These regulations came into force on 13 June 2014 and apply to all contracts entered into on or after that date. Any contract entered into prior to this date is unaffected.
The first noteworthy point is that these regulations explicitly supercede the Consumer Protection (Distance Selling) Regulations 2000 and The Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008. For the purposes of these Regulations the definition of ‘consumer’ is as follows: “An individual acting for purposes which are wholly or mainly outside that individual’s trade, business craft or profession.”
As such, the first area of potential conflict is whether a claimant who, for example, uses their vehicle for work as well as social, domestic and pleasure purposes, can be said to be a consumer for the purpose of these Regulations. Credit hire organisations (CHOs) may try and argue they are not, whereas insurers may say they are.
The question of, “mainly outside,” may require examination of specific records as to the use of the vehicle. The Regulations seek to clarify what information must be given to a consumer when making both an ‘on-premises’ and ‘off-premises’ contract.
S14 of the Regulations sets out requirements for contracts concluded by electronic means. Some CHOs form contracts by electronic signature and we would question whether these contracts could be caught by this section. If they are, then, if the contract places the consumer under an obligation to pay, the trader must make the consumer aware of this fact in a clear and prominent manner before the consumer places the order and that the consumer explicitly acknowledges that the order implies an obligation to pay.
If the trader fails to comply with the requirements the consumer is not bound by the contract or order. Potentially this could mean that any claim for credit hire against the defendant could fail. CHOs will no doubt argue that a court should not go behind any signed contract and that the claimant would still have a liability to pay.
The main discussions surrounding these regulations however, is whether the regulations apply to credit hire contracts at all and therefore whether a notice of the consumer’s right to cancel is in fact required. S28 covers various contract types which are excluded from the requirement to provide a notice of cancellation rights. S28 (1) (h) excludes the following contracts: “the supply of accommodation, transport of goods, vehicle rental services, catering or services related to leisure activities, if the contract provides for a specific date or period of performance.”
The question posed is whether credit hire contracts are excluded because the period of hire is not known at the outset. It could be said that merely a start date for hire will be sufficient, or that, for those contracts which limit the period of hire to no more than three calendar months (in order to ensure the contract is not caught by S15 CCA 1976 – a Consumer Hire Agreement), can be said to provide a, “period of performance,” ie we will provide you with a hire vehicle for a reasonable period between these dates.
If this is sufficient to exclude the contract from the requirement to provide a notice of cancellation rights it is likely to mean that CHOs will be more vigilant with regards to entering into new contracts where the period of hire exceeds the contractual term. If however, the requirement to provide a hirer with a notice of their cancellation rights subsists, then the trader must not begin the supply of a service before the end of the cancellation period unless the consumer has made an express request. Most CHOs are already conversant with such a requirement therefore it is unlikely to have any significant impact.
Due to the Regulations only applying to contracts entered into after 13 June 2014 it is unlikely we will see such issues argued in the courts any time soon. However, when cases do come to be heard it is likely, as we saw with the COCR 2008, there will be much debate and consternation as to the applicability of this new legislation.
Melanie Mooney
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