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under an organised
distance sales or service provision scheme run by the supplier; and
This will cover, for example, sales made through a call centre or from a
web site. One-off contracts concluded at a distance are not intended to
be caught by the Regulations.
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where the supplier
communicates with the consumer without ever coming face to face with
the consumer up to and including the moment at which the contract is
concluded (i.e. by 'distance communication').
Means of distance communication would include:
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unaddressed or
addressed printed matter (this could include leaflets dropped through
letter boxes);
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letters;
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press advertising
with order forms;
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catalogues;
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telephone with or
without human intervention;
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e-mail
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fax
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television (teleshopping)
Exempt distance contracts
The
Regulations do not apply to all distance contracts and there are a
number of exemptions from some or all of the provisions of the
Regulations.
The
Regulations do not apply at all to:-
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most contracts for
the sale or transfer of land or for building on land, except short
rental agreements;
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contracts for the
supply of financial services;
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contracts
concluded by means of an automated vending machine or automated
commercial premises;
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contracts by
telephone through the use of public pay-phones; and
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contracts
concluded at auction.
However, there is a proposal for an EU Directive relating to the sale of
financial services at a distance.
Parts
of the Regulations do not apply to:-
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contracts for the
supply of food, beverages or other goods intended for everyday
consumption supplied to the consumer's residence or to his workplace by
regular roundsmen; and
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contracts for the
provision of accommodation, transport, catering or leisure services,
where the supplier undertakes, when the contract is concluded, to
provide these services on a specific date or within a specific period.
The
exemption is in respect of the provisions relating to:
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information given
to the consumer prior to the conclusion of the contract;
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written
confirmation;
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cancellation
rights;
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recovery of money
paid by the consumer;
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return of goods
by the consumer after cancellation;
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goods given in
part exchange; and
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mandatory
performance of the contract within 30 days.
Each of these provisions is discussed in more detail below.
What are the requirements of the Regulations?
The
Regulations require a supplier to:-
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give consumers
certain information prior to conclusion of the contract;
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give consumers
confirmation in writing or in another durable medium which is available
and accessible to the consumer (e.g. e-mail), of the prior information
and also provide consumers with additional information (e.g. in respect
of cancellation rights). The term “in writing” is used as a convenient
shorthand and references in this article to confirming information “in
writing” should be read as including “or in another durable medium
which is available and accessible to the consumer”;
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repay sums paid by
consumers within a certain time period; and
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perform the
contract within a certain time period.
Prior information
A
distance contract will not be enforceable against a consumer unless the
supplier has provided to the consumer in good time prior to the
conclusion of the contract the following information:-
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the identity of
the supplier and (where the contract requires payment in advance) the
supplier’s address;
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a description of
the main characteristics of the goods or services;
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the price of the
goods or services, including all taxes;
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delivery costs,
where appropriate;
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the arrangements
for payment, delivery or performance;
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the existence of a
right of the 7 day cooling off period;
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if the consumer is
to use a premium rate telephone number, the cost of the call must be
specified;
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how long the offer
or the price remains valid; and
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the minimum
duration of the contract in the case of a contract to supply goods or
services continuously (e.g. in a contract for a mobile phone or for
cable TV services), or recurrently (e.g. in a contract with a monthly
book club).
This prior information must be provided in a clear and comprehensible
manner which is appropriate to the means of distance communication
used (e.g. if the customer has contacted the supplier by e-mail, it may
be reasonable for the supplier to provide the prior information by
e-mail).
If
a business cold calls consumers by telephone, there are special rules
regarding any distance contract concluded during the course of the
conversation. The contract will not be enforceable unless, at the
beginning of the conversation, the supplier has made its identity and
the commercial purpose of the telephone call explicitly clear.
In
the case of a dispute, the supplier must prove that the information was
provided in accordance with the Regulations. However, this requirement
should not cause too many difficulties as it can be built into the
telescript quite easily and, in any case, most suppliers operating over
the phone would have to provide such information in order to comply with
data protection legislation.
Written confirmation and additional information
Suppliers must provide the consumer with confirmation of the prior
information otherwise they will not be able to enforce the distance
contract. This confirmation must be in writing.
In
addition to confirming the prior information, the supplier must also
provide the following information to consumers in writing:-
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the name of the
supplier and, if payment is required in advance, his address;
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a statement that
the consumer has a right to cancel the contract if he wishes and how
this right can be exercised;
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details of the
cancellation process to enable the consumer to cancel the contract,
including the provision of the name and address of the person to whom
the consumer should send the notice;
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whether the
consumer or the supplier is responsible for the cost of returning the
goods to the supplier if the consumer cancels;
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the geographical
address of the place of business of the supplier to which the consumer
may address any complaints;
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information on any
after-sales services and guarantees; and
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the conditions for
cancelling the contract, where it is of an unspecified duration or a
duration exceeding one year.
This information must be given to the consumer either:-
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prior to the
conclusion of the contract, or
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in good time
before or during the performance of the contract and, at the latest, at
the time of delivery where goods not for delivery to third parties are
concerned. This means that where consumer A orders goods to be
despatched to consumer B, the information must be given to consumer A
prior to the conclusion of the contract.
The
supplier in a contract for the supply of services shall not be subject
to the obligations to provide additional information where those
services are supplied on only one occasion and are invoiced by the
operator of the means of distance communication. However, the supplier
shall take all necessary steps to ensure that the consumer in such a
one-off contract is able to obtain the supplier’s geographical address
and the place of business to which the consumer may address any
complaints.
Right to cancel
The
consumer can cancel a distance contract at any time during the
“cancellation period” by notifying this intention to the supplier in
writing.
A
contract which is cancelled must be treated as if it had never been
entered into by the consumer. For example, if the consumer has entered
into a credit agreement in order to purchase the goods, that agreement
must also be cancelled at the same time as the distance contract.
The
cancellation period referred to above varies depending on whether
the prior information has been confirmed in writing. The
following is an outline of the various cancellation periods that may
arise:-
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where the prior
information is confirmed in writing before delivery of the goods
or before conclusion of the contract for services, the
cancellation period is seven working days beginning with the day after
the day on which the goods are delivered or the day after the day on
which the contract for services is concluded;
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where the prior
information is confirmed in writing before the end of the period of
three months beginning with the day on which the goods are
delivered or the contract for services is concluded, the cancellation
period is the period of seven working days beginning with the day after
the day on which the confirmation of the prior information is given;
Example
– the prior information is confirmed in writing to a new customer three
weeks after he placed an order. The cancellation period will be seven
working days from the day after the date the written confirmation was
provided. However, if the prior information was provided more than three
months after placing the order, see below.
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where the
obligation to give written confirmation of the prior information is
not fulfilled within three months beginning with the day on which
the goods are delivered or the contract for services is concluded, the
cancellation period is the period of three months and seven working
days from the day after the day on which the goods are delivered or the
contract for services is concluded.
Exceptions to the right to cancel
Unless the parties have agreed otherwise, the consumer will not
have the right to cancel in respect of certain distance contracts. This
applies to the following contracts:-
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for the provision
of services, if the performance of the contract has begun with the
consumer’s consent before the end of the cancellation period;
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for the supply of
goods or services which are priced according to fluctuations in the
financial market and cannot be controlled by the supplier;
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for the supply of
goods which by means of their nature cannot be returned (e.g.
personalised goods) or are likely to deteriorate or expire rapidly
(e.g. dairy products);
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for the supply of
audio or video recordings or computer software which were unsealed by
the consumer;
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for the supply of
newspapers, periodicals or magazines; or
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for gaming and
lottery services.
Recovery of money paid by consumer
On
the cancellation of a contract, any sum paid by the consumer must be
repaid as soon as possible and, in any case, within thirty days of
cancellation. The supplier cannot impose any charge upon the consumer
for the exercise of this right. However, the supplier can impose a
reasonable charge to cover postage costs incurred by the supplier where
it bears the cost of the consumer returning the goods if the contract
provides for this and the consumer gets notice of this in advance as
part of the written confirmation relating to the right to cancel.
Where the supplier wishes to send substitute goods (e.g. where the
original goods ordered are not in stock, but similar goods are
available), the supplier must not only have provided for the possibility
of sending substitute goods in its contract so that the consumer was
informed that this could be a possibility but, in the case of the
consumer cancelling the contract and returning the goods, the supplier
must bear the cost of such return.
Return of goods by consumer after cancellation
If
the consumer has, before cancelling the distance contract, acquired
possession of the goods, the consumer will be under a duty to restore
those goods to the supplier and, in the meanwhile, to retain possession
of the goods and take reasonable care of them. This duty to take
reasonable care ends if the consumer delivers or sends the goods at his
own expense although the consumer is under no obligation to do so except
at his own premises and in pursuance of a written request by the
supplier.
If,
within twenty-one days following cancellation of the distance contract,
the supplier requests the consumer to return the goods and the consumer
unreasonably refuses or unreasonably fails to comply with the request,
the consumer’s obligation to retain possession and take reasonable care
of the goods continues until he delivers the goods to the supplier.
If
the supplier fails to request the return of the goods within twenty-one
days following cancellation of the distance contract, the consumer’s
obligation to take reasonable care of the goods ceases at the end of the
twenty-one day period.
Where the supplier is holding any sum as security, the consumer is not
under an obligation to return the goods after cancellation until the
supplier discharges any duty on him to release the security under the
Regulations.
Goods given in part-exchange
In a situation where the supplier had agreed to take goods in
part-exchange and those goods have been delivered to him, if the
consumer cancels, the supplier must return the part-exchange goods in a
condition substantially as good as they were delivered within ten days
of the cancellation, otherwise the consumer is entitled to a sum equal
to the part-exchange allowance. If no part-exchange allowance was
agreed, the sum shall be what would be reasonable to allow for the
part-exchange goods if no notice of cancellation had been served.
Performance of the contract
Unless the parties agree otherwise, the supplier must perform the
contract within thirty days from the day after the consumer sent his
order to the supplier. If the supplier is unable to perform the contract
within this period, he must inform the consumer and repay any sum paid
as soon as possible (and in any event within 30 days). A contract which
is not performed within the 30 day period shall be treated as if the
consumer never entered into it, but the consumer will still have
remedies for non-performance. This means that if a supplier is unlikely
to be able to perform its obligations within 30 days, then it must
specifically provide for this in its contract and make this fact clear
to the consumer before the contract is entered into. The supplier may
perform the contract by substitute goods or services of equivalent
quality and price if the contract provided for this possibility and the
supplier gave the consumer the prior information in the appropriate way.
Payment by card
Where fraudulent use has been made of a consumer’s payment card in
respect of a distance contract then the consumer will be entitled to
cancel any payment which has been made as a result of such fraudulent
use. It is interesting to note that the Regulations refer to “payment
card” and not simply credit card. This means that debit cards, charge
cards and store cards will be afforded protection under the Regulations
as well as credit cards.
Inertia selling / unsolicited goods
A
person who, having sent in the course of business unsolicited goods to a
person with a view to the recipient acquiring them but who has neither
agreed to acquire or return the goods, makes a demand for payment or
threatens legal proceedings to get payment will be guilty of an offence.
The recipient of such unsolicited goods may use, deal with or dispose as
if they were an unconditional gift.
No
contracting-out
Any
term in a distance selling contract which is inconsistent with the
protection of the consumer as set out above shall be automatically void.
Consequences of breach
If
a supplier is in breach of the restrictions on the use of means of
distance communication, he can be sued for compensation by a consumer
who has suffered damage as a result of the breach. The power to consider
complaints and seek court orders for compliance with the Regulations
rests with the Director General of Fair Trading.
Summary
The
most important provisions of the new Regulations are that consumers are
now entitled to:-
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Receive clear
information about goods and services before deciding to buy;
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Confirmation of
this information in writing;
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A cooling off
period of seven working days in which the consumer can withdraw from
the contract; and
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Protection from
credit card fraud.
The
full text of the Regulations is available at
http://www.legislation.hmso.gov.uk/si/si2000/20002334.htm. |
