of the draft Consumer Rights Bill.  The appointment of a Parliamentary Committee to scrutinise the Bill and the volume of responses to the consultation reflect the fact that the Bill raises some serious issues and that there may be many more changes before the Bill goes onto the Statute books. 
 
The twin intentions of the Bill are reform and consolidation.  The need for reform arises because the EU Consumer Rights Directive (2011/83/EU) or “CRD” is due for implementation in the UK in December 2013 (and to be in force by June 2014).  However, most of the CRD’s distance selling requirements will be enacted not through the Act, but through secondary legislation. 
 
The Government’s stated intention for the Bill was to streamline the various consumer rights legislation into one comprehensive source.  The Department for Business, Innovation and Skills ("BIS") estimates that the simplification of several pieces of legislation could save businesses in the UK £9.3million per year in simpler complaint handing procedures.  Thus, many of the provisions are familiar.  For example, goods supplied under a relevant contract must be of satisfactory quality, based on what a reasonable person would expect; they must be fit for purpose (general or communicated particular); they must match the description or a representative model or sample upon which any relevant sale is based; and the trader must have the right to supply the goods.
 
The Bill is intended to harmonise key definitions, which are currently inconsistent across consumer protection legislation (“trader”; “goods”; “digital content”; “consumer”).  The legislation does not extend to the rights and duties currently contained in the Consumer Protection Act 1987.  Subject to that limitation, “consumer” is defined as an individual acting for purposes which are wholly or mainly outside that individual's trade, business, craft or profession. The trader will bear the burden of proving that an individual is not a consumer.
 
The principal areas of reform (considered below) relate to:

1. The remedies for supply of goods (in particular those with digital content) or services;
2. Unfair contract terms;
3. The reform of enforcement powers; and
4. Collective consumer actions for anti-competitive behaviour.
 
The draft Bill introduces the following measures relating to the sale of goods:

• Currently consumers can reject faulty goods until they have been "accepted".  Rejection must take place within a "reasonable time".   Given the notorious uncertainty surrounding this concept, the draft Bill stipulates that consumers will have a fixed time period of 30 days following purchase in which they can reject faulty goods and receive a full refund.
• The draft Bill retains the right to a repair or replacement, but clarifies that consumers need only accept a single repair or replacement before being able to get some money back.
• The Bill provides that traders may not, in the first six months after purchase, reduce the level of refund due to a consumer to take account of the consumer's use of faulty goods unless there is a proven second hand value and an active market for the goods.
• Traders will need to deliver goods without undue delay and within 30 days after the contract is made (unless the trader and consumer agree otherwise).  Goods will remain at the risk of the trader until they come into the physical possession of the consumer.
• The draft Bill aims to consolidate and align the remedies available for goods supplied under different contract types, such as sale, work and materials, conditional sale or hire purchase.
• The draft Bill removes the concepts of implied conditions and warranties and sets out the standards that goods must meet as "statutory rights".

The draft Bill also modernises existing consumer protection by dealing specifically with goods with digital content.  BIS’s perception was that current consumer protection did not keep track with digital business and that the courts struggled to apply the rights found in the sale and supply of goods and services legislation to different types of digital content transactions.
 
Consumers will have a range of rights implied into contracts for the supply of any digital content that they are provided with.  If a trader supplies digital content that does not comply with the statutory requirements, the trader will need to offer consumers the right to a repair or replacement of any non-conforming digital content.  If repair or replacement is not possible, does not resolve the fault, or the trader takes too long or inconveniences the consumer in providing the repair or replacement, it will have to offer the consumer a refund of a proportion of the price paid for the digital content.  The level of refund will depend on the nature of the faulty content (even within the six month time limit that applies to other goods).  There is, however, no limit to the number of repairs or replacements a trader can make to digital content before it must provide a partial refund to the consumer (which is not the case if supplying goods under the draft Bill).  Other statutory rights will include consumer entitlement to an immediate refund of the total price paid for digital content if the supplying trader did not have the right to provide the content to the consumer (dealing with cases of “unlicensed use”) and compensation for damage to consumer property which was caused by digital content (dealing with “virus” cases).
 
In relation to the supply of services, the Bill introduces a new statutory right that services provided must comply with information given by the trader (even if that information does not translate into a contractual term).  It also prohibits a ban on excluding or limiting statutory rights. 
 
The Bill largely reflects the existing provisions of the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999.  Contract terms and notices will only be binding on a consumer if they are "fair". A term will be deemed unfair if it puts the consumer at a disadvantage by causing a significant imbalance in the parties' rights and obligations to the detriment of the consumer. The Bill contains a non-exhaustive list of terms which may be regarded as unfair. 
 
The draft Bill vests a number of consumer law enforcers with various powers.  The draft Bill also introduces stronger safeguards for businesses against these extended powers.  Thus, enforcers will usually be required to give at least two business days' written notice to any business before entering its premises.  
 
Moreover, the draft Bill intends to make it easier for consumers and businesses to take action in the Competition Appeal Tribunal, where there has been a breach of competition law.  
 
All consumer-facing businesses ought to prepare carefully for the implementation of the new regime.  We recommend:

• Review of current practices for dealing with faulty goods, faulty digital content, substandard services, and repair, replacement and refund policies;
• Review of all consumer contracts and notices to ensure their “fairness”;
• Review of all pre-sale descriptions provided to consumers (including adverts or labelling), to ensure that the goods, digital content or services being provided can comply with these descriptions as they will now be included as contractual terms; and
• Costing of updating business practices, amending consumer contracts and training staff for when the draft Bill comes into force.

Prashant Popat QC
 
Prashant Popat QC is a leading specialist in the areas of product liability, health and safety and public inquiries. He combines his work in these areas with a broad commercial litigation practice. Over the past decade Prashant has been retained in the largest and most significant cases in the field of fields of product liability and health and safety.
 
Noted in the Legal Directories in the field of Health and Safety, Chambers and Partners 2013 quote; "Prashant Popat QC is "a class act," who is "eloquent and consistently excellent," according to one source. He is particularly well known for his work in the rail sector and was involved in the Grayrigg inquest into a rail fatality in Cumbria, and in R v Network Rail, the prosecution following the Potters Bar crash." The Legal 500 2012 states; "‘Heavy hitter’ Prashant Popat QC is ‘rightly rated at the top level’; he is ‘an excellent leader in large cases’ and ‘head and shoulders above others’."

Ranked as a leading silk in Product Liability The Legal 500 2012 says; "Prashant Popat QC, who is ‘a stellar performer, truly in a class of his own."
 
Email: ppopat@hendersonchambers.co.uk
 
Noel Dilworth
 
Recommended by the Legal 500 for his work in the fields of product liability, in which he was said to show "fantastic experience" and in commercial property litigation, Noel has also gained particular distinction in commercial and employment law.  His practice has developed across a wide range of fields and industries.  Whether as a lead advocate, or as a member of a team of large-scale group actions, Noel’s industrious work ethic and keen, practical advice have attracted plaudits from a wide range of clients.
 
Noel has worked on various large-scale pharmaceuticals-based claims including Sabril and Seroxat. He also has extensive expertise in vehicle-related product liability cases.

Noel has served as sub-editor in the Kluwer Encyclopaedia of Product Liability
 
Email: ndilworth@hendersonchambers.co.uk