The new Consumer Rights Act 2015 (‘the Act’) came in to force on 1st October 2015 and applies to all contracts entered into between a consumer and a trader after this date.
It is important to note that the Act only applies to contracts between a trader and a consumer. A trader is defined in the Act as somebody acting for purposes relating to that person’s trade, business, craft or profession, whether personally or through another person acting on their behalf. A consumer is somebody acting for purposes wholly or mainly outside of their trade, business, craft or profession. As such, business-to-business contracts are not caught by the Act.
The Act replaces existing consumer legislation including the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982, and consolidates consumer rights and remedies in respect of goods, services and digital content, as well as unfair terms in consumer contracts. However, it is important to note that the Acts listed above still relate to business to business contracts.
The Act outlines a clearer route for consumers interested in understanding their rights and remedies, and clarifies the periods for the repair, replacement and rejection of goods.
This article concentrates on the impact the Act will have on the sale/purchase of vehicles.
Requirements
The Act states that goods must be:
• of satisfactory quality
• fit for purpose
• as described
• matching any sample
• in accordance with information provided before the contract was agreed
New remedies
The Act sets out an entirely new regime of remedies and is a new “tiered system” of consumer remedies.
1. A consumer has 30 days to reject a vehicle if it detects a default. Whilst the consumer can ask for the vehicle to be repaired or replaced the consumer is not obliged to give the retailer an opportunity to do so. Therefore as a seller you should be aware that if a default is detected and is raised within 30 days you have to provide the consumer with a refund.
2. After 30 days:
i. Stage one: The seller will have one opportunity to repair or replace the vehicle, before moving onto step two. If a repair or replacement is impossible, or the first attempt fails (or the first replacement is also defective), the consumer has the right to step up to the next remedy below. Critically if one defect is repaired and another entirely different defect arises, the consumer will still be able to escalate to step 2 below.
ii. Once the 30 days period has expired, if the “one shot” repair or replacement has not remedied all issues the customer can reject the vehicle and ask for a refund or replacement.
What should be done?
1. Review and amend standard contract terms (including order forms with terms and conditions printed on the reverse) to ensure that:
a. they are compliant with the new Act
b. there are no terms that conflict with the new Act.
2. Any warranties and terms and conditions should clarify that the consumer’s statutory rights are not affected
3. Consider how your business will manage cash flow, particularly where large refunds are due, and implement a coping strategy, if necessary.
4. Train staff to ensure they are fully up to speed with the Act and are aware of the rights afforded to consumers.
If in doubt about any of the above, seek legal guidance on the options available to you.
For more information, please contact Libby Ashton
T: 01254 828 300
E: libby.ashton@backhouses.co.uk