Some Key Changes Under the CRA

Consumers purchasing goods have long enjoyed statutory protection under the Sale of Goods Act. Similar protection has now been extended to consumers buying both services and digital content. So if you provide services or market apps and downloads to consumers, you will need to ensure your terms of business comply with the new law. Even if you sell goods only, you will need to update your terms to minimise the impact of the new remedies.

2. Definition of Goods Extended

Under the broader scope of the CRA, consumer rights will extend to hire contracts, hire-purchase contracts, conditional contracts and 'contracts for the transfer of goods other than by way of a price'.

3. New Rules for Mixed Contracts

A key change made by the CRA is its extension to mixed contracts, for example a contract for the supply of services where the service provider also supplies materials. The classic example is a builder who also supplies materials.

In such instances consumers will benefit from the wider statutory remedies relating to defective goods even if it is  the services alone which are non-conforming - for example, a defective bespoke pair of shoes or a washing machine with a faulty chip.

So if you're a service provider, you will need to consider the changes you can make to your terms to minimise your risk of exposure to wider potential liability.

4. New Standards and Consumer Remedies

The CRA introduces new quality standards and remedies for consumers which cannot be excluded by contract.

The standards for goods are largely imported from the Sale of Goods Act but the remedies have moved on. There is an initial (first tier) time-limited right to reject. This is followed by a second period during which the consumer has a right to repair or replacement, coupled with an ultimate right of rejection if this fails. There are also assumptions (favourable to the consumer) as to where liability lies depending on the time expired since the sale.

Consumers purchasing services will benefit from a right of repeat performance or price reduction/refund if the services are not carried out with reasonable skill and care and to match their description.

Digital content must meet new statutory standards, similar to those applying to goods and traders will have to either repair, replace or refund the price of non-conforming digital content.

5. Giving it Away Doesn't Help

Traders will additionally be liable for damage caused by digital content to any electronic device or other digital content, even where the content is provided free of charge. This would kick in, for example, if a free download damaged a mobile phone or other device.

6. No Excluding Liability

The new standards and remedies are mandatory and cannot be excluded by contract.  This means that businesses will have to revise their terms to minimise risk within the new framework because many existing exclusion clauses will cease to be enforceable.

If you continue to use your old terms you may find your business exposed to unlimited liability.

7. Transparency and Fairness

These are key in ensuring compliance with the CRA which incorporates all the rights consumers currently enjoy under the Unfair Contract Terms Act 1977. Terms should be clear, and the concept of fairness replaces the more legalistic concept of reasonableness.

For more information, please contact Doug Locke in our Commercial Law team on 020 7665 0915.

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