With just over a week before the Consumer Rights Act comes into force, we take a brief look at how the Act will affect service providers.
In most respects, the rights consumers have regarding services under the Act remain unchanged. They still benefit from the right for services to be performed with reasonable care and skill, to only be charged a reasonable price for services (where the price has not been agreed upfront) and for services to be performed within a reasonable time (where timings have not been agreed upfront). However, there are some additional rights and the Act provides clarity on issues that had previously been unclear:
- Contracts where goods are manufactured or produced and then supplied to the consumer = sales contracts. e.g. a tailor employed to make a suit must adhere to the standards applicable to goods rather than services.
- Anything said/written about the trader or services and taken into account by the consumer will form part of the contract. This is an important change as it means that traders will need to review and think carefully about their marketing statements, literature and staff engagement with consumers. However, it is not clear whether statements made/seen after a contract has been concluded with the consumer will vary the original contract.
- Traders are subject to an absolute ban on excluding liability for failing to perform services with reasonable care and skill or in accordance with the information provided. Previously this was allowed, subject to passing the reasonableness test in the Unfair Contract Terms Act, but given this was a hard test to satisfy, this change is unlikely to have much practical significance.
- The trader cannot limit its liability to a sum below the contract price.
- Delivery of goods purchased, installation of goods by the trader supplying them (where this forms part of the contract of sale) and related services for digital content (i.e. services allowing for the transmission of the digital content) will NOT be subject to the services provisions in the Act.
So long as the consumer provides some form of consideration (e.g. the provision of personal data), free services will be subject to the service provisions in the Act, save that Scotland is specifically carved out - “In relation to Scotland, this Chapter does not apply to a gratuitous contract”.
It is important to bear in mind that the Act will only apply to consumer contracts though; if the consumer provides nothing in return for receiving a service, there will be no contract, and consequently the consumer will have no specific rights and remedies in respect of that free service – e.g. a free shoe fitting service or community event.
Until now, consumers have not had the benefit of any statutory remedies in relation to services – they have had to rely on the right to claim damages for breach of contract. Consumers will not be precluded from seeking damages or other remedies (such as specific performance) but the Act introduces two statutory remedies (repeat performance and price reduction). The remedy that applies will depend on the right that is breached:
Where a consumer is entitled to repeat performance but this is impossible, or the trader has failed to repeat the services within a reasonable time or without significant inconvenience, the consumer will be entitled to claim a price reduction. However, unlike for goods, the trader is not limited to one chance to repeat the services, so long as the repeated services are performed within a reasonable time and without significant inconvenience. Obviously, numerous failed repeat performances could cause reputational damage and the more attempts, the harder it is to satisfy the requirement of not causing significant inconvenience. In this case, the trader may wish to consider offering a price reduction after the first repeat attempt to avoid a claim for damages.
The consumer is entitled to the price paid/payable for the services to be reduced by an “appropriate amount”. This will normally mean the difference in price between the services the consumer paid for and the services provided, however, the Act would allow a consumer to claim a reduction in price if the trader did not adhere to information he provided about himself (e.g. his qualifications) even if the value of the services provided was not affected.
The Act is unlikely to change too much for service providers. The main rights in relation to services remain the same and repeat performance and price reductions are already widely used remedies for defective services (albeit they have not been statutory entitlements until now). However, what service providers will need to be acutely aware of is the information being given out about themselves and the services they provide – advertising slogans will need to be carefully considered and staff may need additional training to ensure they are not left unnecessarily exposed.
Author: Rosanna Biggs
Read the rest of our articles in this series: