Get the information you need to practice law Quickly, Easily and No Subscription Required.
What is KnowHow?
Detailed Practice Notes written by our Professional Support Lawyers, guiding you through the key issues in each topic.
Consumer terms and unfair trading - overviewUnfair trading
Regulations came into force on 26th May 2008 implementing the Unfair Commercial Practices Directive (2005/29/EC) ('the Regulations'). They enact a general prohibition on traders treating consumers unfairly and impose obligations on businesses not to mislead consumers or expose them to aggressive commercial practices. Existing legislation has been brought up to date by amending:
The Consumer Protection Act 1987
The Trade Descriptions Act 1968, and
The Weights and Measures Act 1985
Another effect has been the introduction of business protection from misleading marketing implementing the Consolidated Directive on Misleading and Comparative Advertising (2006/114/EC).
Unfair terms in consumer contracts
All suppliers using standard contract terms with consumers must apply a test of fairness to terms that have not been individually negotiated subject to certain exempt terms. A standard term will be deemed 'unfair' by the Office of Fair Trading or other enforcing bodies if contrary to the requirement of good faith it creates a material imbalance in the parties' rights and obligations under the contract, to the consumer's detriment. Enforcement action will be taken against businesses on behalf of consumers generally but enforcers cannot pursue an offender on behalf of an individual consumer or seek personal redress. Enforcers can also compel a business to amend unfair terms or undertake not to continue using an unfair term.
Consumers are entitled to cancel contracts for goods or services made during a visit by a trader to:
the customer's home or place of work
the home of another person
an excursion organised by the trader away from his business premises
The visit or excursion can be solicited or unsolicited. The right to cancel enables the consumer to cancel within 7 days of receipt of the notice of right to cancel from the trader.
Under specific regulations concerning trading with consumers by distance, traders must provide consumers with prescribed information, such as:
the trader's name and address
a description of the main characteristics of the goods or services available
the price (including all taxes)
details relating to payment, delivery or performance of the contract
the cost of any premium line telephone number
the for which any special offer terms remain available
the availability of substitutions if the goods/services ordered are not available
There are also similar information requirements when contracts are concluded with UK website operators.
New regulations are now in force protecting business from misleading marketing. Under the new advertising regulations:
advertising that misleads traders is prohibited
certain comparative advertising is permitted
traders and regulating bodies must not promote misleading advertising or non-permitted comparative advertising
There are criminal penalties for breach, but defences apply. Enforcers are given significant investigative powers.
Trading on-line with consumers
Consumers can trade on-line in relation to:
goods and services
On-line contracts are subject to the same principles as those made face to face.
Contracts for electronic business will take the form of a licence to use a service whereas contracts for goods and services entered into on-line but delivered to the consumer involve the passing of title.
On-line traders are required to provide consumers with:
information about the terms and the cost of the contract
cancellation and complaints information
Failure to provide such information will result in the time period for the consumer to exercise his or her cancellation rights to be delayed.
To find out more about PSL Contact us or call 0207 400 2984