Law Works Talk on Consumer Rights 14 th November 2006 Jason Freeman - PowerPoint PPT Presentation

Law Works Talk on Consumer Rights 14 th November 2006 Jason Freeman Barrister Office of Fair Trading

Aims of this Talk 8 Introduction to consumer law 8 In particular 8 Proper execution of consumer credit agreements 8 Bills of Sale 8 Unfair Contract Terms 8 Sale of Goods 8 Cancellation Rights

Consumer Law 8 A broad area –interference with ‘traditional’ English law of Contract 8 A lot of EC input –eg UTCCRs, Guarantees 8 A huge amount of ignorance of the law, on part of consumers, traders and lawyers! Eg Consumer Credit Act 1974 8 Changes on the Horizon –eg UCPD, Consumer Credit Act 2006 -Coming into force through 2007

Consumer Credit Agreements 8 CCA 1974 covers credit up to £25,000, unless a 1 st legal charge on a home (FSA) 8 Typical examples: mail order catalogues –buy now pay later; car finance; loans 8 Heavily regulated: CC (Agreements) Regs 8 Strict compliance vital: CCA s. 61, 65 and 127 –Court Order required to enforce; Court cannot enforce unless all prescribed terms + signed by debtor

CCA s.61 61 Signing of agreement (1) A regulated agreement is not properly executed unless: (a) a document in the prescribed form itself containing all the prescribed terms and conforming to regulations under section 60(1) is signed in the prescribed manner both by the debtor or hirer and by or on behalf of the creditor or owner, and (b) the document embodies all the terms of the agreement, other than implied terms, and (c) the document is, when presented or sent to the debtor or hirer for signature, in such a state that all its terms are readily legible .

65 Consequences of improper execution (1) An improperly executed regulated agreement is enforceable against the debtor or hirer on an order of the court only. (2) A retaking of goods or land to which a regulated agreement relates is an enforcement of the agreement.

127 Enforcement orders in cases of infringement (1) In the case of an application for an enforcement order under: (a) section 65(1) (improperly executed agreements), or …. the court shall dismiss the application if, but (subject to subsections (3) and (4)) only if, it considers it just to do so having regard to: (i) prejudice caused to any person by the contravention in question, and the degree of culpability for it; and (ii) the powers conferred on the court by subsection (2) and sections 135 and 136. (2) If it appears to the court just to do so, it may in an enforcement order reduce or discharge any sum payable by the debtor or hirer, or any surety, so as to compensate him for prejudice suffered as a result of the contravention in question.

CCA s.127(3) The court shall not make an enforcement order under section 65(1) if section 61(1)(a) (signing of agreements) was not complied with unless a document (whether or not in the prescribed form and complying with regulations under section 60(1)) itself containing all the prescribed terms of the agreement was signed by the debtor or hirer (whether or not in the prescribed manner).

What do the Regulations require? 8 Strict rules on content, order, no interspersing 8 Handout sets out the basic order 8 The handout is for guidance only, and is not a definitive legal statement 8 The current rules have been in force since 31 May 2005. Before this there were different rules.

The Core Prescribed terms 8 Without these, the agreement is irredeemably unenforceable (until 6 th April 2007) 8 Set out in Sched 6 of the Agreements Regs 8 amount of credit or credit limit 8 rate of interest 8 how the debt is to be repaid 8 The document must be signed!

A note on Bills of Sale 8 Used to circumvent ss. 90, 99 &100 of CCA, as not Hire Purchase 8 S.90: once debtor has paid 1/3 of total price, creditor cannot recover possession without Court Order 8 S.99: Debtor can terminate agreement at any time 8 S.100: never liable to pay more than either the sum already due or half the total (whichever is greater) 8 Eg –if total is £500, have paid £260, can’t be forced to pay more; if have paid £200, must pay £50. If in default, creditor can’t seize the goods unilaterally.

Bills of Sale requirements 8 Acts of 1878 and 1882 8 Strict Form and Content Requirements of the bill –a Security instrument (see handout) 8 The bill must have been registered at the RCJ within 7 days of execution 8 If fail to comply with either, the instrument is void . 8 Must also comply with the CCA Agreements Regs –the loan

Can I challenge a Bill of Sale? 8 Usually arises where debtor is in default and creditor seeking repossession 8 Check CCA compliance, incl that security included and bill given to debtor with credit agreement 8 Check for any unfair terms 8 Is bill in correct form? 8 Was the bill registered? 8 Has CCA s.87 default notice been served in prescribed form? – gives debtor 7 days to remedy default 8 Apply to court under CCA s.129 for a Time Order at once!!

Unfair Terms 8 Unfair Terms in Consumer Contracts Regulations 1999 (implementing EC Directive 93/13/EEC) 8 Applies to terms in consumer contracts which have not been individually negotiated (esp. pro-forma contracts) 8 All such terms must be in plain and intelligible language , and are construed in favour of the consumer 8 Terms defining the main subject matter of the contract or the price cannot be impugned further 8 All other terms are unfair if (1) cause significant imbalance in parties’ rights, (2) to detriment of the consumer, (3)contrary to good faith. 8 Effect of unfair term: not binding on the consumer

When is a term unfair? 8 Not if inserted to comply with the law 8 Schedule 2 ‘grey list’ –indicative and non- exhaustive 8 Eg.1 Exclusion clauses for Death or Personal Injury 8 Eg.2 Making consumer overcompensate for breach 8 See the OFT Unfair Contract Terms Guidance February 2001 OFT 311. It is on the OFT Website; analyses terms and gives examples of unfair and fair terms. 8 See also OFT Guidance on Unfair terms in: Tenancy Agreements (OFT 356), holiday caravans (OFT 734), care homes (OFT 635), consumer entertainment.

Sale of Goods Act 1979 8 Read alongside Supply of Goods and Services Act 1982 8 Implies terms into all contracts 8 Title, Description, Satisfactory Quality, Fitness for purpose 8 Terms can’t be excluded from consumer contracts 8 If defect within 6 months of purchase, presumption that it was not of satisfactory quality at date of purchase

Sale of Goods (Cont…) 8 Special remedies for Consumers 8 Repair or Replacement 8 Price reduction or Rescission 8 Guarantees –bind seller as well as manufacturer 8 See handout for more details

Cancellation Rights –Distance Selling 8 Consumer Protection (Distance Selling) Regs 2000 (Directive 97/7/EC) 8 Exclusive use of distance communication up to conclusion of contract (no face to face contact) 8 Eg telephone sales; mail order catalogues 8 Some exclusions (check regs 5 &6) 8 Reg.7 information to be provided in writing before contract concluded, or soon after (eg on price, delivery costs etc) + info on right to cancel 8 Cancellation period is 7 days from receipt of info or 3 months & 7 days from receipt of goods (where info not given) (reg 11)

Cancellation Rights –Doorstep Selling 8 Consumer Protection (Cancellation of Contracts Concluded away from Business Premises) Regs 1987 (Directive 85/577/EEC) 8 Essentially where contract made off business premises and consumer ‘surprised’ 8 Unenforceable against consumer unless given the cancellation form in the correct form (4(1)). Also criminal offence

Questions?? 8 For a good overview of Consumer Law, get Lowe & Woodroffe, Consumer Law & Practice