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Terms & Conditions: Why A Business Needs Them & Should Update Regularly

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Consumers today are savvier than ever before, and the majority of people will be aware of the basic rules surrounding defective goods and what their rights are to return such items and obtain a refund.

However, are those rights the same when purchasing a “service”? If a particular service has been provided to an unsatisfactory standard and the consumer wants something to be done, what must business owners consider?

Remedies To The Customer

The Consumer Rights Act (CRA) 2015 came into force last year and provides certain statutory requirements which businesses must adhere to when providing services to consumers. These obligations include an obligation on the service provider to:

  • perform the service with reasonable skill and care;
  • perform the service within a reasonable time;
  • perform the service in line with the information provided relating to the service;
  • perform the service in line with information provided concerning the trader.

The remedies available to consumers for a breach of these obligations vary depending on which obligations are breached, but will usually allow a consumer to have either the service repeated or a reduction in price up to a full refund, which can obviously be a severe detriment to a business and its reputation.

There are also strict rules around contracts completed in a consumer’s home or away from your business premises.

Limiting Liability

A business will want to exclude or limit their liability through express provisions in their terms and conditions. However the CRA 2015 bans businesses from excluding certain obligations (for example, the obligation to perform a service with reasonable skill and care).  Any attempt to do this could jeopardise other provisions of the contract.  The CRA 2015 will also not allow a business to limit their liability to any less than that of the price paid.

It is therefore important that businesses know what they can, and cannot, exclude and to ensure that their terms and conditions are compliant with the CRA 2015.

Recent research carried out by the Competition and Markets Authority (CMA) (a link to which can be found by clicking here) has found that over half of businesses do not fully understand the rules on “unfair terms”.  A large number of businesses have standard terms for their services which are outdated, non-compliant or perhaps even not making full use of the rules, and leaving them exposed.

What About Brexit?

The ever-present topic of Brexit will always throw doubt into most commercial matters of today and the issue of consumer rights is no exception. Given the CRA 2015 derived from EU legislation, the UK would be free to repeal the Act following its departure from the EU. It is unlikely that such a move would be a priority of the government following our exit, but changes may well come down the line and it is important to keep up to date and be aware of what obligations are on you as a business.

How To Prevent Issues Down The Line

The CMA also states in its report that the average businesses reviews their consumer contracts only once every four to five years. This means that businesses are risking their contracts becoming outdated in light of new laws. The CRA imposes the most important new rules at this time and it is estimated only 15% of businesses are familiar with it. It is therefore paramount that businesses have a system in place for regular reviews of their consumer documentation.

The CMA also found that even when businesses do conduct a review, they typically use an internal member of staff who does not understand the law in this area and its most recent changes. All contracts, consumer or otherwise should be periodically reviewed by you and a legal advisor.  Here at Tilly Bailey & Irvine Law Firm we have experts who can carry out a review of your terms and conditions and help you prepare a consumer contract you can rely on