Consumer Law I Assignment (1) 2016 PDF

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‘The Consumer Rights Act 2015 promised much but delivered little’. Critically discuss the above statement. The Consumer Rights Act1 received royal assent on 26th March 2015. Coming into force on 1st October 2015 in order to establish a new framework consolidating several pieces of already existing UK Consumer legislation, including contracts for goods and services; digital content; and unfair terms in consumer contracts. Being described by consumer experts as "the biggest reform to shoppers rights in a generation" 2 after aiming to replace laws that have been in place and untouched for the past thirty years. the act has a direct focus on trader to consumer contracts as opposed to trader to trader or consumer to consumer contracts, with a consumer defined as "an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession."3 and a trader as "a person acting for purposes relating to that person’s trade, business, craft or profession, whether acting personally or through another person acting in the trader’s name or on the trader’s behalf." 4 The Act allows for a wider meaning of the term 'trader' and 'consumer', with consumer extending to individuals who enter into contracts for both personal or business reasons, and trader extending to government departments and public sector authorities. In addition, the act also make it more accessible for small and medium-sized enterprises to challenge anticompetitive behaviour through the Competition Appeal Tribunal (CAT), and helped to consolidate powers relating to breaches of consumer law. The Act is split into three distinct parts:   

consumer contracts for goods, digital content, and services; unfair terms; and other miscellaneous provisions.

Part 1 is concerned with consumer contracts for goods, services and digital content. Prior to the Consumer Rights Act, the law on contracts for the supply of goods was set out in a number of pieces of legislation5, including the Sale of Goods Act6, the Supply of Goods and

1 The Consumer Rights Act 2015. 2 Katie Morley, 'New Consumer Rights Act: what is means for you' The Telegraph (30 September 2015) < http://www.telegraph.co.uk/finance/personalfinance/11901852/New-Consumer-Rights-Act-what-it-means-foryou.html> accessed 12 January 2016. 3 The Consumer Rights Act 2015 s2(3). 4 The Consumer Rights Act 2015 s2(2). 5 Woodroffe G and Lowe R, Woodroffe and Lowe’s Consumer Law and Practice, (9th edn, Sweet & Maxwell, 2013) 39. 6 The Sale of Goods Act 1979.

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Services Act7, and the Supply of Goods (Implied Terms) Act.8 The various legislation all in all provided that goods are required to meet specific standards, such as satisfactory quality 9, match their description10, and be fit for their purpose11. Although amended by subsequent legislation the Supply of Goods (Implied Terms) Act still remained the basis for law relating to the sale of goods. However, the SGA previously achieved through a variety of implied rights, which has caused confusion among consumers and resulted in a great deal of case law on the matter. For example in the case of Harlington & Leinster v Christopher Hull Fine Art12, the claimant purchased a painting described in an auction catalogue. After the sale the buyer discovered the painting was a fake. An action was brought under s13 SGA as the painting was not as described. It was held: after sending people to inspect the painting this meant the sale was no longer by description and therefore the buyers had no protection. Part 2 of the new Consumer Rights Act focuses on the law surrounding unfair terms. Although the test for 'unfair terms' remains the same, as set out in the Unfair Contract Terms Act 1977 13, the act did make significant changes to the law on unfair terms, with additions to the so called 'grey-list'14; adjustments to the fairness test15; the inclusion of notices; and changes to relevant terms, including prominence and transparency16. Part 3 is concerned with other miscellaneous provisions, ranging from changes in competition law, with schedule 8 amending the Competition Act 199817; the law on secondary ticket sales; and the duty for letting agents to publicise their fees.

Before the enactment of the Consumer Rights Act, there was a universal agreement that the current legislation on UK Consumer law was far too complex. While consumers were safeguarded by the Sale of Goods Act and the Supply of Goods Act, it was scattered among several pieces of legislation. The Consumer Rights Act aimed to rectify the complexities of UK Consumer Law and make rights more accessible to the everyday consumer 18 and result in fewer disputes being litigated, after the consolidation into one single act. The Consumer 7 The Supply of Goods and Services Act 1982. 8 The Supply of Goods (Implied Terms) Act 1973. 9 The Sale of Goods Act 1979 s14(2). 10 The Supply of Goods (Implied Terms) Act 1973 s13. 11 The Sale of Goods Act 1979 s14(3). 12 Harlington & Leinster v Christopher Hull Fine Art [1991] 1 QB 564. 13 The Unfair Contract Terms Act 1977. 14 The Consumer Rights Act 2015 Schedule 2. 15 The Consumer Rights Act 2015 s62. 16 The Consumer Rights Act 2015 s64. 17 The Competition Act 1998. 18 Elizabeth Ovey, 'The Consumer Rights Act 2015: clarity and confidence for consumers and traders?[2015] Volume 30 Issue 8 8 JIBFL 504.

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Rights Act also aimed to address the issues surrounding the categorization of digital media within the current law system19. In recent years, the consumer has become more reliant on digital media, and while the nature of which the consumer purchases their products has changed drastically, the legislation surrounding it has not20. There were also several inconsistencies with the implementation of various European Union (EU) Legislation and pre-existing UK Legislation that needed clarification after numerous judgements from the Court of Justice of the European Union (CJEU) questioned the impact of the Unfair Terms in Consumer Contracts Directive21. Other provisions brought into force by the CRA also aimed to introduce changes affecting the financial services, by insuring that firms terms and conditions and their communication with consumers comply with the CRA 22. As you can see, the Consumer Rights Act 2015 aimed to rectify a number of issues within pre-existing legislation which many agree was in great need of reform. But did it deliver?

Consumer Rights Act 2015 Part 1: Part 1 of the CRA covers consumer contracts in relation to the supply of goods and while the CRA does provide some additional provisions to those previously stated in the Sale of Goods Act 1979. One example being that, where a trader agrees to the installation of the goods they are supplying, the installation must be done correctly. Some 'new' provisions set out in the CRA appear to simply be an extension of rights already available in the SGA. Under the CRA where goods are supplied by reference to a model such as a TV or a car in a showroom, the goods must match the model. This simple appears to be a reflection of the similar longstanding rule of sale by sample available under the SGA.

Certainly the most notable impact the CRA has in relation to the supply of goods is the new system of remedies it provides consumers when a trader breaches the standards contained in the Act. Replacing the two-tier system previously under the Sale and Supply of Goods to Consumer Regulations23 the new system allows for new a three tiered structure. Firstly, the

19 Paul Joukador and Rachael Hunt, 'Consumer Rights Act 2015: a step in the right direction' [2015] (PLC UK Law Department). 20 Oliver Bray, 'Digital content under the Consumer Rights Act 2015' [2015] Ent. L. R. 26(8), 271-273. 21 Julie Patient, 'The Consumer Rights Act 2015: a new regime for fairness?' [2015] J.I.B.L.R. 30(12), 643-

648. 22 'UK Consumer Rights Act: Major changes ahead in 2015' (Eversheds: 27 May 2015) accessed 11 January 2016. 23 The Sale and Supply of Goods to Consumers Regulations 2002.

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short term right to reject24, a brand new statutory provision that provides that the consumer has a 30 day time limit to reject the goods from the day they were supplied. The consumer is then able to treat the contract as at an end and request a refund provided he makes the good available for collection for the trader. Secondly, the CRA then allows for a 'right to replacement or repair' "If the consumer requires the trader to repair or replace the goods, the trader must— (a)do so within a reasonable time and without significant inconvenience to the consumer, and (b)bear any necessary costs incurred in doing so."25 Also if the consumer requests the repair or replacement within the 30 day time period, then the short term right to reject will then be paused, and finally, 'the right of a price reduction or final right to reject' 26. Where a request for a repair or replacement is not possible or not provided, the consumer is given the right to either keep the product at a reduced price or return the goods and claim a refund. Although CRA provides this new three tier remedy system, the remedies under s23 and s24 already existed under the SSGCR, so it is difficult to say if the CRA has provided much in the way of new remedies for the consumer or simply consolidated them into one single act. That being said, unlike the SSGCR, the CRA and associated guidance has clarified the issue that consumers only have to accept one replacement or repair before seeking further remedies27. Prior to the CRA, any refund from the trader must have been exercised within a 'reasonable time period'. During its parliamentary stages, the new boundary was set at a '14 day time limit' for traders to provide a refund, including digital content.28 While this does not seem to provide any dramatic change, it is far simple and clearer for the consumer to know exactly what they are owed and when, as opposed to the trader being granted a 'reasonable' time limit. Who is to say what is a reasonable time period? It could be argued that the CRA did not actually provide much in the way of consumer contracts and the supply of goods. While it allowed for the extension of remedies available, such as the short term right to reject, it mainly just covered its tracks by simply consolidating two remedies already in existence under the SSGCR. Although, it did clarify clearly the time period traders need to refund consumers at 14 days. Helping to clarify the standards consumers can come to expect when purchasing goods. 24 The Consumer Rights Act 2015 s20. 25 The Consumer Rights Act 2015 s23(2). 26 The Consumer Rights Act 2015 s24. 27 Mark Smith, 'Consumer Rights Act 2015: What has changed?' (Fieldfisher, 17 September 2015) accessed 12 January 2016. 28 The Consumer Right Act 2015 s20(15).

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Also covered under part one of the CRA is consumer contracts in regards to digital content 29. The CRA is the first piece of UK legislation to tackle consumer rights in regards to digital products and govern digital products as a category in their own right, some argue that this was a major gap in consumer law with no laws available to deal with extremely popular music and video services such as Spotify and Netflix30. The law prior to the CRA was unclear as there courts applied the rights applicable to goods when dealing with digital content in a physical form, such as DVDs or CD's, e.g. it must be of a satisfactory quality, fit for purpose, and match the description provided. But, when it came to intangible digital products such as downloads, the position was less clear and lead to confusion for both consumers and traders as well as resulting in a consumer who has purchase tangible digital content with more rights than a consumer who purchased the same thing in a intangible form (download). Chapter 3 of the CRA aimed to remedy this by introducing rights that will be automatically applied when consumers purchase digital content. The CRA recognises that digital content is often in need of updates and therefore allows for traders or a third party to update the product without consent. Although many of the changes in the new legislation are largely common sense and simply new applications of already existing rights, the ambiguity surrounding the law on digital content is now gone31. Many argue the CRA is a great step forward in legislating the digitalised world we have now, but has the CRA gone far enough and provided all the necessary rights? The new act is yet to touch on a consumers right to sell digital content, nor the law regarding consumer to consumer or business to business contracts, while there is other legislation in place for these types of contracts in other areas, digital content has not yet been addressed in relation to any other contract, leaving some consumers still in the dark. With the rapid development in digitalised content in the modern era, it is unlikely that the CRA will have a particularly long shelf life32. Part 1 of the new legislation also governs the supply of services as well as goods 33. Initially, it was understood that financial services would not fall within the scope of the new legislation, however the act states that the regime applies to all service contracts between traders and 29 The Consumer Rights Act 2015 Chapter 3. 30 Katie Morley, 'New Consumer Rights Act: what is means for you' The Telegraph (30 September 2015) < http://www.telegraph.co.uk/finance/personalfinance/11901852/New-Consumer-Rights-Act-what-it-means-foryou.html> accessed 12 January 2016. 31 Jackie White, 'Consumer Rights Act 2015 - a new regime for digital content' [2015] Issue 8 39 CSR 8, 59. 32 'Digital content under the Consumer Rights Act 2015' King & Wood Mallesons (6 October 2015) < http://www.kwm.com/en/uk/knowledge/insights/digital-content-under-the-consumer-rights-act-201520151006#> accessed 13 January 2016. 33 The Consumer Rights Act Chapter 4.

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consumers34. Although the CRA largely reflects, rather than changes the current protection for a consumer, it introduces some new regimes that could impact on some financial service firms, provided their clients are considered consumers. One such example being remedies for non-conforming services, such as the right to request a repeat performance35 or the right to a reduction in price36. On the one hand the CRA provides much more effective protection for consumers and clarifies the stance in the event that goods are manufactured and then supplied to the consumer is in fact a contract for goods, not a contract for service. 37 A position that prior to the CRA was unclear to consumers and traders. On the other hand, the CRA goes as far as providing definitions for 'a trader', 'a consumer' and 'digital content' but neglected to provide an effective definition for 'services'. The act also places an additional burden on certain businesses, given that now anything that is written or spoken about the service, could be a term within the contract38, allowing consumers to claim a breach of contract as opposed to misrepresentation.

Consumer Rights Act 2015 Part 2: Part 2 of the CRA provides a much needed single platform for unfair terms for consumers. 39 Previously, protection against unfair terms in consumer contracts was governed by several pieces of legislation40, specifically, the Unfair Contract Terms Act41 and the Unfair Terms in Consumer Contracts Regulations42, but several of these overlapped, making it once again rather confusing for the consumer. Much of the new act is similar to the Unfair Contract Terms Act, providing a term is unfair if -"contrary to the requirements of good faith, it causes a significant imbalance in the parties' rights and obligations to the detriment of the consumer"43. However, there has been some significant changes in the test for fairness, with an increased focus on prominence and transparency. The requirement for transparency largely repeats the current legislation for the term to be "plain and intelligible language"44, but the test for prominence is a new welcome addition, requiring that a term be "brought to the 34 The Consumer Rights Act 2015 s48. 35 The Consumer Rights Act 2015 s55. 36 The Consumer Rights Act 2015 s56. 37 Paul Joukador and Rachael Hunt, 'Consumer Rights Act 2015: a step in the right direction' [2015] (PLC UK Law Department). 38 'Consumer Rights Act 2015: key issues for financial service firms' [2015] PLC UK Financial Services. 39 Eimear O'Brien, 'The UK Consumer Rights Act 2015: unfair contract terms considered' [2015] Comp. & Risk, 4(6), 12-14. 40 Lockett N and Egan M, Unfair Terms in Consumer Agreements' (Chancery Law Publishing, 1995). 41 The Unfair Contract Terms Act 1977. 42 The Unfair Terms in Consumer Contracts Regulations 1999. 43 The Consumer Rights Act 2015 62(4). 44 The Consumer Rights Act 2015 64(3).

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consumers attention in such a way that an average consumer would be aware of the term" 45. There is hope that this will increase simplicity in contractual drafting, while also providing further protection for consumers46 after it was felt that although terms may have been plain and intelligible language it did not necessarily mean the consumer was aware of them. The law in relation to unfair terms is an ongoing saga of varying decisions from the European and UK Courts, specifically in relation to the transparency of terms. Various cases have been referred to the CJEU such as Nemzeti Fogyasztóvédelmi Hatóság v Invitel Távközlési Zrt47 or RWE Vertrieb AG v Verbraucherzentrale Nordrhein-Westfalen48 in regard to whether the terms were transparent enough for the consumer to understand and to assess the interpretation of 'plain and intelligible' in the context of each case49. There was also growing confusion due to the overlap of the Directive and some European case law, domestic courts must take into account the decisions of the Court of Justice of the European Union (CJEU) when interpreting the CRA, so any recent decisions from the European Courts are equally applicable to the interpretation of the CRA and UTCCR, which has now been made more prominent on the face of the act. In addition to this the CRA also provide some additional provisions to the 'grey-list'. The grey list is a list of terms within consumer contracts that may be regarded as unfair. Although a terms can still be regarded as unfair without being included in the grey list and a term included in the list could potentially be regarded as fair, it gives the consumer a an indication of terms that are more likely to be regarded as unfair without seeking jurisdiction. Although the CRA has added three new terms to the grey list, it was not seen as a very substantive change, but more a drafting change when on the whole it remained mostly unchanged from the grey list in the UTCCR. The Consumer Rights Act was considered to be an ambitious piece of legislation, aiming to rectify a number of issues. Firstly with its aim to address new laws on digital media for the first time. The CRA is the first piece of legislation to tackle this ongoing confusion when it comes to digital media, many of the changes are seen by some as common sense but the CRA provided that clarification that we needed, there is now a distinct lack of ambiguity surrounding these issues that can only benefit consumers and traders in the future. One of the 45 The Consumer Rights Act 2015 64(4). 46 Eimear O'Brien, 'The UK Consumer Rights Act 2015: unfair contract terms considered' [2015] Comp. & Risk, 4(6), 12-14.

47Nemzeti Fogyasztovedelmi Hatosag v Invitel Tavkozlesi Zrt [2012] 3 C.M.L.R. 1....