New Rights and Remedies for Consumers

In a recent article, we discussed the impact of the Consumer Rights Act 2015, which will come into force on 1 October 2015. Over the coming months we will comment in more detail on the key reforms, beginning here with the new rights and remedies relating to the supply of goods.

The aim behind the 2015 Act is to bring together the existing legislation on the supply of goods and services, as currently the remedies for breach of contract are contained in different Acts, depending what type of contract is involved. As such, the 2015 Act aims to bring together the Sale of Goods Act, the Supply of Goods and Services Act and the Supply of Goods (Implied Terms) Act so that the remedies for breach of goods contracts are contained in one place.

The new rights and remedies are set out in Part 1 of the 2015 Act. These provisions will apply to business to consumer contracts where there is to be a supply of goods, and therefore the Act will cover all contracts where goods are to be supplied, whether that is by sale, hire or hire purchase.

Whereas the term of satisfactory quality is currently implied into contracts by the Sale of Goods Act (or by the Sale of Goods (Implied Terms) Act, in the case of hire purchase agreements) the new Act will now imply that term, and will make it a term of every business to consumer contract to supply goods that the quality of the goods is satisfactory and that the goods are fit for any particular purpose brought to the trader's attention by the consumer, prior to entering into the contract. The 2015 Act then sets out the remedies available to consumers in the event of a breach of those terms. The remedies are also applicable in instances where goods do not match their description, or do not correspond to the sample in instances where there is a sale by sample.

If goods do not comply with the contract, the customer will have three alternative rights of redress, which are slightly different to those set out in the existing sale of goods legislation. The new rights are as follows:-

• The short term right to reject;
• The right to repair or replacement; and
• The right to a price reduction or the final right to reject.

The remedies are designed to be tiered such that the trader will have one opportunity to repair or replace goods, before the consumer is entitled to move on to the next tier of remedies.

The short term right to reject gives consumers the right to reject defective goods within 30 days of ownership/delivery. If, during the 30 day period, the consumer requests a repair or replacement, there will be a "waiting period" to allow the repair or replacement to be carried out, so the 30 day time limit will stop running and the short term right to reject will instead end seven days after the waiting period. The 30 day period can be extended by the trader but cannot be reduced. Once the 30 day time limit expires, the consumer will lose the short term right to reject. In addition, if a consumer has required a repair to be carried out, they cannot exercise the short term right to reject without giving the trader a reasonable time to carry out the repairs.

The final right to reject arises where:-

• After one repair or one replacement, the goods do not conform to the contract; or
• The consumer has required a repair or replacement, but the trader has been unable to carry out that repair or replacement within a reasonable time and without inconvenience to the consumer.

In circumstances where a consumer exercises the final right to reject more than six months after the date of delivery, any refund may be reduced by a deduction for use, to take into account the benefit the consumer has had from the goods in the period since delivery. There will be no deduction for use if the final right to reject is exercised within six months of the date of delivery, but there is a carve-out out to the rules where motor vehicle sales are concerned, to allow a deduction to be made in all circumstances, even where the final right to reject is exercised within the first six months of delivery.

One other major change under the 2015 Act is that distinct rules will apply where goods are both supplied and installed by a trader, or installation is carried out under that same trader's responsibility. Where these contracts are concerned, if the goods are not correctly installed then the goods remedies described above will also be applicable, with the exception of the short term right to reject. In other words, the consumer will be entitled to a repair or a replacement, or to claim a price reduction or the final right to reject.

One notable provision which is carried over into the 2015 Act is the burden of proof in the consumer's favour in the event that there is a defect or fault which arises within six months of the date of delivery. In such cases, the fault or defect will be presumed to have been present at the point of delivery unless the trader proves otherwise. This reverse burden of proof will apply where a customer claims a repair or replacement, or a price reduction or final right to reject, but it will not apply where the consumer exercises the short term right to reject.

The tiered remedies under the 2015 Act will take some getting used to and no doubt we will start to see litigation in instances where customers claim the right to progress to the next tier of remedies and the trader is not satisfied that the customer is entitled to do so. It is also likely that there will be disputes around the calculation of deduction for use when the final right to reject has arisen.

However, the aim of the new Act is to simplify and codify the existing law on contracts for the supply of goods and it is to be hoped that the fact of bringing consumers' rights and remedies into one place will eventually make it clearer to both traders and consumers as to what those rights and remedies are.

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.