New consumer rights in force on 1 October—are you ready? (Part 2)

On Wednesday, we wrote about the new right to a discount under unfair trading laws that will come into force on 1 October (eg in only 19 days from now).

As you may recall, the Consumer Protection (Amendment) Regulations 2014 insert three new remedies into the Consumer Protection from Unfair Trading Regulations 2008.

Under the Regulations, if a business has misled a customer or sold goods or services to them in an aggressive manner, they may be entitled, depending on the circumstances, to rely on some or all of the following significant new remedies:

  • right to a discount
  • right to unwind the contract, and
  • right to damages.

Today, we will look at the second of these remedies: the right to unwind the contract.

Cue nifty graphic (and appropriate unwind icons):

righttounwind

So provided the conditions above are satisfied, the right to unwind applies, even if no loss has occurred.

Sorry, 'no loss'? And yet the right to unwind still applies?

Yes.

As with the right to a discount, the right to unwind the contract applies even if the customer has not lost any money or incurred any costs.

In addition, a consumer doesn't even need to show that the trader acted dishonestly, recklessly or even negligently in order to claim this right.

This flowchart sets out how this right works in practice for business to consumer contracts. It also shows the right to unwind in the context of the other two rights.

flowchart

As with the right to a discount, this right is a strict liability remedy. This means that even if a trader has done its utmost to avoid falling foul of the law, this won’t matter. There is no ‘due diligence’ defence.

That said, even if there is no defence as such, businesses would be wise to ensure that they do have proper and robust systems in place to comply with the law as, self-evidently, this should mean they do not fall foul of it.

This means understanding sales processes, changing them where necessary, and training staff properly about the new regime.

Where can I get more information?

Lexis®PSL Commercial also wrote about the new law, the Consumer Protection (Amendment) Regulations 2014, in May:

https://twitter.com/LexisUK_News/status/464410660085170176

And if you are a subscriber to Lexis®PSL Commercial, don't forget about our Practice Note on the new law:

https://twitter.com/LexisUK_Comml/status/488677039080472576

Finally the Department for Business, Innovation and Skills has also produced guidance for businesses on this new law (in Part 2 from page 11 onwards).

Next week, we'll be looking at the final remedy: the right to damages.

In the meantime, if you have any thoughts on this new regime, let us know below.

Area of Interest