Technology &
Internet Law

Briefing Note - Consumer Protection (Distance Selling) Regulations 2000

Introduction

The Consumer Protection (Distance Selling) Regulations 2000 came into effect on 31 October 2000 and offer all businesses a serious challenge in terms of the onerous obligations imposed on any "distance communication" (see below for the definition).  We advise you to print this page rather than attempt to read it on screen as it is over 5 pages of A4 text.

Definitions 

"Distance contract" means "any contract concerning goods or services concluded between the supplier and consumer at an organised distance sales or service provision scheme run by the supplier who, for the purpose of the contract, makes exclusive use of one or more means of distance communication up to and including the moment at which the contract is concluded".   In other words, the Regulations apply to any contract for goods or services which is not conducted face to face.

"Distance communication" is "any means which, without the simultaneous physical presence of the supplier and the consumer, may be used for the conclusion of a contract between those parties", eg:

1. Unaddressed printed matter
2. Addressed printed matter
3. Letter
4. Press advertising with order form
5. Catalogue
6. Telephone with human intervention
7. Telephone without human intervention (automatic calling machine, audiotext)
8. Radio
9. Videophone (telephone with screen)
10. Videotext (microcomputer and television screen) with keyboard or touch screen
11. Electronic mail
12. Facsimile machine (fax)
13. Television (teleshopping).

When Do the Regulations Apply

These Regulations do not apply to contracts:

• for the sale or disposition of an interest in land, except for a rental agreement;
• for the construction of a building where the contract also provides for sale or other disposition of an interest in land except for rental agreement;
• for financial services (a non-exhaustive list of which is contained in schedule 2;
• by automated vending machine services or automated commercial premises;
• concluded with a telecommunications operator through the use of a public pay-phone;
• concluded at an auction.

The majority of the regulations do not apply to contracts which is a "time share agreement" within the meaning of the Time Share Act 1992 and that Act will prevail.

Other forms of excluded contract include:

• contracts for the supply of food, beverages or other goods, intended for everyday consumption, supplied to a consumers residence or workplace by regular roundsmen (thus perishable goods are largely excluded);
• contracts for provision of accommodation, transport, catering or leisure services (where the supplier undertakes at the time that the contract is concluded to provide such services on a specific date or within a specific period)(package holidays, tours and travel are also exempted from some of the Regulations).

What Information Must the Seller Provide?

The information below must be provided in a clear and comprehensible manner. Therefore, if the contract is concluded via a website, the information should appear on a page prior to the order form and the visitor to the site should be made to scroll down the page before proceeding with an order.  This can be achieved by adding the information to a terms and conditions page provided the consumer has to view them before the order is "submitted".

1.     Before the contract is made, the supplier must provide the following information to the consumer:

(a)        the identity of the supplier and, if the contract requires payment in advance, the supplier's address;

(b)        a description of main characteristics of the goods/services;

(c)        the price of goods/services including taxes;

(d)        the delivery costs where appropriate;

(e)        the arrangements for the payment delivery/performance;

(f)         the existence of a right of cancellation unless referred to in paragraph 13 of the Act;

(g)        the cost of using the means of distance communication if charged above the basic rate;

(h)        the period for which the offer price or the offer remains valid (where appropriate);

(j)         the minimum duration of contract, if for the supply of goods/services performed either permanently or currently.

2.         If the seller intends to be able to substitute goods/services of equivalent quality and price, the cost of returning any unwanted substituted goods to the supplier is to be met by the supplier.

3.         In the case of telephone sales, the identity of the supplier and the commercial purpose of the call must be made clear at the beginning of the conversation with the consumer.  The supplier should then run through the above information with the customer.

4.         This information mustalso be provided to the consumer in writing (or in another durable medium) available and accessible to the consumer, either prior to the conclusion of the contract or after the conclusion in good time and which must be during the performance of the contract (services) or at the very latest at the time of delivery.  It would be acceptable, therefore, in an internet-based scenario to email the client once they have placed the order for goods/services.

5.         The supplier must also give:

(i) the geographical address of the place of business of the supplier to which the consumer may address complaints; 

(ii)information about after-sales services and guarantees (where relevant); and 

(iii)details of any conditions to cancel the contract if it is of an unspecified duration or if it exceeds one year. 

6.        Goods

The seller must inform the consumer that in the event of cancellation they are required to return the goods and whether the consumer or the supplier is to be responsible (according to the regulations) for the cost of returning those goods, or the cost of their recovery if the consumer cancels the agreement.

  7.      Services

The seller is not obliged to provide the information as listed above if the contract concerns the supply of services, supplied on only one occasion and invoiced by the operator by the means of distance communication.  For example, paying for software online which is then delivered over the net will not be a transaction to which the Regulations apply.

How Can the Consumer Cancel a Contract?  

The Consumer must give notice to the supplier in writing (or in another "durable medium" which is available and accessible to the supplier) clearly indicating their intention to cancel the contract - there is no specific form required, however.   A notice must:

• be sent to or left at the supplier's last known address (last known to the consumer) and addressed to the supplier (or other person) by name; or 
• be sent by fax or email to the business of the supplier's last known fax number or email address

When can a consumer cancel?

The period for cancellation begins on the actual day of which the goods are received by the consumer.  The duration of the cancellation depends on two things; whether the supplier has provided the correct information and whether that information was provided in good time.  The cancel period for goods is:

            (a)        If the supplier complies fully with Regulation 8, the cancellation period is seven working days (ie not weekends or bank holidays) starting the day following receipt of the goods by the consumer.

(b)        If the supplier has provided the information but not in good time, but does so three months from the day following delivery to the consumer, the period of cancellation is seven working days from the day after the consumer receives the information.

(c)        If the supplier has not provided the complete information and it has not been provided in good time, the cancellation period is then three months and seven working days from the day following delivery to the consumer. 

The time limits apply equally where the goods are delivered to a third party - they apply to the consumer as though he himself had received them. 

            The cancellation period for services is:

  (a) Seven working days from the day after the contract is entered into if the supplier has both provided the information in good time and in a durable form; 

(b) (If the supplier has provided the information within 3 months of the day after the contract is entered into but not on or before the contract is entered into) seven working days from the day after the consumer receives that information;

(c)(If the supplier has not provided the information at all) three months and seven working days from the day after the contract is entered into. 

What is the effect of cancellation?

The effect of cancellation is that the contract will be treated as if has not been made.  This means that any rights on the part of the consumer or obligations on the part of the seller no longer exist (except relating to the return of goods and refund of money to the buyer).

Exceptions to the right to cancel (Regulation 13)

1. The consumer loses the right to cancel contracts for services if the supplier has complied with the regulations mentioned above and performance of the contract begins (with the consumer's agreement) before the cancellation period runs out.

2. Other exceptions to the right to cancel

   (a)  Contract for the supply of goods or services, the price of which depends on fluctuations in the financial market which are outside the seller's control eg shares, bonds.

    (b)      Goods made to a consumer's specification or which are clearly personalised goods or which by the very reason of their naturecannot be returned or which are liable to deteriorate or expire rapidly eg  flowers.

    (c)    Audio/video recordings or computer software if they are unsealed by the consumer.

    (d)    Newspapers, periodicals and magazines.

    (e)    Gaming betting or lottery services. 

What do Suppliers have to do if the contract is cancelled? 

The supplier must repay (without deduction, except as stated below) to the consumer money paid by him or on his behalf, within 30 days, from the day on which notice of cancellation was given.  Any security provided by the consumer is to be treated as never having been given and is to be returned by the supplier immediately after cancellation. 

The supplier may require the consumer to collect the goods, if he is bound to return the goods under the agreement, and he fails to do so, at the seller's expense.  This last point does not apply where the consumer cancels in circumstances where he has the right to reject the goods under the term of contract, if the term was "unfair", or if the goods were supplied as substitutes for those ordered by the consumer. 

The giving of notice also has the effect of cancelling any related credit agreement which the consumer has entered into. 

What Protection is there for Suppliers in relation to the Goods delivered?

On cancellation, provided the supplier so demands in writing (or other durable form) within 21 days of cancellation, the consumer has to return the goods to the supplier and in the meantime the consumer has to take reasonable care of them. 

The consumer is however responsible for ensuring the goods are received by the supplier and not damaged in transit.

However, if the terms of the contract provide that the consumer must return the goods to the supplier in the event of cancellation (and the consumer is not otherwise entitled to reject the goods under the terms of the contract or under any other statute) he has to take reasonable care of the goods for up to six months from the date of notice of cancellation. 

If the consumer delivers or otherwise sends the goods to the supplier or the person to whom notice of cancellation may be sent (see "How can the Consumer Cancel the Contract?" above) at his own expense the consumer is then released from further obligation (within 21 days on cancellation). 

Do Suppliers have to do anything else?

Yes, the supplier must supply the goods/services within 30 days of the date the contract is entered into, starting from the day after the placing of the order.  However, provided it has been agreed with the consumer (normally in the notices on your website) before the contract is entered into, this date can be extended. 

If the supplier is unable to provide the goods/services because they are not available, either within the 30 day period or within any longer agreed period, the supplier must inform the consumer and reimburse all money in full paid for the goods/services.  The money must be returned as quickly as possible and in any event within 30 days of the latest delivery date.

NEED TO KNOW MORE?

For further information or legal advice on consumer protection or electronic trading and how it applies to you, contact our solicitors, Maitland Kalton or Julian Danobeitia.  Should you prefer to telephone call us on +44 (0)207 278 1817.

Kaltons Solicitors, Suite 302, Spitfire Studios, 63-71 Collier Street, London, N1 9BE. Telephone +44 (0)20 7278 1817; Fax: +44 (0)207 278 1835.

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