Cancellation of Consumer Contracts
A review of the Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008.
Previous laws aimed at protecting people from high-pressure sales in the home only offered a cooling-off period when a salesman cold-called. This has now been extended to any agreements signed, even if a sales person has been invited to the consumer’s home.
The Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008 apply where a sales person visits a consumer at their home or place of work to sell them goods or services costing more than £35. The sales person is required by law to provide the consumer with a written cancellation notice at the time the contract is made giving the consumer 7 days to cancel the contract from the date the cancellation notice is received. This will apply even if the consumer has personally requested that a sales person visit them in their home or place of work.
Businesses that have not reviewed their contracts and sales practices in the light of these new rules may now be breaking the law and could find that their contracts are unenforceable.
- Where the regulations apply, the consumer must be given a cooling-off period of at least seven calendar days in which to exercise the right to cancel the contract starting from the date of receipt of the notice of the right to cancel;
- The sales person must give the consumer written notice of his right to cancel the contract whether the contract is a written contract or a verbal contract;
- The ‘Notice of the Right to Cancel’ must be given at the same time the contract is made and where the contract is wholly or partly in writing, the ‘Notice of the Right to Cancel’ must be incorporated in the same document;
- If incorporated in the written contract (or other document) the notice must be set out in a separate box with the heading “Notice of the Right to Cancel”, and be as prominent as any other information in the contract or document (apart from the heading and the names of the parties to the contract and any other information inserted in handwriting);
- The ‘Notice of the Right to Cancel’ must contain the information set out in the Regulations (see below) and a cancellation form must be provided as a detachable slip which can be used by the consumer if he wishes to cancel the contract;
- For ‘specified’ contracts listed in Regulation 9 (see below), the business must include, in the ‘Notice of the Right to Cancel’, information that the consumer may be required to pay for goods or services received before the end of the cancellation period; and
- Where applicable, the business must include in the ‘Notice of the Right to Cancel’ information that a related credit agreement will be automatically cancelled if the contract for goods or services is cancelled.
Notice of the Right to Cancel
Whether the contract is a written contract or a verbal contract, the written ‘Notice of the Right to Cancel’ must:
- be dated;
- indicate the right of the consumer to cancel the contract within the cancellation period;
- be easily legible;
- contain the identity of the business including trading name if any;
- contain the business’s reference number, code or other details to enable the contract or offer to be identified;
- contain a statement that the consumer has a right to cancel the contract if he wishes and that this right can be exercised by delivering, or sending (including by electronic mail) to the person mentioned at any time within the period of 7 days starting with the date of receipt of the notice of the right to cancel the contract;
- contain the name and address, (including any electronic email address as well as the postal address), of a person to whom a cancellation notice may be given;
- contain a statement that notice of cancellation is deemed to be served as soon as it is posted or sent to the business or in the case of electronic communication from the day it is sent to the business;
- indicate – if applicable – that the consumer may be required to pay for goods and services supplied if performance of the contract has begun with his written agreement before the end of the cancellation period;
- indicate – if applicable – that a related credit agreement will automatically be cancelled if the contract for goods and services is cancelled;
- contain a statement that the consumer can use the cancellation form provided only if he wishes; and
- contain a cancellation form (for use by the consumer to cancel the contract) provided as a detachable slip and completed by or on behalf of the business in accordance with the notes in the Regulations.
Will businesses be protected against non payment for goods or services provided before the end of the cooling off period?
Where a business has provided goods or services to a consumer under a contract specified in Regulation 9 (see below) the consumer will be required to pay in accordance with the ‘reasonable’ requirements of the cancelled contract for goods or services provided up to the point of cancellation provided that:
- the business has included in the ‘notice of the right to cancel’ a statement that the consumer may be required to pay for the goods or services supplied if performance of the contract has begun before the end of the cooling-off period; and
- the consumer provided the business with a written request for performance of the contract to begin before the end of the cooling off period.
Where performance of the contract begins before the end of the cooling off period, the onus is on the business to ensure that written permission has been received from the consumer before work is commenced. If the consumer does not provide written agreement for work to begin before the end of the cooling-off period, the consumer would be able to cancel the contract and would not be under any obligation to pay for goods and services provided up to the point of cancellation.
Where a business has supplied goods to a consumer under a contract not specified in Regulation 9 the consumer shall be required to return the goods to the business on cancellation of the contract.
Contracts specified in Regulation 9
The following types of contracts are specified in Regulation 9:
- the supply of goods to meet an emergency;
- the supply of goods or services relating to a funeral;
- the supply of services of any other kind;
- the supply of goods made to a customer’s specifications or clearly personalised;
- the supply of goods, which by their nature are consumed and before the cancellation, were so consumed;
- the supply of goods which, before the cancellation, had become incorporated in any land or thing not comprised in the cancelled contract;
- the supply of perishable goods;
- the supply of newspapers, periodicals or magazines;
- advertising in any medium; and
- the supply of goods the price of which is dependent on fluctuations in the financial market which cannot be controlled by the business.
Reviewed in 2015