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New Consumer Contracts Regulations Come Into Force
On 13th June 2014 new rules and penalties will come into force which affect all businesses which deal with consumers. Here is a brief summary:
General Changes
- Traders must seek the consumer’s express consent before taking any additional payments (for example, pre-ticked boxes will not be permitted).
- Traders must, unless the consumer agrees otherwise, deliver any goods purchased within 30 calendar days.
- Traders must not make the consumer use a premium rate telephone line to contact the trader about an existing contract.
On Premises Contracts
The rules introduce a new list of pre-contract information that a trader must give or make available to a consumer under a contract concluded on the trader’s premises. (The information is not required in respect of day to day transactions which are performed immediately.)
Distance and Off Premises Contracts
The rules:
- Extend the list of pre-contract information that a trader must give to a consumer (there are some differences between distance and off premises contracts).
- Introduce new rules on the cancellation of contracts for the supply of digital content.
- Extend the statutory cancellation period (sometimes known as the cooling off period) to 14 calendar days.
- Where a consumer has a right to cancel a contract, require the trader to provide the consumer with a model cancellation form.
- Extend the cancellation period to, broadly, one year if the trader fails to provide certain pre-contract information.
- Require online traders to make it clear (for example by labelling the payment button) where proceeding with the transaction will trigger a payment.
- Require a consumer to return goods within 14 calendar days of cancelling the contract.
- Allow the trader to withhold a refund until the goods are returned (or evidence of their return is provided).
- Allow the trader to deduct an amount for the diminished value of the goods when refunding payment.
Service Provider Cannot Exercise a Lien over Electrical Database
Your Response Limited v Datastream Business Media Limited
If you provide a service which involves storing and/or manipulating your client’s data, don’t think that you will be able to withhold the data to secure payment of your fee. In a case concerning the payment of outstanding fees, the Court of Appeal has held that the service provider could not exercise a common law lien over the electronic database it had managed for the defendant publisher. The defendant had engaged the service provider to hold and maintain its database for subscribers. The contract was silent about how the contract could be terminated and what was to happen to the database when it ended. The Court of Appeal’s decision confirms that it is not possible to exercise a common law lien over intangible property and also illustrates the reluctance of the Courts to treat information in itself as property.
Beware Repudiatory Breach Claims on Termination
Vi Vergo Fuels Limited v Redhall Engineering Solutions Limited
This case required the Court to rule on a complex dispute concerning delay in termination in a mechanised piping contract on an engineering product.
While it rejected large parts of the contractor’s claim for an extension of time, the Court found that the employer had not been entitled to terminate the contractor’s engagement for failing to proceed regularly and diligently. Instead, the employer’s purported termination was itself a repudiatory breach, which the contractor had accepted.
The Court’s decision is based largely on the facts but the Judgment underlines once again the danger of terminating for an alleged repudiatory breach. If a Court finds that there was no such breach, the purported termination itself may be an act of repudiation that can be accepted by the other party.