Opinion

Contracting with consumers? Being upfront matters

23rd May 2019

Contracting with consumers? Being upfront matters

Consumer rights are well publicised in the UK, but did you know that by law, businesses are usually required to provide certain information to consumers before they even enter into a contract? This is otherwise known as the pre-contract information requirements. Get it wrong and your business could pay a hefty price.

What are the pre-contract information requirements?

The scope of the information that you must provide to a consumer before a contract is formed is extensive. Examples of some general themes that cut across the requirements include price and any promotional offers, a description of what is being sold and the identity of the trader.

However, many of the requirements will be dictated by:

  • what you are selling i.e. goods, services, digital content or a combination of the above; and
  • how your business contracts with consumers i.e. on-site, off-premises, online, by telephone or by other means

Always remember that there are also sector-specific requirements that may apply to your business, such as those for finance agreements that are made in conjunction with goods, services or digital content.

Where do the pre-contract information requirements come from?

The main rules are set out in the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 and other associated regulations.

The 2013 Regulations stem from and implement European legislation. Although the UK’s departure from the EU is unlikely to have an immediate impact on consumer rights, it is worth keeping up to date with any changes that may arise so that your business is prepared.

When do the pre-contract information requirements apply?

Most, but not all, contracts between a consumer and a trader will come within the 2013 Regulations.  Defined broadly:

  • a consumer is an individual acting for purposes outside of their trade, business, craft or profession; and
  • a trader is someone acting for the purposes of their trade, business, craft or profession

There are limited types of consumer contracts that are excluded from the 2013 Regulations. These include contracts for residential lettings, package holidays and timeshare. However, most of these types of contracts are governed by sector-specific legislation that protects the consumer.

How must the information be provided to consumers?

In all cases, the pre-contract information must be provided in a way that is clear and transparent before the contract is entered into with the consumer.

However, the way in which the information must be delivered will vary depending on the type of contract. For example, it is acceptable when concluding contracts by telephone to provide most of the pre-contract information verbally.

 

Why do the pre-contract information requirements matter?

Getting the requirements wrong could prove to be a costly mistake for your business. There are a range of possible consequences, including: 

  • the consumer could, in certain cases, have extended cancellation rights
  • the consumer could bring a claim against you for breach of contract
  • you could face allegations of unfair commercial practice
  • you could face enforcement action from your local trading standards authority
  • you could, in certain cases, be guilty of a criminal offence and be subject to an unlimited fine

What to do next

The pre-contract information requirements are complex and can be difficult to navigate.  No two businesses are the same and one simple change, such as a move to online trading, could mean you need to re-consider the 2013 Regulations.

Always consider seeking legal advice on the pre-contract information requirements and how the rules apply to your business. For more information, contact a member of the Higgs & Sons Commercial Team on 0345 111 5050.

 

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