BUSINESS ADVICE PACK. London Borough of Sutton Business Development & Regulation Service

Transcription

1 London Borough of Sutton Business Development & Regulation Service Incorporating: Trading Standards, Commercial Premises, Licensing, Business Development and Health & Safety Civic Offices St Nicholas Way SUTTON SM1 1EA BUSINESS ADVICE PACK 1

2 Business Advice Pack Contents A Guide to the Consumer Protection from Unfair Trading Regulations 2008 Accurately describing goods and services Electrical equipment Staying legal during the Olympics A trader's guide to the civil law relating to the sale and supply of goods Price marking of goods for retail sale Returns policies: a guide for retailers Unsafe goods - liability for damage or injury Companies and business names Page 3 Page 7 Page 10 Page 12 Page 14 Page 19 Page 22 Page 24 Page 27 2

3 A Guide to the Consumer Protection from Unfair Trading Regulations 2008 The Consumer Protection from Unfair Trading Regulations 2008 (the CPRs) came into force on 26 May 2008 and implement the European Union-wide Unfair Commercial Practices Directive (UCPD). The aim of the UCPD is to harmonise consumer protection laws across the European Union to prevent business practices that are unfair to consumers and all Member States are introducing equivalent legislation. The Regulations replace a lot of consumer protection legislation including Part III of the Consumer Protection Act 1987 (which dealt with misleading prices), the majority of the Trade Descriptions Act 1968, and the Control of Misleading Advertising Regulations What do the Regulations cover? The CPRs cover commercial practices between traders and consumers - 'acts, omissions, course of conduct, representation or commercial communication (including advertising and marketing) by a trader, which is directly connected with the promotion, sale or supply of a product to or from consumers, whether occurring before, during or after a commercial transaction (if any) in relation to a product'. A 'product' is any goods or service and includes rights and obligations. What is prohibited? Effectively the CPRs prohibit trading practices which are unfair to consumers. There are four different types of practices to consider: 31 specific practices which are always considered to be unfair, misleading actions and omissions, aggressive practices and a general duty not to trade unfairly. For the last three practice types above it is necessary to show that the action of the trader has an effect (or is likely to have an effect) on the actions of the consumer. There does not have to be a physical consumer as this is a test looking at how the average consumer is, or is likely to be, affected. The CPRs identify three different types of consumer - the average consumer, the targeted consumer and the vulnerable consumer - recognising that different types of consumers may react to a practice in different ways. 1. Practices prohibited in all circumstances Schedule 1 to the CPRs (reproduced in the attached appendix - PDF 43KB) introduces 31 practices, which are always considered to be unfair and therefore are banned in all circumstances. These include: False endorsements/authorisations: False claims of membership of trade associations. Claiming a product has been approved by a public or private body when it has not. Misleading availability: Bait advertising (or 'bait and switch') where a trader lures a consumer into believing he can buy a product at a low price when the trader is aware he does not have reasonable stock available or is not able to supply at that price, or attempts to 'sell-up' to a higher priced product. Falsely stating a product is only available for a very limited time in order to make the consumer make an immediate decision. 3

4 Misleading context/effect: Claiming a trader is going to cease trading or move premises when he is not (e.g. bogus closing down sales). Falsely claiming a product has curative properties. Describing a product as 'free', 'gratis', 'without charge' or similar if a consumer is going to have to pay more than the cost of responding to the advertisement and collecting or paying for delivery of the item. Including an invoice or similar in marketing material, implying a consumer has ordered the product when he has not. Failing to make it clear that a person is actually a trader or creating the impression he is a consumer (e.g. failing to indicate trade status when selling a second-hand car). Pyramid schemes: Operating or promoting such schemes are specifically prohibited, provided they fit within the definition of a pyramid scheme (i.e. a scheme where a consumer gives consideration for the opportunity to receive compensation that is derived primarily from the introduction of other consumers into the scheme, rather than from the sale or consumption of products). Prize draws: Competitions where the prizes described (or equivalent) are not awarded. Creating the false impression that a consumer has won, or will win, a prize when there is no prize or claiming the prize is subject to the consumer paying money or incurring a cost. Aggressive sales: Creating the impression a consumer can't leave the premises until a contract is formed. Visiting a consumer at home and refusing to leave when asked to leave (except when the trader has a legal right to enforce a contractual obligation). Making persistent and unwanted solicitations by phone/fax/ (except when a trader has a legal right to enforce a contractual obligation). Making a direct exhortation to children to buy a product or to persuade their parents to buy a product for them (pester power). Telling a consumer a trader's job will be in jeopardy if the consumer does not buy the product. Unreasonable demands: Requiring a consumer who wishes to claim on an insurance policy to produce irrelevant documents or failing to respond to correspondence in order to dissuade the consumer from exercising his contractual rights. 2. Misleading actions and omissions The CPRs prohibit misleading actions and misleading omissions which cause, or are likely to cause, the average consumer to take a different transactional decision, i.e. any decision taken by the consumer concerning the purchasing of the product or whether to exercise a contractual right in relation to the product, including decisions not to act. This does not only relate to pre-shopping but includes after-sales and continues for the lifetime of the product. 2.1 Misleading actions (regulation 5) This regulation prohibits giving false information to, or deceiving, consumers. A misleading action occurs when a practice misleads through the information it contains, or its deceptive presentation, and causes, or is likely to cause, the average consumer to 4

5 take a different transactional decision. There are three different types of misleading actions: misleading information generally (see below) creating confusion with competitors' products failing to honour commitments made in a code of conduct The information which may be considered as misleading is very wide and listed in the legislation itself, including such things as: the existence or nature of the product the main characteristics of the product, e.g. the benefits of the product or the geographical origin the price or the manner in which it is calculated the need for a service, part, replacement or repair the nature, attributes and rights of the trader, e.g. qualifications 2.2 Misleading omissions (regulation 6) This regulation prohibits giving insufficient information about a product. It is a breach of the CPRs to fail to give consumers the information they need to make an informed choice in relation to a product if this would cause, or be likely to cause, the average consumer to take a different transactional decision. A trader is required to give consumers material information which is the information the average consumer needs, according to the context, to make an informed choice. It is a breach of the CPRs: to omit material information to hide material information to provide material information in a manner which is unclear, unintelligible, ambiguous or untimely to fail to identify the commercial intent (unless this is apparent from the context) 3. Aggressive practices (regulation 7) The CPRs prohibit aggressive commercial practices which intimidate or exploit consumers, restricting their ability to make free or informed choices. In order for an aggressive practice to be unfair it must cause, or be likely to cause, the average consumer to take a different transactional decision. A commercial practice is aggressive if: it significantly impairs, or is likely to significantly impair the average consumer's freedom of choice or conduct in relation to the product through the use of harassment, coercion or undue influence and it thereby causes him to take a different transactional decision To decide if a practice breaches this regulation, account shall be taken of: timing, location, nature or persistence use of threatening or abusive language or behaviour exploitation by the trader of any specific misfortune or circumstance which impairs the consumer's judgement, in order to influence the consumer's decision with regard to the product any onerous or disproportionate non-contractual barrier imposed by the trader where a consumer wishes to exercise rights under the contract (e.g. rights to terminate the contract or switch to another product or trader) any threat to take action which cannot legally be taken N.B. 'coercion' includes the use of physical force, and 'undue influence' means exploiting a position of power in relation to the consumer so as to apply pressure, even without the using or threatening to use physical force, in a way which significantly limits the consumer's ability to make an informed decision. 5

6 Physical force, in a way which significantly limits the consumer's ability to make an informed decision. 4. General duty not to trade unfairly (regulation 3) This is effectively failing to act in accordance with reasonable expectations of acceptable trading practice. Regulations 3(1) and 3(3) set out a general prohibition of unfair business to consumer practices and will allow action to be taken in relation to unfair practices which do not fit into the more specific prohibitions. This will cover a wide range of unfair practices including practices which may emerge in the future. The general prohibition prohibits practices that: contravene the requirements of professional diligence (defined as the standard of special skill and care which a trader may reasonably be expected to exercise towards consumers which is commensurate with either honest market practice in the trader's field of activity, or the general principle of good faith in the trader's field of activity) materially distort the economic behaviour of the average consumer (or are likely to) with regard to the product (i.e. appreciably to impair the average consumer's ability to make an informed decision thereby causing him to take a transactional decision that he would not have taken otherwise) What are the consequences of non-compliance? Enforcers may take civil enforcement action in respect of a breach of the CPRs under Part 8 of the Enterprise Act This can be done by applying to a court for an enforcement order and a breach of any order could lead to up to two years imprisonment and/or an unlimited fine. The CPRs also contain criminal offences, which can be prosecuted by the Office of Fair Trading (OFT), trading standards services, or the Department of Enterprise, Trade & Investment in Northern Ireland (and by the Lord Advocate in Scotland). The penalties are: on summary conviction, a fine not exceeding the statutory maximum (currently 5,000) on conviction on indictment, an unlimited fine or imprisonment for up to two years, or both This can only be a general guide to the regulations. For more comprehensive guidance (with examples) please visit the OFT website. 6

7 Accurately describing goods and services A guide for businesses about the requirements about the way in which they can describe goods and services since the majority of the Trade Descriptions Act 1968 was repealed in May It has now been replaced by a European piece of legislation called the Consumer Protection from Unfair Trading Regulations Whilst there was a substantial amount of case law relating to the Trade Descriptions Act 1968, there is currently no case law on the new Regulations, so the information in this leaflet is based on the current interpretation of the law. The advice might change in the light of matters being decided in the courts. What does the law require? The Regulations cover commercial practices, which includes any act, omission, course of conduct, representation or commercial communication (including advertising and marketing) by a trader that is directly connected with the promotion, sale or supply of a product to consumers. A trader must not mislead a consumer about a product (this is defined very broadly and includes goods, services, rights and obligations) in any way by giving false or deceptive information about a number of specific matters. They must also not omit information about a product which a consumer would need in order to make an informed decision. It should be noted that to breach the majority of the Regulations the misleading action or omission must cause, or be likely to cause, the average consumer to make a different transactional decision (e.g. make a purchase which they would not otherwise have made). The Act is not intended to cover insignificant inaccuracies but ultimately only a court can decide whether the actions of a trader would affect the average consumer in an adverse way. However there are some practices that are banned in all circumstances. How can a misleading action or omission be given? Misleading actions and omissions can be given verbally, in writing (e.g. in an advert or brochure, or on an invoice or order form), by illustration (e.g. in advertisements or on packaging) or by implication. In addition, if goods are supplied in response to a request that includes a specific description (e.g. a customer specifies they want a granite worktop), it is possible that it would be held that the supplier of the goods has applied the description themselves. What are the specific breaches of the Regulations (relating to goods, services, rights and obligations)? It is a breach of the Regulations (and potentially a criminal offence) to engage in an unfair commercial practice. A practice is unfair if: it is a misleading action (it contains false or misleading information - and is therefore untruthful in relation to a list of specified matters - or if its overall presentation in any way deceives or is likely to deceive the average consumer) - or it is a misleading omission (it omits information which the average consumer needs to take an informed transactional decision) If the trader's actions would cause the average consumer to take a different transactional decision (which could be to buy as opposed to not buy, having work done or not. or paying a different amount for goods). The law also introduces a general duty not to trade unfairly. 7

8 Certain specific actions are prohibited in all circumstances regardless and it is not necessary to show an effect, or a likely effect, on the average consumer - please see the leaflet mentioned above. If it is decided to prosecute, the offences under the Regulations (other than the 'general duty not to trade unfairly') are strict liability offences, i.e. it is possible for a trader to commit an offence without intending to do so. What descriptions are covered by the Regulations? The following matters are specifically covered when looking at a misleading action: the existence or nature of the product the main characteristics of the product, which includes: - availability - benefits - risks - execution - composition - accessories - after-sales service - handling of complaints - method and date of manufacture - method and date of provision - delivery - fitness for purpose - usage - quantity - specification - geographical or commercial origin - results to be expected - results and material features of tests or checks carried out the extent of the trader's commitments the motives for the commercial practice the nature of the sales process any statement or symbol relating to direct or indirect sponsorship or approval of the trader or product the price or the manner in which the price is calculated the existence of a specific price advantage the need for a service, part, replacement or repair the nature, attributes and rights of the trader, which include his: - identity - assets - qualifications - status - approval - affiliations or connections - ownership of industrial, commercial or intellectual property rights - and - awards and distinctions 8

9 Are there any relevant parts of the Trade Descriptions Act 1968 left? Section 12 of the Act remains in force and should be noted as follows: it is an offence to falsely state or imply that any goods or services are of a kind supplied to, or it is an offence to falsely state or imply that any goods or services are of a kind supplied to, or approved by, the Queen or any other member of the Royal Family (e.g. by the misuse of the phrase or emblem 'By Royal Appointment') it is also an offence to use, without the authority of the Queen, any device or emblem signifying the Queen's Award to Industry or anything that closely resembles such an emblem it is also an offence to falsely state or imply that any goods or services are of a kind supplied to any other person (e.g. by stating 'council contractor'/as supplied to X) Who can commit an offence under the new Regulations? A 'trader', which means any person who in relation to a commercial practice is acting for purposes relating to his business and anyone acting in the name of or on behalf of a trader. This would include directors, managers and all levels of employees. How can a trader avoid committing an offence? The Regulations provide a trader with the defence that the commission of an offence was due to a mistake, or to reliance on information supplied to him, or the act or default of another person, an accident or some other cause beyond the trader's control - and that he took all reasonable precautions and exercised all due diligence to avoid the commission of such an offence by himself or any person under his control. In simple terms, this means that a system should exist to avoid unfair commercial practices, and that the system should be followed. Under the Trade Descriptions Act 1968, a practice of using disclaimers to avoid committing offences had become prevalent. Due to new requirements in these Regulations, particularly concerning the 'misleading omission', the use of disclaimers may no longer be applicable until tested in the courts. What are the penalties? Failure to comply with the Consumer Protection from Unfair Trading Regulations 2008 is a criminal offence. The maximum penalty on conviction at a magistrates' court is a fine of 5,000 per offence. The maximum penalty on conviction in a crown court is an unlimited fine and/or two years imprisonment. Purchasers of misdescribed goods/services are likely to seek redress through the civil courts. Enforcers may also take civil enforcement action under the Enterprise Act 2002, which could include a court order to ensure a business complies with the legislation in the future. The Business Protection from Misleading Marketing Regulations 2008 The Business Protection from Misleading Marketing Regulations 2008 have replaced the Trade Descriptions Act 1968 insofar as that Act protects businesses. They prohibit business-to-business misleading advertising and impose further restrictions on how businesses compare their products to rival products from other companies. 9

10 Electrical equipment Electrical equipment designed for use between 50 and 1000 volts AC or 75 and 1500 volts DC are required to comply with the Electrical Equipment (Safety) Regulations The Regulations therefore apply to electrical equipment that is designed to be connected to a domestic mains electricity supply, as well as to some industrial equipment. Components of electrical equipment are also covered if they are to be supplied as separate items. Second-hand items (including items for hire and equipment supplied as part of a furnished accommodation) are only required to satisfy the general safety requirement. They are not required to be CE marked, etc. General safety requirement: Electrical equipment must be: safe constructed in accordance with principles constituting good engineering practice, and in particular protecting against electric shock in conformity with the safety objectives contained in Schedule 3 to the Regulations, including: - marked with the manufacturer s brand name or trade mark (this can be on the packaging) - designed so that the equipment can be safely and properly assembled and connected - instructions and information required for the equipment to be used safely must be marked on the equipment or in an accompanying notice - operate at a safe temperature with no dangerous arcing or radiation Satisfying the general safety requirement: if the electrical equipment complies with a harmonised European standard, it is automatically taken to be safe 1. if there is no relevant harmonised European standard, compliance with international standards will be sufficient 2. if there are no relevant international standards, compliance with a national standard will be sufficient provided that standard includes everything in the general safety requirement 3. Certain notified bodies are permitted to test and report on electrical equipment and to state whether or not they are safe. Please contact your local trading standards service for a list of these bodies. Labelling and records: A manufacturer or his authorised representative within the European Economic Area (EEA) must: Affix a CE mark to the equipment, the packaging, instruction sheet or guarantee certificate - the CE mark is a declaration that the equipment complies with the Regulations. Draw up and hold an EC declaration of conformity, which should contain: the name and address of the manufacturer or his authorised representative a description of the electrical equipment; a reference to the harmonised standards used to assess compliance if no harmonised standard, then a reference to other specifications identification of the person who will enter into commitments on behalf of the manufacturer or authorised representative (if appropriate) the last two digits of the year in which the CE marking was affixed 10

11 Compile and hold technical documentation, which must be kept for at least ten years after manufacture of that model of equipment has ceased. This should contain: a general description of the electrical equipment the conceptual design, manufacturing drawings, details of components, etc., along with information to help interpretation of these a list of the standards with which the electrical equipment complies, or a description of what has been done to ensure compliance with the general safety requirement if standards were not used results and reports of tests, examinations, calculations, etc. Who should keep the documentation? The declaration of conformity and the technical documentation must be kept and be available for inspection by enforcement bodies (including trading standards) by: the manufacturer if he is in the European Economic Area his authorised representative if he is outside the EEA if neither of the above, the importer into the EEA Quality assurance: The manufacturer must ensure that his manufacturing process always produces electrical equipment that conforms to the technical documentation. In practice, this means having adequate quality assurance systems. Other CE marking Regulations that may apply: Electromagnetic Compatibility Regulations 2005 (contains provisions prohibiting electromagnetic emissions from electrical equipment interfering with the operation of other equipment) Toys (Safety) Regulations 1995 (also contain a general safety requirement) Radio Equipment and Telecommunications Terminal Equipment Regulations 2000 Supply of Machinery (Safety) Regulations 2008 Medical Devices Regulations 2002 (further information is available from the Medicines and Healthcare products Regulatory Agency website or telephone ) 11

12 Staying legal during the Olympics London Olympics 2012 will be one of the biggest sporting events in the nation's history and it will be a time when businesses may be looking at ways of increasing interest in their products or services. How can this done legally? This is a complex area and you may have some sector specific questions. This leaflet's aim is to bring to your attention the key areas of law covering to Olympic related trading. To ensure success of the games the organisers rely on sponsorship and it is through this sponsorship that money can be used for the infrastructure and construction of venues and so forth. Therefore the Olympic brand itself is very well protected in law and you should take time to make sure that you will not be risking action from the organisers (The London Organising Committee for the Olympic Games - LOCOG) or other enforcement agencies. In general terms you should be very careful of any claims and/or associations with the Olympics. Even terms and references that do not directly reference 2012 may not comply. London Olympic Games and Paralympics Games Act 2006: This Act gives LOCOG the power to give their sponsors the right to associate themselves with the games. In other words this means that unless you have received prior authorisation you cannot falsely suggest any association at all with the games. There is a list of combinations of 'Listed expressions' that a court can take into account when looking into whether an association has been created. These are any two from list A or any word from list A with one or more words from list B: A: games, Two Thousand and Twelve, 2012, twenty twelve B: London, medals, sponsors, summer, gold, silver, bronze Please note that an unlawful association may be created without using the listed expressions. The court may look into the overall impression that is created taking into account words, images, marks. In particular athletic images, torches, flames, rings etc. If you are an established business (e.g. 'Olympic Cafe trading since 1980') then the above will not apply but you cannot further suggest an association with the games through other means. Olympic Symbol etc. Protection Act 1995: This Act makes it unlawful to use symbols, mottos or logos associated with the Olympics in the course of trade - and this does not only apply to the 2012 games. Words that are closely related such as 'Olympix' are also covered. Infringing goods can be seized by local authority trading standards officers. A list of protected games' marks can be found on the London 2012 website. Trade Marks Act 1994: This Act prevents unauthorised use of trade marks in the course of a business. Consumer Protection from Unfair Trading Regulations 2008: This Act places a general duty on all businesses to trade fairly but also has specific offences relating to: 'Claiming that a trader (including his commercial practices) has been approved, endorsed or authorised by a public or private body when the trader, the commercial practices or the product have not or making such a claim without complying with the terms of the approval, endorsement or authorisation.' 12

13 Where can I get help on how to comply? Your local trading standards service will be able to provide guidance regarding best practice on complying with the law. You should also see the list of 'Frequently asked questions' on the London 2012 website. 13

14 A trader's guide to the civil law relating to the sale and supply of goods This document is a guide to the rights and obligations that arise when a consumer buys goods from a trader. It answers questions which are commonly raised by traders about their obligations towards the individual consumer. Contracts that involve credit or finance in any form are also subject to additional rules which are not covered in this document. Traders also have duties towards consumers in general (for example to ensure that descriptions are accurate) - these duties are not covered in this document. What is a consumer? Under the Sale and Supply of Goods to Consumer Regulations 2002 a consumer is defined as being a 'natural person [...] acting outside his trade, business or profession'. FORMING A CONTRACT: The contract: When a consumer buys goods and/or services from a trader, both consumer and trader are seen to be entering into a binding contract. The contract may include various express terms and implied terms. Express terms are those that are specifically agreed between both parties - for example, the price in most contracts or an agreed delivery date. Implied terms are those which are deemed to exist even if they have not been specifically agreed - they cover issues such as quality, description and fitness for purpose (usually referred to as consumer or statutory rights). Failure to comply with the terms of the contract is referred to as a breach of contract and the person committing the breach normally has to correct it in some way. In order for an express term to be binding it must clearly be part of the contract and be legal. Terms given to a consumer after the contract is made (for example, terms written only on the back of a receipt) are not part of the contract and they have no effect. A contract does not have to be written down but where there are key express terms it is advisable to detail these in writing so there can be no dispute later on. How is the contract made? When a trader displays or advertises goods or services (for example, by displaying goods on a shelf in a shop alongside a price ticket) they are giving consumers what is referred to as an 'invitation to treat'. The consumer can then make an offer to buy the goods or services. At this point the trader is under no obligation to accept the offer - a contract is made if and when the trader accepts. Sometimes, the process works the other way round, i.e. the trader makes an offer to the consumer and a contract is made when the consumer accepts the offer. Under the contract, the consumer will agree to pay the trader a sum of money and/or to do something else in return for the goods or services the trader supplies. This commitment is known as the 'consideration' in the contract. If there is no consideration (i.e. if a trader offers to supply goods or services completely free of any charge or other obligation) there is no contract at all. What happens when the consumer changes their mind? Normally, a consumer has no automatic right to change their mind and to cancel a contract. Therefore if this happens they are in breach of contract. There is, however, an 14

15 automatic right to cancel in some special cases, including most consumer contracts made at a distance (e.g. mail order or Internet) or at a consumer's home. When the consumer cancels the contract wrongfully the trader may not be able to recover the lost sale and could be entitled to claim loss of profit and any other reasonable costs incurred. THE IMPLIED TERMS: Sale and supply of goods: The law provides that in every transaction for the sale and supply of goods (including hire purchase, hire, part exchange and contracts for work and materials) certain terms are implied. The person transferring or selling the goods must have the right to do so and the goods must: - Correspond with the description: Many transactions involve a description of some kind. When goods are supplied and the consumer relies on such a description, the goods must be 'as described'. If the description is false, a criminal offence may also have been committed. - Be of a satisfactory quality: Goods must be of a standard that a reasonable person would regard as satisfactory (taking into account any description applied to them, the price and all other relevant circumstances). Quality is a general term which covers a number of matters including: appearance and finish freedom from minor defects safety durability In assessing quality, all relevant circumstances must be considered, including price and description. In consumer contracts, the manufacturer's advertising can also be taken into account. - Be fit for the purpose: When a consumer indicates that goods are required for a particular purpose or where it is obvious that goods are intended for a particular purpose, and a trader supplies them to meet that requirement, the goods should be fit for that specified purpose. REMEDY FOR BREACH: A consumer can reject goods providing that they have not accepted them (in the case of a contract of sale) or that they have not affirmed the contract (in other contracts where goods are transferred such as hire, hire purchase or contracts for work and materials). Acceptance and affirmation are defined below. When a consumer rejects goods they can claim compensation for their losses. This will normally amount to a full refund, plus compensation for any foreseeable losses that have been incurred. These losses might include the cost of any property damage caused by the goods, compensation for personal injury and compensation for the additional cost of buying equivalent goods if they are more expensive elsewhere. The consumer is also released from all their outstanding obligations under the contract for example, the outstanding instalments in a contract of hire purchase. If a consumer is buying goods for business use, they cannot reject goods if the breach of contract is very minor, but they will still be in a position to claim compensation. 15

16 What are acceptance and affirmation? When acceptance or affirmation take place, the consumer loses the right to reject goods, although they may still retain a right to compensation or some other remedy. Acceptance applies only in contracts for the sale of goods. Examples of acceptance are as follows: the consumer telling the trader that they have accepted the goods altering the goods in some way keeping the goods for more than a reasonable time without complaining (this time period may vary depending on the nature of the goods and is not strictly defined in law using the goods after complaining A consumer is not considered to have accepted the goods just because they let the trader attempt a repair or where they have merely signed an acceptance or delivery note. A consumer must have a reasonable opportunity to examine the goods to check that they conform with the contract before they are deemed to have accepted them. Affirmation applies in other contracts for the transfer of goods, including hire, hire purchase and contracts for work and materials. Affirmation takes place when the consumer, knowing that there is a breach of contract, chooses to keep the goods and not to reject them. Affirmation can occur if the consumer becomes aware of a breach but fails to complain within a reasonable time. Remedies where the consumer cannot reject the goods: When there is a breach of contract, but the consumer has lost their right to reject goods, they will be entitled to claim compensation from the trader. The amount of compensation will be the sum required to put right the breach. Usually, this will be the cost of repair or replacement - or a part refund plus compensation for any other losses suffered. If a repair or replacement would put the breach right and the trader offers this, the consumer would normally be expected to accept it. Additional remedies for consumer buyers: Under the Sale and Supply of Goods to Consumers Regulations 2002, there are additional remedies where the buyer is acting as a consumer (see definition at the top of this document) in contracts for the sale or supply of goods (but not in contracts of hire and hire purchase). In these circumstances, the consumer may be able to demand any of the following: a repair or replacement a price reduction to an appropriate amount taking the defect into account rescission of the contract (i.e. return of the goods, part or full refund, and compensation, if appropriate) If the consumer chooses one of these remedies, and if the defect is discovered within six months of delivery to the consumer, it is automatically assumed that the fault was there at the time of delivery unless the trader can prove otherwise. If more than six months have passed, the consumer has to prove the defect was there at the time of delivery (even if it was not apparent at that time). If the consumer chooses the option of a repair or replacement, the trader must do this within a reasonable time and without significant inconvenience to the consumer. The trader must also pay all the relevant costs, e.g. labour, postage, etc. Where a consumer demands a repair or replacement, but that remedy would be disproportionate, then the trader would be entitled to offer them one of the other remedies. For example, if a consumer demands a repair, but it would be 16

17 cheaper to replace the item than to repair it, the trader could offer a replacement. The consumer can only require a price reduction or rescission where the cost of repair or replacement is disproportionate or where repair/replacement are not provided within a reasonable time. Exceptions - when the consumer cannot make a claim: A consumer has no rights in respect of defects that are brought to their attention before the sale, or if the consumer examines the goods before purchase and any defects should have been obvious. A consumer cannot claim for damage they cause or if they simply change their mind about wanting the goods. Neither can a consumer claim if they choose the product themselves for a purpose which is neither obvious nor made known to the trader and they then find that the item is simply unsuitable for that purpose. A consumer has no rights to claim for faults that appear as a result of fair wear and tear. OTHER LAWS AFFECTING CONSUMER CONTRACTS: Supply of services: Any service you provide must be carried out: with reasonable skill and care for a reasonable price (unless a price has been agreed) within a reasonable time (unless time is an express term, i.e. when a completion date has been agreed at the time the contract was made) Loss or damage in transit: If the trader arranges for goods to be delivered to a consumer, the goods remain at the trader's risk until delivery. Therefore it is the trader's responsibility to ensure that goods are not lost or damaged in transit and/or to take out appropriate insurance. Misrepresentation: A misrepresentation is a false statement of fact made by a person or their agent which induces someone else to make a contract with them. Dependent upon whether the misrepresentation was made fraudulently, negligently or innocently, the party who has relied on the misrepresentation will be entitled to a remedy that may include rescission, refund and/or compensation. The Unfair Contract Terms Act 1977: This legislation restricts a trader's ability to use contract terms to limit their legal and contractual liabilities. A trader cannot limit or exclude liability for death or personal injury arising from his/her negligence. In consumer contracts, traders cannot limit or exclude liability for breaches of the implied terms as to description, quality and fitness for purpose of goods. In addition, any attempt to mislead the consumer about their rights is an offence under the Consumer Protection from Unfair Trading Regulations In business-to-business contracts, liability in respect of these implied terms can be limited, but only in so far as is reasonable, considering all of the circumstances under which the contract was made. The Unfair Terms in Consumer Contracts Regulations 1999: These regulations, which only apply to consumer contracts, say that a consumer is not bound by a standard term in a contract with a trader if that term is unfair. Examples of unfair terms would include the following: penalty clauses which allow the trader to claim more than their actual losses when a consumer 17

18 breaches the contract terms that are unclear or unintelligible terms which exclude liability for breach of contract terms which deny the consumer their legal rights if they do not comply with formalities as to the time or manner of making the claim (e.g. making a complaint in writing by recorded delivery) giving the trader the right of final decision in a dispute The regulations do not apply to terms negotiated with individual consumers, nor do they apply to the core subject matter of the contract (such as the description of the goods/services, and the price). The Consumer Protection Act 1987 (Part 1): This legislation allows a person to claim compensation if they are injured by a defective product. Depending on the circumstances, a claim might be made against anyone in the supply chain from manufacturer/importer to retailer. Compensation can also be claimed under this Act for damage to personal property (but not damage to business property). The Contracts (Rights of Third Parties) Act 1999: This legislation gives rights to anyone who was intended to benefit from the transaction. For example, if someone buys a gift for a friend and the gift proves to be faulty, the recipient or the buyer of the gift can take action for breach of contract (as long as it was made clear that the goods were to be given as a gift). The trader's identity: The consumer needs to know or to be able to find out who they are dealing with. A trader's identity and address must be displayed at their place of business, on key business documents and on websites. This information must also be made available to consumers before a contract is made and whenever a consumer requests it. See our leaflet 'Companies and business names'. If a trader fails to disclose that it is a limited company and there is then a breach of contract, the consumer may be able to claim against the directors of the business as individuals. If a trader fails to disclose that it is acting as an agent for someone else, then the consumer may be able to make any claim directly against that trader. Uncollected goods: Occasionally consumers fail to collect their goods after having them repaired or forget to pick up dry-cleaning. Section 12 of the Torts (Interference with Goods) Act 1977 sets out what action a trader should take to Section 12 of the Torts (Interference with Goods) Act 1977 sets out what action a trader should take to get the goods collected and makes it clear what they can do if they are not. It is sufficient to have a notice, which is easily visible to consumers, stating how long the trader will keep goods after repair and an intention to dispose of them after this date. Any time period would need to be reasonable. If no notice is displayed, the trader may need to send a registered letter to the consumer specifying that the goods are ready for collection and from where. It also should state the amount owing. Additional notification must also be given if the trader intends to sell or dispose of the goods after a certain date and how additional proceeds from the sale can be collected. 18

19 Price marking of goods for retail sale A guide for retailers which explains the main requirements of the Price Marking Order 2004 and brief details of the Consumer Protection from Unfair Trading Regulations The Price Marking Order 2004 applies to products only and is limited to sales between traders and consumers. It does not apply to services or products supplied in the course of the provision of a service. The Order also does not apply to sales by auction or sales of works of art or antiques. The Consumer Protection from Unfair Trading Regulations 2008 are similarly limited to sales between traders and consumers and prohibits traders from giving misleading information to consumers about prices. The regulations have revoked previous legislation that governed the way prices had to be displayed, including parts of the Trade Descriptions Act 1968, Part III of the Consumer Protection Act 1987 and the Control of Misleading Advertising Regulations The Department for Business, Innovation and Skills(BIS) issued a Pricing Practice Guide which gives advice to traders on good practice in giving information about prices. There are separate regulations called the Business Protection from Misleading Marketing Regulations 2008 that cover business-to-business transactions What does the order require? Where goods are offered for retail sale the selling price and, where appropriate, the unit price (e.g. 65p per 100 grammes) must be given to consumers in writing (including prices in catalogues, shops and online). Small shops which have a retail area of less than 280m² do not need to display a unit price. How should price indications be given? When selling to the general public, all pricing information must be clearly legible, unambiguous, easily identifiable and inclusive of VAT and any additional taxes. Pricing information must be given close to the product, or in the case of distance contracts (e.g. online or mail order sales) and advertisements, close to a picture or written description of the product. In relation to sales by telephone, price indications must be clearly audible and linked to the subject of the transaction. Prices can be shown: on goods themselves on a ticket or notice near to the goods grouped together with other prices on a list or catalogue(s) in close proximity to the goods if counter catalogues are used, there should be sufficient copies for consumers to refer to Pricing information must be available, i.e. clearly visible, to consumers without them having to ask for assistance in order to see it. Legibility refers to a consumer with normal sight. Traders must also comply with the Disability Discrimination Act 1995 and take account of the special needs of the elderly and disabled groups. Traders are encouraged to take account of the Royal National Institute for the Blind's 'Clear Print' guidelines. Goods that are kept out of sight of the consumer are exempt from price marking until an indication is given that they are for sale. 19

20 What about goods in shop windows? Items displayed for sale in a shop window should display pricing information as per the above requirements. Exceptions to this are jewellery, precious metal or watches - where the individual selling price is more than 3,000 - which need not bear pricing information in close proximity to the item, i.e. in the window. The pricing information must still, however, be given elsewhere, e.g. by means of a price list in store. Window displays, which do not contain products that are removed and sold to consumers, may be regarded as being purely promotional. They will fall within the definition of 'advertisement' and be exempt. Traders are advised to contact their local trading standards service for guidance on this matter. Can price indications be in a foreign currency? If a trader indicates that he is willing to accept foreign currency for the purchase of a product, in addition to the required price indications in sterling he must also: give the price in the foreign currency together with any commission to be charged clearly give the conversion rate together with the commission to be charged indicate that these do not apply to transactions via a payment card for a non-sterling account What about VAT and other charges? All price indications that can be seen by consumers must include VAT and any other compulsory charges or taxes. Postage, packing or delivery charges may be shown separately as long as they are unambiguous, easily identifiable and clearly legible. If the rate or application of VAT or any other tax changes: general notices in store may be used for up to 14 days after the change takes effect, indicating that prices will be adjusted at the till to reflect the change in tax catalogues and sales literature may continue to be distributed providing: - a label is attached indicating prices will be adjusted to reflect the change - there is sufficient information to allow adjusted prices to be established or - a supplement accompanies the catalogue/sales literature, which enables consumers to establish the selling price What are the unit pricing requirements? A unit price must be given when products are as follows: sold loose from bulk (e.g. fruit and vegetables, meat and fish) or required by the Weights and Measures Act 1985 to be marked with an indication of quantity or to be made up in a prescribed quantity (e.g. wine) - a summary of the requirements under weights and measures legislation is given below in Annex A A unit price must be given in adverts only where the selling price of a product is indicated. The unit price for most products is the price per kilogram, litre, metre, square metre, or cubic metre andthe unit 'one' for goods sold by number. Certain items, identified in Annex A, are exempt from this requirement and the unit price should be given for an alternative quantity (e.g. price per 100g for sweets). Similar products should use the same unit for unit pricing purposes to allow consumers to readily compare prices between them. For solid food products in a liquid medium (i.e. water, brine, vinegar, syrups and fruit or vegetable juice) the unit price must refer to the net drained weight of the product. Traders can give the imperial equivalent unit price, provided the metric unit price is given greater prominence and the imperial equivalent equates to the metric price. Where the unit price falls below 1 it must be given to the nearest 0.1p. If it is above 1 it may be given to the nearest 1p or 0.1p. 20

21 The following do not require an indication of selling price: advertisements (this exemption does not apply to catalogues, or to advertisements which are intended to encourage distance contracts, e.g. via the Internet, or mail order adverts in newspapers) products sold loose from bulk (these will require unit pricing - selling price refers to the final price payable for a given quantity of a product) The following do not require an indication of the unit price: advertisements by radio, television, cinema or in a small shop products that have had the price reduced due to damage or danger of deterioration an assortment of different items sold in a single package products whose unit price would be 0.0p by virtue of the rounding provisions where the item's selling price is equal to its unit price products pre-packed in a constant quantity and bread made up in a prescribed quantity which are either sold: - from a small shop - by a mobile trader (e.g. selling from a stall, barrow etc) or - from a vending machine shops with a floor area or display not exceeding 280m² (note you may be required to produce evidence of this) Promotions: Promotional offers should be unit priced to reflect the single standard product. Retailers may give additional information if they wish, i.e. the reduced unit price if purchasing a multi-buy offer may be shown, as long as it is clear to which products it relates. Limited period promotions, which relate to individual products (e.g. 10% extra free) may retain the unit price of the standard product for the period of the offer. Retailers may give additional information if they wish - e.g. they may show the unit prices of both the standard and promotional products but they must be absolutely clear to which products they relate. Special provisions relating to precious metals: In the case of products where the selling price varies from day to day according to the price of the precious metals contained in them, the requirement to indicate the selling price may be complied with by indicating: 1. the weight, type and standard of fineness of each precious metal contained in the product with a clearly legible and prominent notice stating the price per unit of weight for each of these - and 2. any element of the selling price, which is not referable to weight 21