Consumer Rights Act Guidance

The Consumer Rights Act 2015 (CRA) came into force on 1 October 2015. The CRA replaced both the relevant parts of the Unfair Contract Terms Act 1977 (UCTA) and the entirety of the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs).

[N.B. Although these Acts and Regulations were each implementations of EU Directives, Parliament extended consumer rights in the CRA beyond the minimum requirements of the EU, and the CRA is expected to survive Brexit unchanged.]

The main fairness and transparency requirements are unchanged; only their scope has changed; this also means that case-law relating to the UCTA and the UTCCRs are applicable to the CRA. A term or notice is unfair ‘if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer.’

As well as consolidating all consumer rights found in the UCTA and the UTCCRs, the CRA also extended consumer rights in a number of significant ways, namely:

1. The CRA applies to all contracts between a trader and a consumer (other than employment or apprenticeship) including negotiated contracts, service contracts and secondary contracts (which were previously excluded)
2. The definition of ‘consumer’ has been widened to include individuals acting mainly outside their trade, business, craft or profession; and the burden of proof that an individual is not a consumer is borne by the trader
3. As well as written contracts, the CRA also applies to both contractual and non-contractual consumer notices (defined as any communication which is intended to be seen or heard by the consumer) such as those found in private car parks
4. As well as the usual transparency requirements, written terms and notices must be legible
5. The main subject matter and the price payable are excluded from the fairness requirement if they are transparent (as before) but also prominent (defined as being brought to the consumer’s attention in such a way that the average consumer would be aware of it)
6. Courts must assess the fairness of consumer contract terms, even when not expressly asked to do so by the parties involved

So, what does this mean in practice?

The good faith requirement embodies ‘an overall evaluation of the different interests involved’ and includes the following general principles:

• Fair and open dealing – this relates to how contracts are drafted and presented, as well as the way in which they are negotiated and carried out. It requires, in particular, that contracts be drawn up in a way that respects consumers’ legitimate interests.
• Openness – this requires that terms and notices should be ‘expressed fully, clearly and legibly, containing no concealed pitfalls or traps. Appropriate prominence should be given to terms which might operate disadvantageously’ to the consumer.
• Fair dealing – this requires that, in drafting and using contract terms, traders ‘should not, whether deliberately or unconsciously, take advantage’ of consumers' circumstances to their detriment.

This means that traders must, in formulating their contract terms, not simply resist the temptation to take advantage of consumers, but actively take the legitimate interests of consumers into account. Traders should take particular care in communicating key terms to consumers who may have greater difficulty than others in collecting, processing and acting upon information. The Equality Act 2010 (EA) can also relevant when considering fairness and transparency.

Some terms and notices are always deemed to be unfair, and these are referred to as blacklisted terms and notices. There is one blacklisted item that may be applicable to private parking contracts:

• Terms or notices seeking to exclude or restrict liability for death or personal injury resulting from negligence

Otherwise, the CRA illustrates the meaning of unfairness by including a long, non-exhaustive and illustrative list of terms that may be unfair. This is called the Grey List because it includes terms that are likely to be unfair, depending on the particular circumstances in each case. The following Grey List terms may be applicable to private parking contracts:

1. Exclusion and limitation clauses in general
2. Disproportionate financial sanctions
3. Binding consumers to hidden terms
4. Restricting consumers’ remedies

The second of these is worth considering in more detail. Part 1 of Schedule 2 states that the following may be unfair: It is unfair to impose disproportionate sanctions for breach of contract. A requirement to pay more in compensation for a breach than a reasonable pre-estimate of the loss caused to the trader is one kind of sanction that is likely to be considered disproportionate. Such a requirement may be void to the extent that it amounts to a penalty under English common law. However, a term may still be considered unfair independently of the common law, if it has a penal purpose or effect. In particular, a disproportionate financial sanction involving a requirement to pay a fixed or minimum sum in all circumstances will be open to challenge if the sum could be too high in some cases.

Enforcement

The CRA can be enforced by individual consumers in the civil courts, of course, but there are a number of regulators with significant enforcement powers. These include:

• The Competition & Markets Authority (CMA)
• The Consumers’ Association (Which?)
• Local weights and measures authorities (Trading Standards) in Great Britain
• The Department of Enterprise, Trade and Investment (DETI) in Northern Ireland
• The Office of Rail Regulation, since renamed the Office of Rail and Road (ORR)
• and several other consumer market sector regulators unrelated to parking

I would encourage everyone to complain to any or all of these regulators about the unfair practices of the private parking industry. They only look into something once they have received a large volume of complaints. There is a particular unfairness with the IAS that should be brought to the attention of CMA and the Consumers’ Association frequently. This is from the Grey List: Guidance, legislation and case-law

1. CMA (2015) Unfair Contract Terms Guidance (CMA37)
2. OFT (2008), Unfair Contract Terms Guidance: Guidance for the Unfair Terms in Consumer Contracts Regulations 1999 (OFT311) adopted by the CMA without amendment in 2014
3. The Office of Fair Trading v Foxtons Ltd [2009] EWHC 1681
4. Consumer Protection from Unfair Trading Regulations – traders (OFT1008)
5. The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013
6. The Director General of Fair Trading v First National Bank plc [2001] UKHL 52
7. Aziz v Caixa D’Estalvis de Catalunya, Tarragona i Manresa CJEU C-415/11
8. Spreadex Ltd v Cochrane [2012] EWHC 1290
9. Consumer Contracts (OFT1312) February 2011
10. The Office of Fair Trading v Ashbourne Management Services Ltd and others [2011] EWHC 1237
11. Deutsche Bank (Suisse) SA v Khan and others [2013] EWHC 482
12. Harrison and others v Shepherd Homes Ltd and others [2011] EWHC 1811
13. RWE Vertrieb AG v Verbraucherzentrale Nordrhein-Westfalen e.V. CJEU C-92/11
14. Bogdan Matei and Ioana Ofelia Matei v SC Volksbank România SA CJEU C-143/13
15. Jean-Claude Van Hove v CNP Assurances SA CJEU C-96/14
16. El Corte Ingl!s v Office for Harmonisation in the Internal Market (Trade Marks and Designs) [2004] ECR II-965, Joined Cases T-183/02 and T184/02
17. The Office of Fair Trading v Abbey National plc and others [2009] UKSC 6
18. Munkenbeck and another v Harold [2005] EWHC 356
19. Nemzeti Fogyasztovedelmi Hatosag v Invitel Tavkozlesi ZrtCJEU C-472/10
20. The Financial Services Authority v Asset LI.Inc (trading as Asset Land Investment Inc) and Others [2013] EWHC 178