On-Premises and Off-Premises Contracts - Information Requirements
In a recent article we reported on the introduction of the catchily-titled Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, which implement the EU Consumer Rights Directive. The Regulations apply to consumer contracts for goods or services made on or after 13 June 2014.
Certain categories of consumer contract are excluded from the Regulations, the main exemptions being contracts dealing with financial services (such as banking, credit, insurance and personal pensions), contracts for the construction and sale of immovable property, package travel contracts and residential letting contracts. However, consumer contracts which do not fall within one of the excluded categories will be caught by the Regulations (subject to other limited exemptions), such that businesses need to be aware of the information requirements and cancellation rights detailed in the Regulations. Here, we provide guidance on the information requirements applicable to on-premises and off-premises contracts and the issues traders need to be aware of when contracting with customers under the new regime.
Consumer contracts will be classed as either on-premises, off-premises or distance contracts, and different information requirements apply to each category. A consumer contract which is neither an off-premises nor a distance contract will, by default, be classed as on-premises, meaning that even if businesses do not deal with consumers by distance means or in an off-premises context, there are still requirements to be followed in order to ensure compliance with the Regulations.
An off-premises contract is one which there is either:
(a) A contract made in the simultaneous presence of the trader and the consumer, in a place which is not the business premises of the trader;
(b) A contract in which an offer is made by the consumer in the simultaneous presence of the trader and the consumer, in a place which is not the business premises of the trader;
(c) A contract made on the business premises of the trader or through distance communication immediately after the customer has been personally and individually addressed in a place which is not the business premises of the trader and the simultaneous physical presence of the trader and the consumer; or
(d) A contract made during an excursion organised by the trader with the aim or effect of promoting and selling goods or services to the consumer.
The first point to note is that the off-premises definition is broad in scope and, by way of example, will apply to situations such as test drives, on the basis that the test drive involves a face to face discussion between the consumer and the trader, after which it is common for the consumer to immediately enter the dealership and sign up to purchase a car. It can be seen that this scenario falls within the definition at paragraph (c) above. There is a requirement of immediacy, so if the consumer test drives the car, goes home to think about whether or not to go ahead with the sale, and then re-visits the dealership at a later date, there is unlikely to be an off-premises contract.
Similarly, where businesses attend off-premises marketing events to sell particular services, and sign customers up off site, the off-premises rules would apply.
In an off-premises situation, the Regulations require the trader to give the customer a list of detailed information, set out in full at Schedule 2 of the Regulations. The list will include the main characteristics of the goods or services, the identity of the trader, the total price of the goods or services and various other matters including any additional delivery charges applicable, details of the trader's complaint handling policy, information on the right to cancel and the mechanism available, and the existence of any relevant codes of conduct. The list of specified information is comprehensive; these are just a few examples. The information must be given to the consumer in "a clear and comprehensible manner" and, if there is a cancellation right, the consumer must be given a cancellation form.
The Regulations operate so as make it a term of the contract that the trader has complied with the information requirements. In the event that the specified information has not been given, the trader will be in breach of contract. Not only this, it is a strict liability, criminal offence for a trader to fail to provide information to the consumer regarding cancellation rights. Enforcement authorities are under a duty to seek compliance with the information requirements of the Regulations and will also consider complaints regarding breaches.
The Regulations also cover businesses dealing with on-premises contracts. There is one important exception where traders involved in on-premises contracts enter into day-to-day transactions which are completed immediately. This is on the basis that the customer will already be familiar with the goods or services and their cost, so that there is no need to provide the information required by the Regulations. In other, less routine, transactions, however, businesses are required to give consumers the information set out at Schedule 1, to include:
(a) The main characteristics of the goods or services;
(b) The identity of the trader, its address and telephone number;
(c) The total price of the goods or services;
(d) Where applicable, all additional delivery charges;
(e) Where applicable, the arrangements for payment, delivery and performance;
(f) Where applicable, the trader's complaint handling policy;
(g) In the case of a sales contract, a reminder that the trader is under a legal duty to supply goods that are in conformity with the contract;
(h) Where applicable, the existence and conditions of any aftersales services or commercial guarantees; and
(i) The duration of the contract.
Additional information is required where digital content is being supplied.
The Regulations only require businesses to give the information in Schedule 1 where it is not immediately obvious from the circumstances. For instance, information on a trader's business address will not need to be given where the location is evident, and likewise the identity of the trader will not need to be repeated where, by way of example, this is prominently displayed at the premises.
It may be acceptable for a business to "make available" the Schedule 1 information as an alternative to physically giving this to the consumer at the point of sale, but businesses still need to exercise caution as the information will only be "made available" if the customer can reasonably be expected to know how to access it. For instance, providing an elderly person with a generic website address on which the information is set out is unlikely to be sufficient as the business would be expected to know that this means of access would cause problems for the customer.
Again, the Regulations make it a term of the contract that the trader has complied with the information requirements, and the consumer will have an action for breach of contract if the information has not been given. The information itself will also be treated as a term of the contract, so that consumers will have an action in breach of contract if any of the information given is incorrect.
Compliance with the information requirements under the Regulations will be crucial for businesses so as to avoid claims by customers for breach of contract, and therefore businesses should review their sales policies and ensure that the necessary information is being given.
For additional guidance, we encourage our clients to contact the Dispute Resolution Team, who will be happy to assist with any queries which might arise.
Posted on: 15/08/2014
This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.
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