On 13 June, 2014 new legislation came into force which will have a material effect on many companies operating within the removals industry. By Jon Bartley, Partner: IP, IT & Commercial, Penningtons Manches LLP.

Although many of the core obligations in the Consumer Contracts Regulations previously applied (through the Distance Selling Regulations 2000 and the so-called ‘Off-Premises Regulations’ 2008), the Regulations significantly strengthen existing obligations and introduce new requirements.

 

Most removals companies will enter into ‘distance contracts’ or ‘off-premises contracts’ with their customers.  Companies that never meet consumers prior to conclusion of the contract (e.g. where quotes are provided and contracts concluded online or by telephone) will be entering into distance contracts and those concluding contracts following a visit to the customer’s home to price up a job are likely entering into off-premises contracts. 

 

In both cases, the trader is obliged to provide certain pre-contract information in a clear and comprehensible manner, and the scope of information has increased under the Regulations.  With off-premises contracts, the pre-contractual information, and a copy of the signed contract or confirmation of the contract, must be given on paper, unless the customer agrees to receive the information on another ‘durable medium’ (such as e-mail).  For distance contracts, confirmation of the contract must also be provided on a durable medium but not necessarily on paper.  For the first time, there is a requirement to provide certain pre-contractual information to contracts that do not qualify as distance contracts or off-premises contracts (e.g. where the customer places an order during a visit to the company’s premises), but there is more flexibility in the way in which companies provide this information.

 

One of the most significant issues for businesses is the right of consumers to cancel distance and off-premises contracts during a cooling-off period.  The Regulations extend this period from 7 days to 14 days (although it can now be over 12 months if the pre-contract cancellation information is not provided).  It is debatable whether the right to cancel applies to companies operating in the removals industry, as one of the contract types exempted from the right to cancel are contracts for the ‘supply of … transport of goods … if the contract provides for a specific date or period of performance’.  If removals industry associations have not yet clarified the application of this exemption to the sector, it is important to do so, given the significant commercial impact of the cancellation provisions.  If the right to cancel does apply, specific information regarding the right to cancel needs to be given at the pre-contract stage, and now a model cancellation form, set out in a schedule to the Regulations, must be provided, although the consumer is not obliged to use this form in exercising the right to cancel.  In the event that a contract is cancelled, all payments made by the consumer must be reimbursed within a period of 14 days, shorter than the previous 30 day period.

 

In many cases, removals companies will need to provide their services within the 14 day cancellation period.  They can address this risk by ensuring that they provide the pre-contract information on cancellation and that the customer expressly requests that the services be provided within the cancellation period, and acknowledges that once the services are fully performed, their right to cancel will be lost. If this is done, the customer cannot cancel once the services have been performed and if the customer cancels before the services have been fully performed, the trader can charge a proportionate fee based on the services supplied prior to the cancellation, and the total fees agreed.  Therefore, if the right of cancellation applies, it is important to ensure that you can show an audit trail of information provided and express requests and acknowledgements given by the consumer. 

 

In addition to the above obligations, the Regulations require that for online contracts, certain information be provided at the start of the ordering process and immediately before the order is placed.  There must also be an explicit acknowledgement that in placing the order, there will be an obligation to pay, including labelling the order button ‘Order with obligation to pay’ or similar language.  If this simple change is not made, the consumer is not bound by the contract even if they confirm the order.  There is also a ban on pre-ticked boxes for additional services that require payment, to ensure that consumers are only charged for additional services if they expressly consent to the charges.

 

Although the requirements of the Regulations can generally be addressed through changes to terms and conditions, website pages and business practices, companies should ensure they are compliant with the Regulations to avoid unnecessary loss of revenue, regulatory action or in certain cases, criminal prosecution.

 

 

Jon Bartley

Jon is a partner in Penningtons Manches’ IP, IT and Commercial team, based in London.  As a commercial, technology and data protection lawyer, he advises corporate clients on a broad range of contractual projects and compliance issues, and has spoken at seminars and given Radio 4 interviews on the government’s current consumer law reforms.

Photo: Jon Bartley