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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.
The Sale of Goods Act has now been replaced by the Consumer Rights Act.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.
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.
Under the legislation, the products you sell must:
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.
Under the Consumer Rights Act, you must follow certain standards when supplying services:
If these standards aren’t met, a consumer is entitled to a repeat performance or price reduction.
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.
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.
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.
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:
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.
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.
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.
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.
Visit the Food Standards Agency website for more information.
There are some situations in which the consumer can’t make a claim under the Consumer Rights Act. Consumers can’t claim:
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.
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.
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.
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.
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
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.
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