Consumer Rights Act 2015 EVALUATION Flashcards
Explain (protection of consumers)
The CRA defines a consumer in S2 as anyone acting wholly or mainly outside of purposes
relating to their business, whereas a trader is anyone acting for purposes relating to their
business.
There are various rights the CRA gives consumers when it comes to goods. S9 is about the right of satisfactory quality, ie does it mean the standards a reasonable man would consider satisfactory. S10 is about fitness for purpose; if a consumer specifies a purpose to a seller and the trader then recommends a product for that purpose, the good must then be fit for that purpose unlike in Baldry v Marshall. Finally, S11 shows were a good is sold by description, the product must match that description exactly. For instance, the wrong groupings of the cans in Re Moore Co breached this right, despite the right number of cans arriving in total. When these rights are breached, various remedies are available. S20 is the right to return, where the consumer can demand a full refund within 30 days. S23 is the right to repair or replace the good at anytime, and S24 allows for a refund later than 30 days if a repair or replacement is not possible. These rights cannot be excluded under s31(for goods). A trader also cannot exclude death or personal injury caused by negligence under S65. Any other terms in a B2C contract can be considered under the fairness test. A term is unfair under S62 if it creates a significant imbalance in the rights and obligations of the parties to the detriment of the consumer; in which case the term will not apply
CRA is not protective of consumers
On the one hand, it can be argued that parts of the CRA are not overly protective of
consumers. For example, the right to satisfactory quality is very flexible and considers numerous factors for what a reasonable person would consider as acceptable (ie the price paid, how safe it is etc.). This means that businesses don’t have to have impossibly high standards in all cases and is more fair. However, a problem with this is that it is uncertain what different judges will consider satisfactory in different (and even in similar) circumstances. Consequently, it will be hard for businesses and consumers to know when this right is actually being fully maintained or when a contract has been breached. Therefore this is not going ‘too far’ in protecting consumers, and this may actually be more problematic than good
Right to description is too protective
Comparatively, the right to description may be going too far in its protection because it is
very rigid. In cases like Re Moore Co, it seems unfair that a contract can be breached when
there was nothing wrong with the product it just didn’t technically match the precise
description. This may create onerous work for businesses. However, this does create much
more certainty for both parties as they know any description must always be lived up to, and because it is the business who chose to make that description, it helps with unequal
bargaining power by ensuring the company lives up to its promise. Therefore this strong protection of consumers is not necessarily a bad thing
Exclusions in business to consumer contracts
Another thing that heavily protects consumers is that neither the implied rights, nor
death/personal injury caused by negligence can ever be excluded in B2C contracts. This is
good because it creates huge certainty over the rights and also protects the weaker party
from being exploited (ie it is very good that consumers should be kept safe from death or
personal injury from wealthy companies!). On the other hand though, this can detract from
freedom of contract in situations where both parties freely agreed to exclude things like the
implied rights, because the CRA will force these into the contract anyway. Therefore parties are not always free to choose the terms of their contract. Consequently, this heavy
protection has both positives and negatives
The general fairness test
In contrast, the general fairness test is much less absolute and only protects consumers
where there is a ‘significant’ imbalance in the rights. This allows for traders and consumers
to be more flexible with these contract terms, but still protects the consumer (the weaker
party) from being put at a disadvantage due to their bargaining power. However, it is very
vague when something will create a ‘significant’ imbalance, and this means similar contracts
may be treated differently in different cases which is very unfair. Additionally, neither a
business nor a consumer will easily be able to tell whether a claim is possible without
consulting a legal expert. Therefore this less absolute protection has some flaws as well
Explain (contract terms)
The CRA contains similar terms for goods as the old law – ie the right to satisfactory quality
(S9), fitness for purpose (S10), and matching descriptions (S11). However, under the old law the remedy for breaches would either be repudiation or damages. Under the CRA, S20
allows the consumer to reject the goods and get a refund within 30 days. S23 allows the
consumer to ask for a repair or replacement, and S24 allows for a price reduction if this is
impossible. Importantly, these rights cannot be excluded under S31, nor can death or
personal injury caused by negligence (S65). S62 can prevent any other unfair terms, but
only where the term would cause a significant imbalance in the rights and obligations of the
parties. This is very different than the rules of UCTA, where almost anything other than
death of personal injury can be excluded (S2(1)) provided such exclusions are reasonable. This is decided using the S11(1) knowledge test, as well as the S11(2) test for implied terms – which considers the Schedule 2 guidelines such as strength of bargaining power and any conditions on liability
CRA mitigates problems with bargaining power
On the one hand, the CRA mitigates problems with bargaining power. Often consumers
have little ability to negotiate the terms of their contract, but the CRA now provides absolute
rights to protect them from businesses providing subpar goods and services despite their weaker position. However, in B2B contracts, bigger businesses still have the possibility of controlling and excluding terms with smaller businesses – even though there is unequal bargaining power. Therefore the CRA has improved the law for consumers, but is not
resolving the problem of unequal bargaining power when it comes to terms completely
CRA’s stance on death/personal injury and implied rights
Additionally, the CRA’s absolute stance on death/personal injury and implied rights creates a great deal of certainty and protection for consumers. A business can never exclude liability for dangerous products, for example, which means both parties know for certain their rights and remedies here, which may encourage businesses to offer better service in the first place. However, the general fairness test may not be so certain, as it is unclear what
constitutes a ‘significant imbalance’ in rights and obligations and this test can be used on
any term rather than just exclusions like in UCTA. Therefore certainty has been created in
some regards, but whether there has been an overall improvement on this is debatable
CRA detracts from freedom of contract
Arguably, the CRA detracts from freedom of contract. This is because the implied rights
cannot be excluded, even if both parties had agreed to this in the contract, meaning that
parties are forced into abiding by terms they did not agree to. However, it can be argued that it is impossible to achieve true freedom of contract without such rights because consumers may be forced into accepting exclusions they do not truly want due to their weaker bargaining position. Therefore problems with freedom of contract are inevitable either way, and the CRA is an improvement on the old law by at least protecting the weaker party in the process
CRA makes the law more uncertain
Finally, it could be argued the CRA has made the law more uncertain. The old and confusing
laws (eg UCTA) still exist – so no improvement has been made there - and there are now
additional and different rules for B2C contracts, which makes the rules regarding contract terms more complex overall. However, it could be argued that the rules under the CRA are more simple than the old law, and so improvement has actually been made in B2C contracts and at least now one part of the law is easier to understand. Therefore the CRA is an improvement, but even further improvement could be made to make the old laws as simple too
