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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. |
