Proposals include ban on expiry dates in gift vouchers and new rights in services and online contracts
The Minister for Jobs, Enterprise and Innovation, Richard Bruton TD today (Monday) published the scheme of a new Consumer Rights Bill.
The legislation, which is being published today for consultation, represents the most far-reaching reform of consumer law in decades. It will make consumer rights clear to consumers and businesses alike by replacing the overlapping and confusing combination of primary, secondary and European legislation in place currently, and will bestow major new rights on consumers, including:
§ Expiry dates – a ban on expiry dates for gift cards and vouchers;
§ Downloads – statutory rights and remedies for the first time for consumers who download or stream games, music, videos, apps and other digital content;
§ Services – strengthened rights for consumers purchasing services, including a right for the first time to have a substandard service remedied or refunded
§ Goods – in respect of goods, a standard 30 day period in which consumers could return faulty goods and get a full refund in place of the current unclear and uncertain rules on this time period;
§ Gifts – consumers who acquire goods as gifts to have the same rights as the purchasers of the goods;
§ Unfair terms – the rules on unfair contract terms to apply to negotiated as well as standard form contract terms and an expanded list of contract terms presumed to be unfair;
§ Information rights – new information rights for consumers in transactions for healthcare, social services and gambling, including price information for GP and other medical consultations.
Today’s announcement forms part of a programme of reform Minister Bruton has led across his Department, including:
· improvements to consumer rights including a ban on pre-ticked boxes and unjustified payment charges, in place since last year
· the merger of the National Consumer Agency and the Competition Authority in the new Competition and Consumer Protection Commission
· the landmark Companies Act 2014
· the radical restructuring of workplace relations institutions and procedures including merging 5 bodies into 2
· the abolition of 35 County and City Enterprise Boards, and their replacement by 31 Local Enterprise Offices within local authorities, delivering an enhanced rage of services and supports
Making the announcement today, Minister Bruton said:
“There is a basic imbalance in contracts between consumers and the people they purchase goods and services from – that is why we are constantly seeking to improve our laws in this area to provide better rights for people in a changing environment.
“The changes we are proposing today are aimed at doing two things. Firstly to improve consumer rights in purchasing online goods and services, which obviously accounts for an increasing proportion of consumer transactions. And secondly to clear up the anomalies and gaps in consumer rights that have grown up through years of overlapping legislation at primary, secondary and European level. The existing law has too many rules in some areas and too few or none at all in other areas.
“For example, a consumer whose car breaks down because of a fault with the car currently has two separate sets of remedies that are neither consistent nor certain , while one whose car breaks down because it was serviced poorly has no clear, readily accessible remedy. A consumer who buys a film on DVD enjoys the protection of consumer legislation, while one who streams or downloads the same film does not.
The Minister concluded by urging businesses, consumers and other interested parties to respond to the consultation on the Scheme of the proposed Bill. “While consumer legislation must first and foremost give effective protections to consumers, it has to do so in a balanced and workable way. This is not easily done because of the great number and diversity of consumer transactions. We want to hear how the proposed legislative provisions would affect the parties to consumer transactions across different sectors of the economy and will consider carefully all views submitted in response to the consultation.”
The consultation, which opens today, will close on Friday 28th August, and the target for enactment of the new legislation is mid-2016.
NOTES TO EDITORS
The need for a major overhaul of consumer law, including the enactment of a comprehensive Consumer Rights Act along the lines of the proposed Scheme, was one of the main recommendations of the Sales Law Review Group whose final report was published in October 2011. The report can be accessed at
A more detailed account of the background to, and the rationale for, the main proposals in the present Scheme can be found in the Department’s Consultation Paper on the Reform of the Law on Consumer Contract Rights which was published in August 2014. This can be accessed at http://www.djei.ie/publications/commerce/2014/crbconsultationpaperaug2014.pdf
The Scheme for the proposed Consumer Rights Bill can be accessed at http://www.djei.ie/publications/commerce/2015/crbschememay2015.pdf
Structure of Proposed Bill
In addition to provisions on preliminary matters and enforcement, the main Parts of the proposed Bill deal with the following:
§ Part 2 sets out consumer rights, and the remedies where those rights are breached, in contracts for the supply of goods (sales contracts, hire purchase contracts, hire contracts, and barter or exchange contracts);
§ Part 3 sets out consumer rights, and the remedies where those rights are breached, in contracts for the supply of digital content (data supplied and produced in digital content, including video, audio, picture or written content, games, and software)
§ Part 4 sets out consumer rights, and the remedies where those rights are breached, in contracts for the supply of a service.
§ Part 5 deals with unfair terms in consumer contracts and with gift voucher contracts.
The provisions of Part 2 of the Scheme on contracts for the supply of goods would apply a single set of rights and remedies to all transactions in which a trader supplies goods to a consumer. They would replace provisions currently spread over a number of different enactments: the Sale of Goods Act 1893 and 1980, the Trading Stamps Act 1980, the Consumer Credit Act 1995, and the European Communities (Certain Aspects of the Sale of Consumer Goods and Associated Guarantees) Regulations 2003.
The main changes to existing law proposed in Part 2 include –
§ The replacement of what the Supreme Court has called the ‘archaic and somewhat mysterious’ standard of ‘merchantable quality’ with a new, clearer and more comprehensive standard of ‘satisfactory quality’ which goods would have to meet.
§ The replacement of the two overlapping sets of remedies for faulty goods in the Sale of Goods Acts and the European Communities (Certain Aspects of the Sale of Consumer Goods and Associated Guarantees) Regulations 2003 with a single, clearer set of remedies.
§ The provision for a standard thirty day period after delivery within which consumers would have the right to choose between having faulty goods repaired or replaced or ending the contract and getting a full refund of the price. The existing law does not specify the period within which the right to reject faulty goods and end the contract has to be exercised, but makes it subject to complex rules on the acceptance of the goods. The proposed thirty day period would offer greater clarity and certainty to both consumers and traders and would make it easier for consumer to enforce their rights.
§ Outside the proposed thirty day period, consumers would have the right to have faulty goods repaired or replaced. If repair or replacement were not possible, could not be done within a reasonable time or without significant inconvenience to the consumer, or if the goods were still faulty after one repair or one replacement, consumers would have the right to keep the goods and get a price reduction or to return the goods and get a full refund of the price.
§ Consumers who acquire goods as gifts would have the same rights as purchasers of the goods. Because of the rule of privity of contract, these rights are at the goodwill of the trader at present.
Digital Content Contracts
While consumers who purchase digital content in tangible form such as a dvd currently enjoy the same protections as the purchasers of goods, those who stream or download digital content are not similarly protected. As the market for digital content market is growing rapidly and as most such content is now supplied in intangible form, there is a clear need to address this gap in our consumer protection legislation.
The provisions of Part 3 of the Scheme would give consumers rights in respect of the quality and other aspects of digital content similar to those that would apply to goods. Digital content would have to be of satisfactory quality, match its description or trial version, and be fit for any particular purpose made known by the consumer.
Where digital content did not conform to these quality or other requirements, Part 3 would give consumers remedies for these breaches. Consumers would be entitled in the first instance to have the digital content repaired or replaced. It is not proposed, however, to give consumers a short-term right to end the contract and receive a refund of the price similar to that which would apply in the case of goods contracts. While goods can normally be returned to the trader where the consumer ends the contract, digital content can readily be copied in many cases and establishing that it had been deleted from the consumer’s hardware would present obvious practical difficulties.
If the trader could not repair or replace the defective digital content, or did not do so within a reasonable time or without significant inconvenience to the consumer, the consumer would be entitled either to a reduction of the price or to end the contract and receive a refund of the price. Unlike in the case of goods, it is not proposed to give consumers these rights after one unsuccessful repair or replacement. This reflects the fact that repairs and patches are a common and necessary feature of many digital products.
Part 3 further provides that, where digital content supplied by a trader damages a consumer’s device or other digital content, the consumer would be entitled to have the damage repaired or to receive appropriate financial compensation.
Though services account for a substantial part of consumer spending, services contracts are lightly regulated in general consumer protection legislation. The rules on the supply of services in Part IV of the Sale of Goods and Supply of Services Act 1980 comprise just four sections, compared with over sixty sections on contracts for the sale of goods in the Sale of Goods Acts.
The main requirement of Part IV of the 1980 Act is that services should be supplied with due skill, care and diligence. Though the service may not achieve the result desired by the consumer or may even be defective, the supplier is liable only if he fails to exercise the degree of skill and care that would be shown by a reasonably competent person in the same trade or profession.
Part 4 of the Scheme proposes to strengthen the rights of consumers under services contracts by providing that a service should be fit for any purpose made known by the consumer, or be of a nature and quality that could reasonably expected to achieve any result made known by the consumer. It further proposes that the consumer would have a right to enforce any promise or commitment given by the trader that was taken into account by the consumer. Both rights would be subject, however, to any qualification or disclaimer made by the trader. Consumers would also be given the right to have a service performed within a reasonable time where the contract did not fix a time for its performance. Unlike the existing Act which permits traders to exclude or restrict the consumer’s statutory rights where this is ‘fair and reasonable’, the rights contained in the Scheme could not be excluded or restricted under any services contract.
The existing legislative provisions on service contracts do not provide for any remedy where the trader does not comply with the requirement to supply the service with due skill and care. It is up to the consumer instead to take an action for damages under the contract. Part 4 includes for the first time a statutory scheme of remedies for consumers in contracts for the supply of a service. Consumers would be entitled in the first instance to require the trader to remedy a defective service. Where the service could not be remedied or the trader failed to do so within a reasonable time or without significant inconvenience to the consumer, the consumer would have a right to have the service remedied elsewhere, to a price reduction, or to end the contract and receive a refund of the price. The price reduction or refund would be based on the difference in value between the service paid for by the consumer and the service provided by the trader and could amount to the full price.
Unfair Contract Terms
The Directive on Unfair Terms in Consumer Contracts which has principally been given effect in Ireland by the European Communities (Unfair Terms in Consumer Contracts) Regulations 1995 is generally acknowledged to be one of the most important pieces of consumer protection legislation. The Directive aims to protect consumers from the abuse of power by seller or suppliers, in particular from one-sided terms in standard contracts. As well as a general test of unfairness, it includes an indicative ‘grey list’ of contract terms that may be regarded as unfair.
The Unfair Terms Directive and Regulations apply to all contracts between a trader and a consumer, including the goods, digital content and services contracts covered by Parts 2 to 4 of this Scheme as well as contracts outside the scope of those Parts, principally property contracts. Certain terms are excluded from the scope of the Directive, however, in particular terms that have been individually negotiated between the trader and consumer as well as what are sometimes referred to as the core terms of the contract, those that define the main subject matter of the contract or relate to the adequacy of the goods or service supplied as against the price.
As the Unfair Terms Directive is a minimum harmonisation measure, EU Member States are free to go beyond its protections in national legislation. While most other Member States have exercised this option, the Regulations that give effect to the Directive in Ireland did not extend or enhance its provisions.
Part 5 of the Scheme proposes to make a number of important changes to the existing legislation on unfair contract terms including –
§ extending the scope of the unfair terms provisions to include contract terms that have been negotiated between the consumer and trader,
§ strengthening the transparency requirements that apply to contract terms,
§ narrowing somewhat the exemption from assessment for unfairness of core contract terms, and
§ expanding the ‘grey list’ of contract terms presumed unfair and making one ‘grey list’ term a ‘black list’ term that is automatically unfair.
While gift cards and vouchers are subject to the provisions of general consumer protection legislation, their terms and conditions are not to any specific statutory regulation. Part 5 includes for the first time a number of provisions that would regulate gift voucher contracts. It proposes, first, to prohibit the inclusion of an expiry date for gift vouchers. Secondly, prior to the conclusion of a contract for a gift voucher, the trader would have to inform the consumer in a clear and comprehensible manner of any fees charged for the gift voucher, including fees charged for an inactive balance or for the repayment of a credit balance. These fees would also be assessable for unfairness under the provisions on unfair contract terms. The trader would also be required to inform the consumer of any restrictions on the use of the gift voucher.
Extension of Consumer Information, Cancellation and Other Rights
The European Union (Consumer Information, Cancellation and Other Rights) Regulations 2013 give consumers the right to detailed information on goods, digital content and services before the conclusion of a contract and, in the case of distance and off-premises contracts, the right to cancel a contract within fourteen days of its conclusion. The Regulations also contain provisions dealing with payment surcharges, additional payments and pre-ticked boxes, and charges for calls to consumer helplines.
The Directive on Consumer Rights to which the Regulations give effect excludes a number of contracts from its scope, including contracts for financial services, passenger transport, healthcare, social services and gambling. These exemptions from the scope of the Directive were adopted for different reasons. Some, such as those for financial services and transport services, were included because the sectors in question were already subject to detailed regulation under other EU legislation. Others, such as those for healthcare, social services and gambling, were included because some Member States thought that the nature of these activities made them either inappropriate to the kind of regulation proposed or more appropriate to regulation under national legislation.
The Directive, however, expressly permits Member States to maintain or introduce national legislation that would apply the provisions of the Directive to contracts outside its scope. The Department proposed, and sought views on, a number of such extensions in public consultations on the implementation of the Directive undertaken in 2012 and 2013. The responses to the consultations were generally supportive of the proposed extensions. It was not possible, however, to apply the provisions of the Directive to excluded contracts in regulations made under the European Communities Act 1972 as the constitutional immunity afforded regulations made under this Act applies only to measures necessitated by the obligations of EU membership. This constraint does not apply, however, to primary legislation such as the Scheme of the proposed Bill.
Subject to review in the light of responses to the consultation on the Scheme of the Bill, it is proposed to make a number of extensions of the scope of the Regulations. Part 2 of the Regulations (Consumer Information for On-Premises Contracts) would be extended to -
§ healthcare contracts,
§ social service contracts, and
§ gambling contracts.
The proposed extension of Part 2 of the Regulations to on-premises healthcare contracts would, among other things, require general practitioners and other healthcare professionals to inform consumers of the price of a consultation in the practitioner’s surgery in advance of the consultation. The amended Regulations may specify also the manner in which this information is to be provided.
Part 3 of the Regulations (Consumer Information for Off-Premises Contracts and Distance Contracts) would be extended to -
§ distance healthcare contracts,
§ distance and off-premises contracts for social services, and
§ distance and off-premises gambling contracts.
Part 4 of the Regulations (Right to Cancel Distance and Off-Premises Contracts) would be extended to –
§ distance healthcare contracts, and
§ distance and off-premises social services contracts.
The provisions of the Regulations on payment surcharges and additional payments would be extended to all excluded contracts other than contracts for financial services. The provision on charges for calls to consumer helplines would be extended to all of the excluded contracts, including contracts for financial services.