Sale of goods and Consumer Rights Act 2015: guide for small businesses
6-minute read
If you run a business that sells goods, services or digital products, it’s important that you’re aware of your legal responsibilities.
Under the Consumer Rights Act, goods and services should be fit for purpose, sold as described, and be of satisfactory quality. Read on to find out more about the law protecting consumers, and what this means for your business.
What is the Sale of Goods Act?
The Sale of Goods Act has now been replaced by the Consumer Rights Act. However it still applies if a product was sold before 30 September 2015.
The only difference between the sale of goods act and consumer rights act is it now includes digital products and services as well as physical goods.
What is the Consumer Rights Act 2015?
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 selling to customers.
Below we explain the legislation that affects the selling of services and products, and standards you need to comply with.
Standards for products
Under the legislation, the products you sell must:
- be of a satisfactory quality (including appearance and finish, free from minor defects, safety, durability)
- be fit for purpose
- match the description, sample, or model
- be installed correctly, if installation was part of the contract
These rights effectively overrule any warranty and guarantee for the product – if a product is faulty then a customer is entitled to a remedy (we explain more about this later).
The Consumer Rights Act also says that you (the retailer) are responsible for the condition of the goods until the goods are received by your customer or by someone they nominated to receive the goods on their behalf (such as a neighbour). The liability doesn’t fall to the delivery company.
Standards for services
Under the Consumer Rights Act, you must follow certain standards when supplying services:
- the service must be carried out with reasonable care and skill
- information said or written to the consumer is binding where the consumer relies on it (for example quotes and timescale agreements)
- the cost must be reasonable (for example, you might show how hourly rates are calculated)
- the service must be carried out within a reasonable time
If these standards aren’t met, a consumer is entitled to a repeat performance or price reduction.
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.
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.
What about business to business consumer rights?
As we mentioned already, a consumer is defined as someone who buys something for individual use, so businesses aren’t covered by the Consumer Rights Act. If your business buys a product or service from another business, known as business to business (B2B), this transaction won’t be protected by consumer legislation.
It’s also worth noting that businesses aren’t entitled to the 14-day cooling off period.
However, the Sale of Goods Act 1979 and Supply of Goods and Services Act 1982 haven’t been repealed and still apply to contracts for the sale of goods and services in a business to business context.
How does the Consumer Rights Act affect businesses?
Simply put, if you sell products, goods, and services, then your customers are protected by the Consumer Rights Act.
As a retail shop, for example, you’ll need to be aware of this law in case you sell something that’s faulty or not fit for purpose. A customer’s right to refund, repair, and replacement is detailed below.
Consumer Rights Act – refund, repair, and replacement rights
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.
We go into more detail below, but these are the types of statutory rights refund you might see:
- full refund and return of goods
- reduction in price
- compensation
Understanding the Consumer Rights Act 2015 refund process
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 statutory rights 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.
Sale of digital content
As we mentioned earlier, the Consumer Rights Act applies to digital content too, so it must meet the description, be fit for purpose, and meet quality standards.
Digital content covers anything you download or stream, such as mobile apps, software, ebooks, games, and music. For example, if you sell a mobile app that turns out not to be compatible with a customer’s phone when you advertised that it would be, this wouldn’t be fit for purpose and you’d have to give a refund.
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, allergens, and traceability.
Visit the Food Standards Agency website for more information.
When can’t the consumer 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
Consumer Contracts Regulations – for distance sales
Under The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, 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.
It’s important to be aware of these rules if you have an online shop, for example.
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.
Read our guide to the Consumer Protection Act for more information.
Legal expenses insurance and helpline
If you have legal expenses insurance as part of your Simply Business policy, you also have access to a number of useful services through DAS Businesslaw (you’ll just need your voucher code found in your policy documents to register).
DAS has a legal advice helpline, available whether you’re facing a serious legal issue or just want to check something with an adviser. They also offer a range of legal templates and guides.
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.
You can also check information on the Business Companion, a government-backed website offering free legal guidance.
More useful guides for small business owners
Is there anything else you want to know about the Consumer Rights Act 2015? Let us know in the comments.
Photograph 1: kerkezz/stock.adobe.com
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Written by
Catriona Smith
Catriona Smith is a content and marketing professional with 12 years’ experience across the financial services, higher education, and insurance sectors. She’s also a trained NCTJ Gold Standard journalist. As a Senior Copywriter at Simply Business, Catriona has in-depth knowledge of small business concerns and specialises in tax, marketing, and business operations. Catriona lives in the seaside city of Brighton where she’s also a freelance yoga teacher.
We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
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