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Sale of goods and the Consumer Rights Act: a guide for small businesses

4-minute read

Sale of goods and the Consumer Rights Act: a guide for small businesses
Jade Wimbledon

Jade Wimbledon

16 March 2017

If you run a business that sells goods, you have certain legal responsibilities. Our guide will help you understand those responsibilities under the Consumer Rights Act and other important sale of goods legislation.

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The basics of the Consumer Rights Act

The Consumer Rights Act came into force on 1 October 2015, and replaced the majority of the Sale of Goods Act 1979, as well as a couple of other pieces of consumer legislation.

Under the Consumer Rights Act, traders have certain obligations when they supply goods (including digital products) to a consumer. This basically means that your business has to comply with certain rules when you sell things to customers.

Under the legislation, the products you sell must:

  • be of a satisfactory quality
  • be fit for purpose
  • match the description
  • be installed correctly, if installation was part of the contract

Who does the sale of goods legislation apply to?

The Consumer Rights Act refers to ‘traders’ and ‘consumers’. When you’re acting for purposes that relate to your trade, business or profession, you’re counted as a ‘trader.’ This means that a ‘trader’ can be a self-employed person, a limited company, a charity, or another individual or organisation.

Under the law, a ‘consumer’ is someone who isn't acting for the purposes of a business when they deal with the trader. This means that a business that buys goods isn’t counted as a consumer under the Consumer Rights Act, and business-to-business (B2B) transactions don’t have the same protection.

Usually, when a transaction takes place, a contract has been formed between the consumer and the trader, and this is when the legislation applies. A contract doesn’t have to be written: it’s formed by the consumer agreeing to pay the trader a sum of money (or do something else) in return for goods supplied by the trader.

The right to a refund, repair or replacement

If the goods sold by the trader don’t meet the requirements set out by the Consumer Rights Act (satisfactory quality, fit for purpose and matching the description), the consumer has a short period (usually 30 days) during which they can reject the goods.

The trader is obliged to give a refund within 14 days of agreeing that the consumer is entitled to one. The trader can ask the consumer to show proof of purchase, but this doesn’t have to be a receipt.

If the contract has been breached but the consumer has lost their right to reject goods because the 30 day period has passed, the trader is obliged to offer repair or replacement, as long as the complaint is made within six months of purchase.

The repair or replacement must not cost the consumer anything, and must be completed within a reasonable time and without causing significant inconvenience.

If the repair or replacement isn’t possible, it fails, or it isn’t completed quickly enough, the consumer can ask for further repairs or replacements, or claim a price reduction or a refund.

The consumer can also claim additional compensation if they’ve suffered other losses as a result of issues with the goods, for example if the goods have caused property damage.

Car sales regulations

The Consumer Rights Act applies to car sales, so a consumer is entitled to a refund within the first 30 days if the car doesn’t meet the requirements set out by the legislation, and under certain circumstances they can get a refund within the first six months.

However, while in most cases the refund amount can’t be reduced within the six month period, in the case of a car sale, the seller can make a ‘reasonable reduction’ based on how much the car has been used.

Food sales regulations

The Consumer Rights Act also applies to food, so restaurant customers can expect food to be of a ‘satisfactory quality’ and to match the menu description. If this isn't the case, they can refuse to pay for it. Consumers can also claim a refund and compensation if they get food poisoning from a food business.

There are lots of other regulations governing the sale of food, including rules about food hygiene, food labelling and traceability. Visit the Food Standards Agency website for more information.

When the consumer can’t make a claim

There are some situations in which the consumer can’t make a claim under the Consumer Rights Act. Consumers can’t claim:

  • for defects that have been brought to their attention before the sale
  • for damage that they’ve caused
  • if they just change their mind about wanting the goods
  • if the item is unsuitable for a purpose, but that purpose is not obvious and the trader didn’t know about it
  • for damage that’s due to fair wear and tear

However, your business may have its own returns policy that allows customers to exchange goods if they change their mind or under other circumstances that aren’t covered by the legislation.

Other important sale of goods legislation

The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013

Under these rules, consumers have a 14-day ‘cooling-off period’ for most distance and off-premises contracts. This includes online and doorstep sales, for example. During the cooling-off period, a customer can cancel for any reason and get their money back.

The Consumer Protection Act 1987 (Part 1)

Under this legislation, someone can claim compensation if they’re injured by a defective product, or their property is damaged by the product. The claim can be made against the manufacturer, the seller or someone else in the supply chain, depending on the situation.

This is where product liability insurance comes in - it can cover legal fees and compensation claims if you’re sued for injury or damage caused by a product you’ve made and/or sold.

The information in this article is not legal advice and you shouldn’t use it to make decisions. Check the legislation for the full wording, and seek professional advice if you need it.

What’s your opinion of sale of goods legislation? Tell us in the comments.

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