Monday, 1 June 2015

Consumer Rights Act 2015

This one seems to have slipped under the radar somewhat - not seen anything on the news, but it seems to cover a lot of stuff, and impacts consumers and businesses.

I have to read through it, at least the sections that impact us, and make sure our terms match up properly. We have always tried to be fair to customers, so I expect only minor changes.

I'll probably post more when I work out some of the implications, however, skimming it I have found one bit I don't quite follow. Section 65: Bar on exclusion or restriction of negligence liability.

It starts off sensibly with "A trader cannot by a term of a consumer contract or by a consumer notice exclude or restrict liability for death or personal injury resulting from negligence." which is pretty bog standard stuff and very simple. Obviously this is the sort of thing the public liability insurance helps cover anyway.

But then it goes not to "Where a term of a consumer contract, or a consumer notice, purports to exclude or restrict a trader's liability for negligence, a person is not to be taken to have voluntarily accepted any risk merely because the person agreed to or knew about the term or notice."

That I am not sure of - it is not clear to me if excluding consequential losses, etc, from negligence is simply not allowed any more, of if it is allowed but not merely by it being a term or something agreed. It seems odd wording, and sounds like it would be allowed if you jump through some sort of hoops to allow it, but it is not clear to me what. i.e. do we have to spell out "I agree to the risk that there may be consequences for a failure of this service that I cannot expect A&A to pay me" or something - i.e. agreeing the risk as opposed to agreeing the "term" in the agreement?

When selling a service, one of the key things that can impact the cost of providing that service is the risk factors taken by the service provider and the customer. I am all in favour of such things be very clear and understood up front, but it would not be appropriate to disallow limiting liability. After all, even with insurance the insurance may have a limit on the amount covered.

Obviously one tries to ensure one uses reasonable skill and care, and is not negligent, but at the end of the day mistakes can happen. This clearly includes mistakes as it is immaterial "whether a breach of duty or obligation was inadvertent or intentional".

If we sell a service for £1/month, as a lot of services are, and a mistake on our part (i.e. negligence) stops that service working, at present we offer a "money back guarantee", in that we will refund what was paid for the service for the time it does not work. This is at one (low) end of the level one might expect in compensation for an error, but I do not think it that unfair, as we go to some lengths to make it very clear to customers so that they can decide it is worth the risk to buy a cheap service. The problem is if such a service has an issue, perhaps a domain service or a VoIP service is out for a day due to a mistake, could a customer claim to have lost out on some high paying job offer and expect us to compensate to the tune of hundreds of thousands of pounds in consequential losses?

So, I am trying to work out if we are still allowed to limit liability to consumers, or not, and if we are, how we do it. If not, we'll need to look at some better insurance and consequentially increasing our prices rather a lot to have unlimited liability for simple mistakes.

10 comments:

  1. You are not excluding liability; you are limiting it, and so the rules under s57 are probably more relevant?

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    1. The one I quoted covers restricting and excluding. I'll read 57!

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    2. OK Section 57 prohibits exclusion, and limitation if it is not at least a money back guarantee, by my reading - agreed?

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    3. Oops — yes, you are right. My apologies.

      However, I would read that particular section — s65(2) — as relating very specifically to the issue of "voluntary acceptance of risk" ("volenti non fit injuria" in older texts).

      This is a specific thing: "voluntarily accepting risk" is a complete defence under the law of negligence. As a result of this (although, probably the case beforehand too), simply saying "you accept all risk" or similar does not mean that a trader can claim that the consumer voluntarily accepted all the risk and so cannot make a claim of negligence, although the inclusion of "merely" means that a trader can use volenti as a defence, but needs to do more than just point to a clause in a contract restricting liability.

      I would not read it as having an impact on your liability restrictions, although other sections of the Act probably do bite.

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    4. In the usual not-legal-advice way, agreed :)

      (You may still struggle to enforce that term if the recoverable sum is very low (e.g. £1), but, since is that exactly what you are being paid, you could at least have a good fight over it.)

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    5. I expected that someone with more legal training would understand that better. s57 looks interesting - that does seem to allow for our normal "money back guarantee" type restriction of liability though, doesn't it?

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    6. I'll look through out terms and find any other oddities that need changing and brief staff accordingly anyway.

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    7. And thanks, in the usual not-legal-advice way, as ever :-)

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  2. "could a customer claim to have lost out on some high paying job offer and expect us to compensate to the tune of hundreds of thousands of pounds in consequential losses?"

    Very unlikely, that would normally be a speculative loss - they'd need to prove it actually cost them a specific amount of money.

    I don't think a company should be allowed to limit their liability for the results of negligence - my wet ceiling and the dodgy plumber responsible explain that quite well I think. I'm sure if he could get away with it, he'd have slipped in a clause that repairing the damage he caused wasn't his problem - and I think a sane legal system would laugh at him while tearing that clause up.

    If he'd only charged £1 to crack that pipe and tape it to delay the resulting leak long enough to make a clean getaway, do you think he should be able to get away with just refunding the £1 and wash his hands of the hundreds of pounds of damage he caused? I don't - and yes, he certainly should have insurance to cover that; indeed, for the specific case of plumbers, this seems to be a legal requirement already in some form.

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