Doorstep Selling19th Apr 2012
CONSUMER CONTRACTS MADE AT HOME OR AT WORK
The Cancellation of Contracts made in a Consumer's home or place of work etc Regulations 2008 ("the Regulations") came into force on 1 October 2008. They seek to protect consumers when purchasing goods or services at home or work from undue pressure to buy, and to allow for a "cooling off period" during which the consumer can change his mind.
Who is affected?
The Regulations apply to both invited and uninvited traders (or "cold calling"), whether the trader is physically on the doorstep or inside someone's home or place of work. The Regulations also apply to any visit arranged by the trader which is not at his place of business.
A contract for goods and services for more than £35 entered into at a consumer's home (or someone else's home) or workplace will be caught by the Regulations. A contract for goods and/or services might include an agreement to install new carpets, build a conservatory or to purchase a new sofa. There are some exceptions which do not fall under the Regulations, such as mortgages, contracts for the sale or construction of property (but not extensions, patios or repairs to property), insurance contracts, and catalogue orders which make clear that there is a right to cancel.
It is not necessary for the contract to be in writing - a verbal contract will still need to comply in order not to fall foul of the Regulations.
What can I do?
Where a consumer enters into any contract which falls within the ambit of the Regulations, the consumer has seven days in which to cancel the contract without obligation, known as a "cooling off period".
In order to comply with the Regulations, the trader concerned must provide the consumer with written notice of their right to cancel, at the time of their agreement. If there is a written contract this information should be included within the contract. If the contract is a verbal one, this information must still subsequently be given in writing. The notice should include certain prescribed information.
Where a consumer wants the work done or services provided before the expiry of the seven day period, the trader should ensure he obtains the customer's written agreement. This will mean that the customer will be obliged to pay for any work done up to the point when they decide to cancel the contract, although they will still be able to cancel the remainder of the services agreed.
Goods which are by their nature able to be returned to the trader may be returned if the consumer cancels within seven days, even if the consumer has previously provided written agreement for the goods to be provided within seven days. Perishable goods and those provided for an emergency or which have become incorporated into land cannot be returned in this way, and the consumer will have to pay for any goods which have been provided to him.
In order to cancel a contract, the consumer must notify the trader that he has chosen to do so in writing. A cancellation form should be provided by the trader, although the consumer is not obliged to use this when he cancels. The cancellation is effective on the day it is posted, delivered or emailed, not on the day it is received by the trader.
What happens if my business doesn't comply?
Failure to give written notice of the seven day cooling off period will mean that the consumer cannot be bound by the contract, i.e. they will not have to pay the trader, even if the goods or services have already been provided, subject to the consumer giving written agreement (see above).
In addition to the risk of non-payment, traders also risk committing a criminal offence by failing to give notice of the right to cancel. Conviction for an offence of this nature is punishable by a fine of up to £5,000.
Examples of how the Regulations apply
A. Bill wants to turn his garage into extra living space. He asks Ben, a local builder, to come round and give him a quote. After deciding on the specifications, Bill decides to go ahead and asks Ben to start work. Ben does not give Bill any paperwork. Bill then has second thoughts and asks Ben to pack up his tools and not return to site. By this time Ben has laid a new floor and ordered materials for the job, as well as turning down other work he had been offered.
As he has not given Bill notice of his right to cancel, Ben cannot force Bill to pay him either for the work he has already done, or for the remainder of the contract. Ben has also committed a criminal offence and risks a fine of up to £5,000.
B. Sarah has been thinking of buying an orthopaedic bed. John from Comfybed Ltd comes to her house to talk about different models and prices. Sarah is very impressed and decides to buy model 22. John hands Sarah his terms and conditions of business, a contract and a notice of her right to cancel in the prescribed form, together with a cancellation form. Two days later Sarah sees a better deal in her local furniture superstore. That day she writes to Comfybed Ltd cancelling her contract with them.
Sarah will not have to pay anything as she has cancelled within the seven day cooling off period, and no goods or services have yet been provided under the contract.
Protect your business
It is sensible to review your standard contract documents and/or terms of business to ensure that they comply with the Regulations. Whether you use written or verbal contracts, you should also give customers a written form of cancellation. If you do not normally require customers to sign written contracts, you should consider drawing up notices of the right to cancel to be handed to clients at the time the contract is agreed.
Coles Miller Solicitors LLP can assist you in drawing up these standard documents, or advise you on the compliance of your existing contracts. Please contact Mark Howell in our Company Commercial department on 01202 673011 for further assistance.