Warners Solicitors

Michael McNally

29 October 2012

1. Consumer

Protection (Distance Selling)

Regulations 2000

(as amended)

Purpose and application of the “Distance Selling” Regulations

• To give customers cancellation rights in relation to contracts for

the sale of goods or services.

• To ensure that the seller supplies information to the customer in

advance of the contract being concluded.

• In short, to give customers a “cooling off” period after purchase

during which they can change their minds and cancel the

contract.

Our Clients

• In a shop sale, the purchaser cannot return the goods or ask for a refund once he has

bought the goods just because he has changed his mind (except where goods are

defective, where legislation such as the Sale of Goods Act applies).

• Shops which give a no fault money back guarantee choose to do so as a marketing

tool.

• The Distance Selling Regulations apply to a contract where the seller and the

customer are not in the same place at the time the contract is made and where the

contract is concluded by some form of distance communication.

• Whether the Regulations apply when a customer orders goods in specially on the

understanding that she will buy them and then she doesn’t will depend on the

circumstances. If goods are ordered by a distance method, the Regulations will apply.

Sale of goods in a shop vs sale at distance

Our Clients

• “Business” – “a trade or profession” – i.e. the definition is very wide.

• “Consumer” – “any natural person who is acting for purposes which are outside his business”.

• “Supplier” – “any person…acting in his commercial or professional capacity” – i.e. the Regulations don’t apply to business to business sales – only to business to consumer sales.

• “Distance contract” – “any contract concerning goods or services concluded between a supplier and a consumer under an organised distance sale or distance provision scheme run by the supplier who makes exclusive use of one or more means of distance communications...”

• “Means of distance communications” – “any means which, without the simultaneous physical presence of the supplier and the consumer, may be used for the conclusion of a contract…”. Schedule 1 sets out examples:

• Telephone with human intervention.

• Email.

• Fax.

Regulation 3 – Interpretation

Our Clients

The Regulations don’t apply to various contracts, including:

• The sale of land.

• The construction of a building where land is also sold.

• Financial services.

• Sales at auction.

Regulation 5 – Excepted contracts

Regulation 6 – Contracts to which only part of these Regulations apply

• Timeshares.

• Delivery of food and drink to a purchaser’s house or place of work.

• Contracts for the provision of accommodation, transport, catering or

leisure within a specified period.

Regulations 7 to 19(1) don’t apply to such contracts, which is in practice

almost all the distance selling provisions.

• Package holidays (because they are covered by the Package Travel,

Package Holiday and Package Tours Regulations 1992).

• Unsolicited services (because they are covered by other regulations).

Regulation 7 – Information required prior to the conclusion of the contract

The seller must supply key information to the customer:

(2) “…the information [must be] provided in a clear and

comprehensible manner appropriate to the means of distance

communication used…”

At this stage, therefore, the information could, for example, be

provided by telephone if the customer’s enquiry is by telephone.

The information must be provided in good time before the

conclusion of the contract.

The information which the seller has to supply is:

• The seller’s name and contact details.

• Details of the goods or services.

• The price of the goods or services (and delivery charges and cost of

distance communications where calculated other than at basic rate) and

the period for which the price remains valid.

• Delivery arrangements.

• The existence of the right to cancel.

• The minimum duration of the contract where the goods or services are

to be supplied recurrently.

• Any proposal by the supplier to provide substitutes of equivalent price

and quality (in which case, the cost of return must be met by the

supplier).

Regulation 8 – Written and additional information

This requires the seller to supply certain information in writing or another durable medium at the latest at the time of delivery of the goods or, in the case of services, during the performance of the contract.

The information which the seller has to supply is:

• The information required under Regulation 7 (i.e. the information which the seller has already had to supply).

• Details of the customer’s cancellation rights under Regulation 10.

• Where the goods are to be returned to in the event of cancellation and who pays for that.

• Address for complaints.

• Information about after sales service and guarantees.

• Conditions for exercising the contractual right to cancel where there is a contract of unspecified duration or exceeding a year.

NB. The term “durable medium” does not include referring the customer to a website because (a) this requires active steps to be taken by the customer and (b) a website’s contents can be changed by the seller after the customer has viewed it

Regulation 10 – Right to cancel and Regulation 11 – Cancellation period in the case of contracts for the supply of

goods

The customer can (in writing or other durable medium) cancel his purchase within the

cancellation period, which is seven days beginning with the day after the day the

purchaser receives the goods.

However, if the seller fails to supply the statutory information under Regulation 8 on

time, the customer has seven days to cancel, beginning with the day after he eventually

receives the statutory information. Furthermore, where the seller fails to supply the

statutory information at all, the customer may cancel for up to three months and seven

days, starting from the day after the customer receives the goods.

NB. The provisions also apply in the event of delivery of goods to a third party.

The customer can cancel by sending a notice by hand, fax, post or email.

Notice is treated as having been given at the time of sending, leaving or posting.

Regulation 12 – Cancellation period in the case of contract for the supply of services

• The cancellation period in relation to services begins with the day after the contract is concluded and ends after seven days.

• Where the seller is late in giving the statutory information but does provide it within three months (beginning with the day after the contract was concluded), the cancellation period ends seven days from the day after the information is supplied.

• Where the contract is performed with the customer’s agreement before the seven day cancellation period and the seller then provides the statutory information during the performance of the contract, the cancellation period ends seven days from the day after the information is supplied.

• If the contract is performed before the seven day period has expired, the cancellation period ends on the day of the performance of the contract.

• Where the seller fails completely to supply the statutory information, the cancellation period ends three months and seven days from the day after the contract is concluded – more on this below.

Regulation 13 – Exceptions to the right to cancel

1. Goods

The customer cannot cancel a contract for goods where those goods are:

• Made to the customer’s specifications or are personalised.

• By their nature cannot be returned or are liable to deteriorate rapidly e.g.

perishable foodstuffs.

• Magazines or audio / video / computer recordings.

2. Services

The purchaser cannot cancel in relation to a contract for services where

performance has already begun by the seller with the customer’s

agreement before the end of the cancellation period, provided the seller

has supplied the statutory information first.

NOTICE TO CUSTOMER WHERE THE CONTRACT IS FOR SERVICES AND THE

CUSTOMER IS TO CONTRACT OUT OF HIS CANCELLATION RIGHTS

[Insert your letterhead here]

Dear Customer

The Consumer Protection (Distance Selling) Regulations 2000

As we have not met face to face, the Consumer Protection (Distance Selling) Regulations

2000 (as amended) apply to the contractual relationship set out in this letter. By signing

and returning this letter, you are agreeing that, to avoid any delay in the transaction, we

may start work on your behalf straight away. By so doing, you do not have a right to

cancellation under the Regulations. We undertake to do the necessary work as soon as

possible, but the requirement under these Regulations for our services to you to be

concluded within 30 days will not apply.

Yours sincerely / faithfully

……………………………

Customer’s name and signature

Regulation 14 – Recovery of sums paid by or on behalf of the consumer on cancellation and return of

security

• On cancellation, the seller must reimburse sums paid by the customer

less the cost of recovering goods where the customer is contractually

bound to return the goods on cancellation and he fails to do so or

returns the goods at the supplier’s expense.

• Repayment by the seller must be within 30 days of cancellation.

• The supplier cannot charge for recovery of the goods where the

customer is entitled to reject the goods by law or contract (e.g. where

the goods are faulty) or where having to return the goods is an unfair

term of the contract (which is unlikely to be the case).

Regulation 15 – Automatic cancellation of a related credit agreement

Where the purchaser cancels, the effect is to cancel any related credit agreement.

Regulation 17 – Restoration of goods by consumer after cancellation

• The customer must look after the goods and return them but only at his own

premises – i.e. he only has to make the goods available for collection by the

seller, unless the contract states otherwise.

• Furthermore, the customer only has to return the goods on receipt of a written

(or another durable means) request from the seller. If the customer does send

the goods back, he shall take reasonable care of them but that is all.

Our Clients

• Unless otherwise agreed, the seller must supply the goods within 30

days of the day after the order is sent.

• If the seller can’t supply the goods, he must tell the customer and give a

refund within 30 days of the day after the period for performance has

expired.

• If the seller fails to perform the contract in time, the contract is treated

as never made.

• Where the seller can’t supply the goods ordered, he can provide

substitutes, as long as the contract allows for this and the seller pays for

the return of the substitutes if the customer cancels.

Performance by the supplier

Our Clients

Within ten days of the date of cancellation, the seller must return any part

exchange goods, failing which the purchaser is entitled to the cash

equivalent.

Regulation 18 – Goods given in part exchange

Our Clients

Contracting out is not permitted by the Regulations.

Regulation 25

Our ClientsThe Director General of Fair Trading or other enforcing authority may apply

for an injunction against a seller in breach, to secure compliance (i.e. there

is no criminal offence associated with breach of the Regulations – it is civil

only).

Regulation 27 – Injunctions to secure compliance with these Regulations

2. Contracts Made in a Consumer’s Home or Place of Work etc

Regulations 2008

Purpose of the Regulations

The purpose of the “Doorstep Selling” Regulations is to give a

customer cancellation rights in respect of the purchase of goods

and services sold during a visit to his home or place of work or

during an excursion by the seller. The idea is to give customers a

cooling off period in circumstances where they may have been

pressurised into buying. The Regulations apply to solicited and

unsolicited visits.

Regulation 2 – Definitions

“Consumer” – someone not acting pursuant to a trade or

profession.

“Trader” – someone acting in a commercial or professional

capacity or through his agent.

“Cancellation period” – seven day period starting with receipt

by the consumer of notice of his right to cancel.

Regulation 6 – Where the Regulations don’t apply

• To consumer credit agreements under which the customer can

cancel through statutory rights or through contractual terms.

Such agreements are regulated by the Consumer Credit Act

1974.

• Excepted contracts. These are listed in Schedule 3 and are

contracts made on the basis of the trader’s catalogue where

there is intended to be continuity of contract between the

trader and the consumer.

• Contracts for less than £35.

Regulation 7 – Cancellation rights

The seller must notify the customer in writing of his cancellation

rights at the time when the contract is made. The notice must be

easily legible and must be headed “notice of the right to cancel”

and must be dated, state that the customer can cancel during the

cancellation period, which is seven calendar days starting with the

day of receipt of the written notice of the right to cancel. The

seller must also supply a separate cancellation form.

The notice must include:

• the date;

• the identity of the trader;

• the trader’s reference number;

• a statement that the customer has the right to cancel the contract if he wishes and

that this right can be exercised by delivering or sending (including by email) a

cancellation notice to the trader at any time within the cancellation period;

• the name and address (including postal address and email) of a person to whom a

cancellation notice may be given;

• a statement that notice of cancellation is deemed to be served as soon as it is

posted or sent to a trader or, in the case of an electronic communication, from the

day it is sent to the trader;

• a statement that the consumer can use the cancellation form provided if he wishes;

• (in relation to specified contracts only) a statement that the customer may have to

pay if performance of the contract begins with the customer’s written consent before

the end of the cancellation period.

The cancellation form must read as follows:

CANCELLATION FORM

(Complete, detach and return this form ONLY IF YOU WISH TO CANCEL THE

CONTRACT)

To:…………………………. [trader to insert name and address of person to

whom notice may be given]

I / We (delete as appropriate) hereby give notice that I / we (delete as

appropriate) wish to cancel my / our (delete as appropriate) contract

……………………. [trader to insert reference number, code or other details

to enable the contract or offer to be identified. He may also insert the

name and address of the consumer.]

Signed

Name and Address

Date

Regulation 8 – Cancellation

Where the customer wants to cancel, he must serve a notice of

cancellation on the seller, using any format. Once the contract is

cancelled, it is as if it was never entered into. The notice of

cancellation is treated as served on the day it is posted / faxed /

emailed.

Regulation 9 – Where performance of the contract is to begin early

Where a customer wants performance of the contract to begin before the end of the

cancellation period, he must request this in writing. A notice from the trader in writing

must state this and state that the customer may be required to pay for goods or

services supplied if performance of the contract has begun with written agreement

before the end of the cancellation period. Where the contract is in writing, the seller’s

notice must be incorporated into the document. If the trader begins work before the

customer has signed, the customer does not have to pay.

But, early performance of the contract and the customer’s obligation to pay for work

done only applies to specified contracts which include:

• The provision of services.

• The supply of newspapers, periodicals or magazines.

• Goods made to the customer’s specification or personalised.

• The supply of perishables i.e. food.

The notice to the customer should read:

NOTICE TO CUSTOMER WHERE PERFORMANCE IS TO BEGIN EARLY IN RELATION TO A

SPECIFIED CONTRACT

[Insert your letterhead here]

Dear Customer

The Cancellation of Contracts Made in a Consumer’s Home or Place of Work

etc Regulations 2008

As this contract is made at your home or place of work, I am required to give you a

formal notice of your right to cancel the contract between us. The form of notice is

attached to this letter.

In accordance with the Regulations, by signing and returning this letter, you are

agreeing that to avoid any delay in the transaction we may start work on your behalf

straight away and we do not have to wait for the cancellation period to expire. You will

be required to pay for our services during the cancellation period even if you

subsequently cancel the contract.

Yours sincerely / faithfully

……………………………

Regulation 10

Once the contract is cancelled, sums paid by the customer (including deposits) are

repayable (and the customer has a lien on any goods he holds until he is repaid).

The cancellation notice cancels any related credit agreement.

Regulation 11

Once the contract is cancelled, the customer must look after the goods and allow the

trader to collect them. He is not under any obligation to send the goods back and is only

obliged to make the goods available for collection. He only has to make them available

for collection if he has received a request in writing from the seller. The customer can

send the goods back but is under no obligation to.

Regulation 13

Regulation 14

If the trader has taken goods from the customer in part exchange, the trader must

return those part exchange goods in good condition on cancellation or provide

equivalent cash.

It is a criminal offence not to give notice of cancellation. The maximum sentence is a

fine in the Magistrates Court.

Regulation 17 – Offences

3. Future Changes

in the Law

The Government has to implement the Consumer Rights Directive

by June 2014.

The Government is at present consulting over changes to the

Distance Selling and the Doorstep Selling Regulations.

Consequently, the proposed changes are not yet clear but are

likely to be minor, including:

• An obligation on the seller to notify the company providing

credit to the customer of any cancellation of the contract.

• Pre-contract information is likely to form part of the contract.

The basic provisions of both sets of Regulations are likely to

remain much as they are.