Regulations governing the cancellation of contracts made in a consumer’s home or their workplace came into force six months ago.
You should be aware of these regulations, so please take time to read this reminder of the ‘Cancellation of Contracts made in a Consumer’s Home or Place of Work etc Regulations 2008’ that came into force on 1 October 2008.
Q. What are the regulations?
A. The Cancellation of Contracts Made in a Consumer’s Home or Place of Work etc Regulations 2008’ were introduced to align the law around cooling-off periods and cancellation rights that consumers have when contracts are made during solicited and unsolicited visits by traders. They give consumers greater rights in areas where they might be most vulnerable and create a level playing field for honest business.
Q. When did the regulations come into force?
A. The regulations came into force on 1 October 2008.
Q. Who is affected by these regulations?
A. The regulations are aimed at traders who enter into a contract with a consumer at their home, workplace, another individual’s home, or on an excursion arranged by the trader to a location away from their business premises. Businesses affected include those who provide home building and maintenance services, energy suppliers as well as those who sell consumer goods and house wares through door to door or face to face methods. The Regulations also apply to businesses in other sectors. Consumers will benefit from cancellation rights and a cooling off period for contracts entered into during solicited visits as well as unsolicited ones.
Q. What are the key provisions for businesses?
A. The Regulations:
- Replace the ‘Consumer Protection: (Cancellation of Contracts Concluded Away from Business Premises) Regulations 1987
- Extend the cooling off period and cancellation rights to include contracts made during unsolicited visits by traders and contracts made during solicited visits by traders
- Set the threshold at which the Regulations apply at a total payment value of £35
- Require that the notice of the right to cancel be prominently displayed in the same document, where the contract is completed wholly or partly in writing
- Set the cooling off period at a minimum seven calendar days (some businesses already offer a longer cooling off period for customers)
- Require that for certain types of contract where a consumer has requested that performance of the contract should begin before the end of the cooling off period
(a) that the trader must include in the notice of the right to cancel, a statement that payment may be required to be made if the contract is subsequently cancelled and
(b) that the consumer must record his agreement in writing to performance of the contract beginning before the end of the cooling off period if that is what the consumer wishes
- Provide that failure to include a statement regarding liability to pay or other required information in the notice of the right to cancel will constitute an offence, with the penalty of a fine at level five of the standard scale, relating to failure to provide notice of the right to cancel
- Provide for the automatic cancellation of a related credit agreement where a cancellation notice which cancels a contract for goods or services is served on a trader.
Q. What are the benefits for business?
A. The changes mean that businesses will in general be able to work with one contract for both solicited and unsolicited visits, helping to reduce costs in administration and staff training. As well as creating a fairer competitive market, this will also enhance the reputation of door-to-door salespersons.
Q. What do businesses need to do?
A. All affected businesses will need to ensure their sales teams are aware of and understand the requirements. They may also need to review the content of their contract documentation and internal procedures connected to the delivery of their products and services. A guide to the regulations offering advice on the changes businesses will need to make can be accessed from the websites listed below.
Q. What happens if businesses don’t comply with the requirements?
A. Businesses who don’t comply with the regulations would be unable to enforce the contract against the consumer and they may face investigations by their local authority trading standards service, which could result in prosecution and fines. They may also lose their customers.
Q. Where can I get further information?
A. Further information about the regulations and the government consultation can be found on www.berr.gov.uk/consumers/buying-selling/Doorstep-selling/index.html.
Guidance for businesses can be found on the following sites: www.businesslink.gov.uk/doorstepselling for England
www.bgateway.com/doorstepselling for Scotland
www.hiebusiness.co.uk/doorstepselling for Scottish Highlands and Islands
www.nibusinessinfo.co.uk/doorstepselling for Northern Ireland
www.business-supportwales.gov.uk for Wales.