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Significant changes are being introduced by the Consumer Rights Act 2015 which comes into force on 1 October 2015. For all motor retailers this will mean reviewing existing complaints handling procedures, sales and service processes and importantly contractual terms and conditions of business.
We would therefore strongly advise all members to contact the MILS legal team to ensure that they fully understand the legislative changes. Members are reminded that MILS can provide advice and assistance in reviewing contractual terms and conditions and business as part of the RMI membership.
The Consumer Rights Act 2015 (CRA) consolidates previous consumer rights legislation incorporated within the Sale of Goods Act 1979 (SOGA), Supply of Goods and Services Act 1982 (SOGSA), and the Unfair Contract Terms Act 1977 (UCTA).
Importantly the CRA introduces new remedies for consumers and extends these protections to digital content.
Statutory rights; Goods
The actual rights remain substantially the same. The implied terms remain that goods must be, of ‘satisfactory quality’, ‘fit for purpose’, and that they correspond with their description. These terms are already implied into every consumer contract and the act simply confirms that this position remains the same, unless any specific differences are brought to the consumers’ attention
Where goods are supplied in breach of the act, consumers will be entitled to the following:-
Burden of proof
The onus will be on the consumer to prove that the goods do not perform to the contract if they are seeking to enforce their short term right to reject, however goods will be presumed to not conform to the contract if a consumer seeks to exercise their right to a repair or replacement, price reduction, or a final right to reject within 6 months of delivery.
Deductions for consumer use
Motor traders may be entitled to make a deduction in respect of any use the consumer has had of the goods before they are rejected in certain circumstances. No deduction can be made if the consumer exercised their final right to reject within the first 30 days. However a deduction can be made for use for motor vehicles rejected after the short term right to reject.
Rejection of goods
As a general rule, if a part on a motor vehicle is faulty then it is unlikely that the consumer will be able to terminate the entire contract. The consumer is obliged to make rejected goods available for collection by the motor trader at the consumer’s choice of location, unless the motor trader has made it a term of the contract that obliges the consumer to return the vehicle to the motor trader.
The costs of returning rejected goods
The motor trader is responsible for the reasonable costs of returning the goods unless they are being returned to the motor dealership. The consumer is not able to recover excessive return costs but the consumer, as part of any damages claim, would be able to claim consequential damages connected to the rejection of the goods, i.e. breakdown recovery charges etc…
It should be noted that no fee can be imposed for processing a refund.
Supply of Services
Terms will still be implied into consumer contracts for the supply of services that the service will be performed with:
The definition of reasonable care will be deemed to be what is reasonable within the motor industry. What is reasonable may therefore vary depending upon the nature of the repair service and price paid.
Section 50, Information about the trader or service to be binding
This is a potentially dangerous section. The CRA states that anything spoken or written to the consumer by or on behalf of the trader or the service becomes incorporated into the agreement if it is taken into account by the consumer when deciding to enter the contract or make decisions during it.
There is no requirement that the motor traders themselves make the statement, simply that it is made on their behalf. This clause has the potential to bind the motor trader to statements or descriptions made by third parties such as manufacturers advertising statements, or standard servicing and maintenance schedules. There is no requirement within the act that it must be reasonable for the consumer to rely on such statements. This has a significant potential for complications in the future.
This section does not fix how this amount is to be calculated. However, as with the supply of goods any refund must be paid within 14 days from that date that a refund is agreed between the parties. The refund must use the same means of payment as the original service and no fee can be levied.
Unfair Contract Terms
In addition to implied terms, the CRA also deals with terms that will be deemed unfair and so will not be enforceable. This is not a new concept. The main legislation currently in force is the Unfair Contract Terms Act 1977 (hereinafter ‘UCTA’) and the Unfair Terms in Consumer Contract Regulations 1999 (hereinafter ‘UTCCR’). However, there are a few more.
Contracts and notices covered by this Part
The CRA clearly extends legislative protection to notices as well as written contractual terms. Notices include any announcements whether or not in writing. In practice any notice purporting to include contractual terms would likely been caught by the previous legislation. However, as the CRA more clearly and widely defines this it is more likely that consumers will be successful in challenging unfair terms.
Requirement for contract terms and notices to be fair
The CRA defines a potentially unfair term more widely than previous legislation. Section 62 states that a term is unfair if it is :
Whilst this term appears detailed, the terminology is such that there appears to be no defined measureable test as to whether any particular term or notice would or would not be unfair.
The CRA defines 2 types of unfair contractual terms. Those that are potentially unfair and those that must be regarded as unfair. These terms are contained Schedule 2 of the CRA
Exclusion from assessment of fairness
Not all terms of the contract can be assessed for fairness. Provided the terms are in plain and intelligible language, the court is prevented from assessing any terms that specify the main subject of the contract.
A motor trader must ensure that a written term of a contract is transparent and that any especially onerous or unusual terms are brought to the consumer’s attention. Further if a contract term is ambiguous or has different meaning, then a court will use a meaning most favourable to a consumer.
This article has been written by Christopher Baylis, Barrister and Head of Legal at Motor Industry Legal Services (MILS) and Paul Carroll, Solicitor, Partner at MILS. Full details of the Legal Team can be accessed here
Members should also be aware that Christopher Baylis heads Riverview Chambers which comprises 40 Barristers who are experts in commercial and motor industry law. Full details of the Chambers can be found here
Motor Industry Legal Services (MILS Solicitors) provides fully comprehensive legal advice and representation to UK motor retailers for one annual fee. It is the only law firm in the UK which specialises in motor law and motor trade law. MILS currently advises over 1,000 individual businesses within the sector as well as the Retail Motor Industry Federation (RMI) and its members.