The new Act enforcing consumer rights was launched with a fanfare on 1 October 2015, but will it really affect the way you do business?
On first view there doesn’t seem to be much that will change working practices day to day, but look deeper and there are a number of points that could impact your business.
Does the Act affect me?
If your business sells goods or services to a Consumer then yes, it does. Goods and services, under the terms of the Act, will include the sale of construction materials as well as the design and installation of those materials.
Sale of Goods
The previous Sale of Goods Act 1979 and Sale and Supply of Goods Act 1994 still apply in business to business contracts so, on the face of it, not much has changed. The standard presumptions of satisfactory quality and fitness for purpose continue to apply as does the requirement that the goods should match their description.
The new Act adds the requirement that the goods must match any models seen or examined by the Consumer and that the goods will not conform with legal requirements if they have been incorrectly installed by the Trader. This addition means that the installation of goods is now brought within the scope of the new Act for the first time.
Supply of Goods and Services
The previous 1982 SoGaS Act is still in force but is supplemented by the new Act. The previous requirements regarding use of reasonable skill and care, performance within a reasonable time and at a reasonable price are still present. There is, however, a very important addition to the supplier’s obligations –
- A Trader is contractually liable for any statements which it makes voluntarily and which are taken into account by the Consumer; and
- There is an absolute ban on any exclusion of liability for failure to perform a service with reasonable care and skill and for failing to perform the service in accordance with the information provided by the Trader.
The first of these additions means that a Consumer can rely on things said in the course of discussions about a project and, importantly, what has been said can be relied on by that Consumer and implied into the Contract. With that in mind it is now vitally important that you are able to deliver on your promises, or the new Act allows you to be taken to task over it.
The second point replaces previous legislation which allowed the removal or change of terms in a contract as long as those changes were reasonable. Now you are responsible for using reasonable skill and care whether you like it or not. In addition you must ensure that you are able to deliver, precisely, the product or service you have quoted for.
Alternative Dispute Resolution
The new Act also provides for the use of ADR in all Consumer agreements. The reality is that those using the JCT form of Construction Contract will already be familiar with the use of mediators and arbitrators when things go wrong, but for the small domestic builder this may be something entirely new. ADR has many forms, but the common thread running through them is access to justice and minimising the cost of disputes. It provides a cost-effective way for Consumers to seek to resolve disputes. With the current pressure the Civil Courts are under you should expect a much greater focus on ADR in years to come.
These are important changes for those in the construction industry. You must be careful what you say and what assurances you give when dealing with Consumers. If they can show that they have taken those comments into account when entering into agreement with you, then those terms will almost inevitably form part of the contract.
With that in mind clear contract terms are more important than ever and your staff must be careful what assurances they give at all times.
You should also be prepared for the further development of ADR. This growing aspect of the commercial world will impact all of us in future.
If you have any questions regarding the contents of this article please feel free to contact Scott Taylor of Setfords Solicitors on 07525 293 852.