Articles

  • December 2016
    The Truth about Consumer - Business Contracts


    The Consumer Rights Act (CRA) came into force in 2015 which included an update on the Unfair Contract Terms with a view to improving the balance of power, transparency and fairness in consumer – business contracts.

    It has come to light from recent Competition and Markets Authorities  research that over half of UK businesses are not fully aware of the unfair contract rules and as a result may be producing contracts that they believe to be enforceable but which are not.  Thus it may prove useful to remind ourselves of what the CRA says.

    There may be an unfair term which the consumer has the right to contest. Even if the consumer has signed the contract, if it is unfair, it may not be legally binding. The Act includes a ‘fairness test’ which aims to encourage equality between the parties. The Act sets out a list of terms that may be considered as unfair.

    To highlight some examples of where lack of knowledge is apparent is the use of non-refundable deposits which a business may believe is non-refundable in all circumstances. However, there may be situations where the consumer is entitled to a refund of part if not all. In addition, if there is an important term inserted into the contract, this must be clear and transparent to the consumer and if this is not done, it may transpire that the term is ‘unfair’, as it was not clearly explained to the consumer. For example, inserting a significant term into the small print of the contract may be regarded as unfair.

    The CRA also brought in new rules regarding digital content to give similar protection to consumers using online services as for those purchasing goods and services on the High Street. There are also clearer rules regarding what should happen if a service is not provided with reasonable skill and care. For example, the business that provides the service must bring it into line with what was agreed with the customer or, if this is not practical, must give some money back.

    A useful guide can be found at https://www.businesscompanion.info/en/news-and-updates/consumer-rights-act

    For further information please contact Howard Wright at howard.wright@jackamans.co.uk or call 01379 643555.

    This article provides only a general summary and is not intended to be comprehensive.  Special legal advice should be taken in any individual situation.

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