Planning on selling to consumers: here is all you need to know!
If you are a business selling goods and/or services to another business, it is generally up to the parties which clauses they wish to include in their terms and conditions and any related contract between them.
However, if you are a business selling goods and/or services to a consumer then the Consumer Rights Act 2015 (the Act) tells us that certain terms or clauses must be included in your terms and conditions. As a business (the Act refers to a business as the ‘trader’), you have certain legal responsibilities when selling goods and/or services to a consumer, as opposed to other businesses. This is because the law does not consider a business/trader and a consumer to be on an equal footing, and therefore, seeks to offer consumers additional protection. This is something very important for your business to consider.
Who is a trader and consumer?
Under the Act, you are considered to be a trader if you are a ‘person acting for purposes relating to your trade, business, craft or profession’.
A consumer, however, is considered to be a ‘natural person’. This means that they are an individual whose dealings with your business are wholly or mainly outside the purposes of their business, commercial or trade activity. For example, a company cannot be a consumer.
What clauses must be included in your terms and conditions?
The Consumer Rights Act requires that the goods you sell must be:
- of a satisfactory quality,
- fit for purpose and
- match the description given
Additional requirements set out by the CRA include:
- A consumer’s right to cancel – The consumer has the right to cancel an order from the moment it is placed and ends 14 days from the day they receive their goods. They then have an additional 14 days to send the goods back.
- A consumer’s right to a refund – You should issue a refund within 14 days of the goods being returned to you or if evidence has been provided of having returned the goods (for example, a proof of postage receipt from the post office), whichever is the sooner.
- A contract to supply a service does not bind the consumer where it excludes the trader’s liability to perform the service with reasonable care and skill
- The consumer has the right to cancel a service 14 days after entering into the contract. The service requested should not be provided before this 14-day period has ended.
- In some instances, the consumer may request the service start within this period. If this is the case, the consumer will still maintain their right to cancel however, they will incur a charge for the service that has provided up until the point of cancellation.
- If the service requested is provided in full within the 14-day period then the consumer’s right to cancel may be lost.
As a business providing services and/or goods to consumers, you cannot include the following:
- Unfair contract terms – A contract term will be assessed for fairness if it is not prominent and transparent. Therefore, if your business hopes to rely on the terms you have with consumers it is crucial that those terms are ‘fair’. Simply, unfair contract terms – whether you’re aware of the law or not – are not legally binding or enforceable and you could be prevented from using them.
- Any term which excludes your business’ liability to provide the service with reasonable care and skill. (services only)
- Any term which excludes or restricts liability for death of personal injury resulting from negligence. This term will be simply be unenforceable.
- Any term that excludes the consumers right to rely on anything that is said (verbally or in writing) to the consumer, by or on behalf of the trader about the service provided if it is taken into account by the consumer when deciding to enter the contract or when making any decision about the service after entering the contract.
Don’t forget the basics…
- Business details (i.e. trading name, address, contact information)
- Definition of goods and/or services being sold
- Payment terms – total price, when payment is due, and what should happen in the event of a late payment, non-payment or incorrect payment
- Additional charges i.e. delivery.
- Warranty or guarantee policies.
- Responsibilities for both parties
- Limitation on liability – specifies the extent to which your business will be obligated to provide damages to a customer if you should happen to fail to perform as agreed
- Term – how long the contract will last for
- Termination – if and how either party can terminate the contract
- A statement covering your intellectual property
- Data protection
- Force Majeure – what happens if there is an event outside the reasonable control of the parties which prevent one party or both performing their obligations.
- Governing Law and Jurisdiction – which legal system will govern the contract – particularly important if you trade with consumers outside England and Wales.
This is something that the team at 2020 Business Law can help you with. Let’s talk – email firstname.lastname@example.org or call 01980 676875.