More on the Consumer Rights Act 2015

The Consumer Rights Act 2015 will come into force this week, on 1 October. In the first of our articles on the major changes to the consumer legislation which will be implemented by the Act, we looked at its effect on sale of goods contracts, and the new tiered remedies which will be available to consumers.

In this second article, we focus on Part 2 of the Act, which deals with unfair terms in consumer contracts.

As elsewhere in the Act, a "consumer" is defined as an individual (that is, a natural person rather than a legal entity such as a company) who is acting for purposes wholly or mainly outside of his or her trade, business, craft or profession. A "trader" is more broadly defined as a legal person (which in this case includes both natural and legal persons such as companies) acting for purposes relating to its trade, business, craft or profession.

For all contracts made between traders and consumers on or after 1 October 2015, the new Act makes some significant changes to the regulation of exclusion clauses and unfair terms, amending those parts of the Unfair Contract Terms Act 1977 dealing with contracts between traders and consumers.

The key change under the Act is that attempts to exclude or restrict certain terms in trader to consumer contracts are subject to an outright ban. The commentary surrounding the Act often refers to these terms as being "blacklisted".

Any terms which a trader seeks to use to exclude or restrict its liability to a consumer in the following respects are "blacklisted":

• The term that goods are to be of satisfactory quality.
• The term that goods are to be fit for a particular purpose.
• The term that goods are to be as described.
• The term that goods are to match a sample.
• The term that goods are to match a model seen or examined.
• The term providing that the trader has the right to supply the goods.

There are other "blacklisted" terms in respect of contracts for the supply of digital content.

Another development which the Act will bring into effect is that terms contained in consumer notices, as well as consumer contracts, will also be affected by the "blacklist". Consumer notices are notices which set out the rights or obligations between a trader and a consumer, and are often found in places used by the public, such as car parks or shopping centres. Any notice between a trader and a consumer which is classed as a consumer notice will be subject to the same prohibitions on the inclusion of the blacklisted terms.

In order to avoid falling foul of the Act, businesses dealing with consumers should review their terms and conditions, and also the content of any consumer notices which may be in use, and ensure that those terms which are potentially "blacklisted" are removed.

The effect of failing to comply with the requirements of the Act is that a trader may be subject to enforcement action by public bodies, including the Competition and Markets Authority, to prevent the use of unfair terms or notices.

For any queries regarding the impact of the Act, please contact a member of the Regulatory Team.

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.