Commercial solicitors Leeds

July 2014

NEW CONSUMER CONTRACTS REGULATIONS

The Consumer Contracts (Information and Additional Payments) Regulations came into force on 13 June 2014. They apply (with some exceptions) to contracts made between traders and consumers at a distance, off-premises and on-premises. All businesses which deal with consumers should therefore review their terms and conditions of trading and procedures in the light of these changes. The key changes include:

For all consumer contracts:

  • Traders must seek the consumer's express prior consent before taking any additional payments (for example, pre-ticked boxes are not permitted).
  • Traders must, unless the consumer agrees otherwise, deliver any goods purchased within 30 calendar days.
  • Traders must not make the consumer use a premium rate telephone line to contact the trader about an existing contract.
  • Traders must not impose excessive payment surcharges when consumers pay by certain means, such as credit or debit cards.
  • For the first time, a new concept of digital content is introduced into UK law.

For on-premises contracts:

The rules introduce a new list of pre-contract information that a trader must give or make available to a consumer under an on-premises contract (except for day-to-day transactions which are performed immediately, and there is no requirement to provide it where it is already apparent from the context.)

For distance and off-premises contracts:

  • Extending the list of pre-contract information that a trader must give to a consumer Introducing new rules on the cancellation of contracts for the supply of digital content not on a tangible medium.
  • Extending the statutory cancellation period (sometimes known as the cooling-off period) to 14 calendar days.
  • Where a consumer has a right to cancel a contract, requiring the trader to provide the consumer with a model cancellation form.
  • Extending the cancellation period to, broadly, one year if the trader fails to provide certain pre-contract information.
  • Requiring online traders to make it clear (for example by labelling the payment button with "Order with obligation to pay"), where proceeding with the transaction will trigger a payment.
  • Requiring a consumer to return goods within 14 calendar days of cancelling the contract.
  • Allowing the trader to withhold a refund until the goods are returned (or evidence of their return is provided).
  • Allowing the trader to deduct an amount for the diminished value of the goods when refunding payments.

The following categories of property contracts are excluded from the scope of the regulations:

  • Contracts for renting residential accommodation.
  • Contracts for the creation of immovable property or of rights in immovable property.
  • Contracts for the construction of new buildings, or the construction of substantially new buildings by the conversion of existing buildings.

SMALL BUSINESS ENTERPRISE AND EMPLOYMENT BILL

On 25 June 2014, the government introduced the Small Business, Enterprise and Employment Bill to Parliament. As the name suggests, it includes a variety of measures aimed at supporting small businesses, encouraging enterprise, and implementing fairer employment practices. There will be a legal requirement for frequent reviews of regulations to reduce red tape affecting small businesses. Measures affecting companies include a register of beneficial ownership showing who owns and controls UK companies, stronger rules on director disqualifications, and provisions to remove unnecessary costs from insolvency procedures. There will be also proposals to address abuses of the minimum wage laws, and zero hours contracts.

In terms of the Companies Act 2006 there are proposed amendments to:

  • Require companies to identify those persons with significant control over the company and keep a publicly available register of those persons.
  • Prohibit the use of corporate directors by UK companies, subject to limited exceptions.
  • Replace the current requirement for an annual return with an obligation to confirm at least once in a 12 month period that all requisite information has been delivered to Companies House.
  • Remove the requirement for the statement of capital to specify the paid up and unpaid amounts on each share and replace this with a requirement to state the aggregate amount unpaid on the total number of shares.
  • Give private companies the option of holding the information required by certain statutory registers (including the register of directors, directors' residential addresses, members and secretaries) on a public register instead.

BREAK CLAUSES IN LEASES

Landlords will be relieved by a recent Court of Appeal decision in the case of Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Ltd and another. The tenant (T) had exercised a break clause, ending the lease early. It sought a refund of parts of payments it had made in advance in respect of rent, service charge, car parking and insurance charges, which related to a period after the break date. The issue of the repayment of the service charge had been settled during the High Court proceedings. By the time the matter came before the Court of Appeal, T was only seeking repayment of the rent, insurance charge and the car parking fee. The main element of T's arguments on appeal was the landlord's acceptance of the right to apportion the service charge. T tried to advance a principle that a tenant should only pay under a lease for what he actually receives. The Court of Appeal ruled that it was not appropriate to imply a term into the lease that entitled T to a refund of the rent, car parking fee and insurance charges that it had paid in advance in accordance with the express terms of the lease. Many commentators will think that the Court of Appeal has restored the widely-accepted view that, in the absence of an express provision, a tenant should not be entitled to a refund of any rent paid that relates to the period after a break date.

INTERPRETING THE WORDS "THE PURPOSE OF"

The High Court has given guidance on the interpretation of this phrase which is often used in legal documents. The judge considered three possible ways of interpreting the words "the purpose" eg whether it is a dominant, sole or specified purpose and lawyers are now more likely to use one of these or otherwise expand on the phrase to make the intention of the parties clearer

"If you want good laws, burn those you have and make new ones. "

Voltaire