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Consumer Rights Bill (HC Bill 161)

A

BILL

TO

Amend the law relating to the rights of consumers and protection of their
interests, to make provision about investigatory powers for enforcing the
regulation of traders, to make provision about private actions in competition
law, and for connected purposes.

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and
consent of the Lords Spiritual and Temporal, and Commons, in this present
Parliament assembled, and by the authority of the same, as follows:—

Part 1 Consumer contracts for goods, digital content and services

CHAPTER 1 Introduction

1 Where Part 1 applies

(1) 5This Part applies where there is an agreement between a trader and a consumer
for the trader to supply goods, digital content or services, if the agreement is a
contract.

(2) It applies whether the contract is written or oral or implied from the parties’
conduct, or more than one of these combined.

(3) 10Any of Chapters 2, 3 and 4 may apply to a contract—

(a) if it is a contract for the trader to supply goods, see Chapter 2;

(b) if it is a contract for the trader to supply digital content, see Chapter 3
(also, subsection (6));

(c) if it is a contract for the trader to supply a service, see Chapter 4 (also,
15subsection (6).

(4) In each case the Chapter applies even if the contract also covers something
covered by another Chapter (a mixed contract).

(5) Two or all three of those Chapters may apply to a mixed contract.

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(6) For provisions about particular mixed contracts, see—

(a) section 15 (goods and installation);

(b) section 16 (goods and digital content).

(7) For other provision applying to contracts to which this Part applies, see Part 2
5(unfair terms in contracts).

2 Key definitions

(1) These definitions apply in this Part (as well as the definitions in section 59).

(2) “Trader” means a person acting for purposes relating to that person’s trade,
business, craft or profession, whether acting personally or through another
10person acting in the trader’s name or on the trader’s behalf.

(3) “Consumer” means an individual acting for purposes that are wholly or
mainly outside that individual’s trade, business, craft or profession.

(4) A trader claiming that an individual was not acting for purposes wholly or
mainly outside the individual’s trade, business, craft or profession must prove
15it.

(5) For the purposes of Chapter 2, except to the extent mentioned in subsection (6),
a person is not a consumer in relation to a sales contract if—

(a) the goods are second hand goods sold at public auction, and

(b) individuals have the opportunity of attending the sale in person.

(6) 20A person is a consumer in relation to such a contract for the purposes of—

(a) sections 11(4) and (5), 12, 28 and 29, and

(b) the other provisions of Chapter 2 as they apply in relation to those
sections.

(7) “Business” includes the activities of any government department or local or
25public authority.

(8) “Goods” means any tangible moveable items, but that includes water, gas and
electricity if and only if they are put up for supply in a limited volume or set
quantity.

(9) “Digital content” means data which are produced and supplied in digital form.

CHAPTER 2 30Goods

What goods contracts are covered?

3 Contracts covered by this Chapter

(1) This Chapter applies to a contract for a trader to supply goods to a consumer.

(2) It applies only if the contract is one of these (defined for the purposes of this
35Part in sections 5 to 8)—

(a) a sales contract;

(b) a contract for the hire of goods;

(c) a hire-purchase agreement;

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(d) a contract for transfer of goods.

(3) It does not apply—

(a) to a contract for a trader to supply coins or notes to a consumer for use
as currency;

(b) 5to a contract for goods to be sold by way of execution or otherwise by
authority of law;

(c) to a contract intended to operate as a mortgage, pledge, charge or other
security;

(d) in relation to England and Wales or Northern Ireland, to a contract
10made by deed and for which the only consideration is the presumed
consideration imported by the deed;

(e) in relation to Scotland, to a contract for which there is no consideration.

(4) A contract to which this Chapter applies is referred to in this Part as a “contract
to supply goods”.

(5) 15Contracts to supply goods include—

(a) contracts entered into between one part owner and another;

(b) contracts for the transfer of an undivided share in goods;

(c) contracts that are absolute and contracts that are conditional.

(6) Subsection (1) is subject to any provision of this Chapter that applies a section
20or part of a section to only some of the kinds of contracts listed in subsection (2).

(7) A mixed contract (see section 1(4)) may be a contract of any of those kinds.

4 Ownership of goods

(1) In this Chapter ownership of goods means the general property in goods, not
merely a special property.

(2) 25For the time when ownership of goods is transferred, see in particular the
following provisions of the Sale of Goods Act 1979 (which relate to contracts of
sale)—

section 16: goods must be ascertained
section 17: property passes when intended to pass
section 18: 30rules for ascertaining intention
section 19: reservation of right of disposal
section 20A: undivided shares in goods forming
part of a bulk
section 20B: deemed consent by co-owner to
35dealings in bulk goods
5 Sales contracts

(1) A contract is a sales contract if under it—

(a) the trader transfers or agrees to transfer ownership of goods to the
consumer, and

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(b) the consumer pays or agrees to pay the price.

(2) A contract is a sales contract (whether or not it would be one under subsection
(1)) if under the contract—

(a) goods are to be manufactured or produced and the trader agrees to
5supply them to the consumer,

(b) on being supplied, the goods will be owned by the consumer, and

(c) the consumer pays or agrees to pay the price.

(3) A sales contract may be conditional (see section 3(5)), but in this Part
“conditional sales contract” means a sales contract under which—

(a) 10the price for the goods or part of it is payable by instalments, and

(b) the trader retains ownership of the goods until the conditions specified
in the contract (for the payment of instalments or otherwise) are met;

and it makes no difference whether or not the consumer possesses the goods.

6 Contracts for the hire of goods

(1) 15A contract is for the hire of goods if under it the trader gives or agrees to give
the consumer possession of the goods with the right to use them, subject to the
terms of the contract, for a period determined in accordance with the contract.

(2) But a contract is not for the hire of goods if it is a hire-purchase agreement.

7 Hire-purchase agreements

(1) 20A contract is a hire-purchase agreement if it meets the two conditions set out
below.

(2) The first condition is that under the contract goods are hired by the trader in
return for periodical payments by the consumer (and “hired” is to be read in
accordance with section 6(1)).

(3) 25The second condition is that under the contract ownership of the goods will
transfer to the consumer if the terms of the contract are complied with and—

(a) the consumer exercises an option to buy the goods,

(b) any party to the contract does an act specified in it, or

(c) an event specified in the contract occurs.

(4) 30But a contract is not a hire-purchase agreement if it is a conditional sales
contract.

8 Contracts for transfer of goods

A contract to supply goods is a contract for transfer of goods if under it the
trader transfers or agrees to transfer ownership of the goods to the consumer
35and—

(a) the consumer provides or agrees to provide consideration otherwise
than by paying a price, or

(b) the contract is, for any other reason, not a sales contract or a hire-
purchase agreement.

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What statutory rights are there under a goods contract?

9 Goods to be of satisfactory quality

(1) Every contract to supply goods is to be treated as including a term that the
quality of the goods is satisfactory.

(2) 5The quality of goods is satisfactory if they meet the standard that a reasonable
person would consider satisfactory, taking account of—

(a) any description of the goods,

(b) the price or other consideration for the goods (if relevant), and

(c) all the other relevant circumstances (see subsection (5)).

(3) 10The quality of goods includes their state and condition; and the following
aspects (among others) are in appropriate cases aspects of the quality of
goods—

(a) fitness for all the purposes for which goods of that kind are usually
supplied;

(b) 15appearance and finish;

(c) freedom from minor defects;

(d) safety;

(e) durability.

(4) The term mentioned in subsection (1) does not cover anything which makes the
20quality of the goods unsatisfactory—

(a) which is specifically drawn to the consumer’s attention before the
contract is made,

(b) where the consumer examines the goods before the contract is made,
which that examination ought to reveal, or

(c) 25in the case of a contract to supply goods by sample, which would have
been apparent on a reasonable examination of the sample.

(5) The relevant circumstances mentioned in subsection (2)(c) include any public
statement about the specific characteristics of the goods made by the trader, the
producer or any representative of the trader or the producer.

(6) 30That includes, in particular, any public statement made in advertising or
labelling.

(7) But a public statement is not a relevant circumstance for the purposes of
subsection (2)(c) if the trader shows that—

(a) when the contract was made, the trader was not, and could not
35reasonably have been, aware of the statement,

(b) before the contract was made, the statement had been publicly
withdrawn or, to the extent that it contained anything which was
incorrect or misleading, it had been publicly corrected, or

(c) the consumer’s decision to contract for the goods could not have been
40influenced by the statement.

(8) In a contract to supply goods a term about the quality of the goods may be
treated as included as a matter of custom.

(9) See section 19 for a consumer’s rights if the trader is in breach of a term that
this section requires to be treated as included in a contract.

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10 Goods to be fit for particular purpose

(1) Subsection (3) applies to a contract to supply goods if before the contract is
made the consumer makes known to the trader (expressly or by implication)
any particular purpose for which the consumer is contracting for the goods.

(2) 5Subsection (3) also applies to a contract to supply goods if—

(a) the goods were previously sold by a credit-broker to the trader,

(b) in the case of a sales contract or contract for transfer of goods, the
consideration or part of it is a sum payable by instalments, and

(c) before the contract is made, the consumer makes known to the credit-
10broker (expressly or by implication) any particular purpose for which
the consumer is contracting for the goods.

(3) The contract is to be treated as including a term that the goods are reasonably
fit for that purpose, whether or not that is a purpose for which goods of that
kind are usually supplied.

(4) 15Subsection (3) does not apply if the circumstances show that the consumer
does not rely, or it is unreasonable for the consumer to rely, on the skill or
judgment of the trader or credit-broker.

(5) In a contract to supply goods a term about the fitness of the goods for a
particular purpose may be treated as included as a matter of custom.

(6) 20See section 19 for a consumer’s rights if the trader is in breach of a term that
this section requires to be treated as included in a contract.

11 Goods to be as described

(1) Every contract to supply goods by description is to be treated as including a
term that the goods will match the description.

(2) 25If the supply is by sample as well as by description, it is not sufficient that the
bulk of the goods matches the sample if the goods do not also match the
description.

(3) A supply of goods is not prevented from being a supply by description just
because—

(a) 30the goods are exposed for supply, and

(b) they are selected by the consumer.

(4) Any information that is provided by the trader about the goods and is
information mentioned in paragraph (a) of Schedule 1 or 2 to the Consumer
Contracts (Information, Cancellation and Additional Charges) Regulations
352013 (SI 2013/3134SI 2013/3134) (main characteristics of goods) is to be treated as included
as a term of the contract.

(5) A change to any of that information, made before entering into the contract or
later, is not effective unless expressly agreed between the consumer and the
trader.

(6) 40See section 2(5) and (6) for the application of subsections (4) and (5) where
goods are sold at public auction.

(7) See section 19 for a consumer’s rights if the trader is in breach of a term that
this section requires to be treated as included in a contract.

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12 Other pre-contract information included in contract

(1) This section applies to any contract to supply goods.

(2) Where regulation 9, 10 or 13 of the Consumer Contracts (Information,
Cancellation and Additional Charges) Regulations 2013 (SI 2013/3134SI 2013/3134)
5required the trader to provide information to the consumer before the contract
became binding, any of that information that was provided by the trader other
than information about the goods and mentioned in paragraph (a) of Schedule
1 or 2 to the Regulations (main characteristics of goods) is to be treated as
included as a term of the contract.

(3) 10A change to any of that information, made before entering into the contract or
later, is not effective unless expressly agreed between the consumer and the
trader.

(4) See section 2(5) and (6) for the application of this section where goods are sold
at public auction.

(5) 15See section 19 for a consumer’s rights if the trader is in breach of a term that
this section requires to be treated as included in the contract.

13 Goods to match a sample

(1) This section applies to a contract to supply goods by reference to a sample of
the goods that is seen or examined by the consumer before the contract is
20made.

(2) Every contract to which this section applies is to be treated as including a term
that—

(a) the goods will match the sample except to the extent that any
differences between the sample and the goods are brought to the
25consumer’s attention before the contract is made, and

(b) the goods will be free from any defect that makes their quality
unsatisfactory and that would not be apparent on a reasonable
examination of the sample.

(3) See section 19 for a consumer’s rights if the trader is in breach of a term that
30this section requires to be treated as included in a contract.

14 Goods to match a model seen or examined

(1) This section applies to a contract to supply goods by reference to a model of the
goods that is seen or examined by the consumer before entering into the
contract.

(2) 35Every contract to which this section applies is to be treated as including a term
that the goods will match the model except to the extent that any differences
between the model and the goods are brought to the consumer’s attention
before the consumer enters into the contract.

(3) See section 19 for a consumer’s rights if the trader is in breach of a term that
40this section requires to be treated as included in a contract.

15 Installation as part of conformity of the goods with the contract

(1) Goods do not conform to a contract to supply goods if—

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(a) installation of the goods forms part of the contract,

(b) the goods are installed by the trader or under the trader’s
responsibility, and

(c) the goods are installed incorrectly.

(2) 5 See section 19 for the effect of goods not conforming to the contract.

16 Goods not conforming to contract if digital content does not conform

(1) Goods (whether or not they conform otherwise to a contract to supply goods)
do not conform to it if—

(a) the goods are an item that includes digital content, and

(b) 10the digital content does not conform to the contract to supply that
content (for which see section 42(1)).

(2) See section 19 for the effect of goods not conforming to the contract.

17 Trader to have right to supply the goods etc

(1) Every contract to supply goods, except one within subsection (4), is to be
15treated as including a term—

(a) in the case of a contract for the hire of goods, that at the beginning of
the period of hire the trader must have the right to transfer possession
of the goods by way of hire for that period,

(b) in any other case, that the trader must have the right to sell or transfer
20the goods at the time when ownership of the goods is to be transferred.

(2) Every contract to supply goods, except a contract for the hire of goods or a
contract within subsection (4), is to be treated as including a term that—

(a) the goods are free from any charge or encumbrance not disclosed or
known to the consumer before entering into the contract,

(b) 25the goods will remain free from any such charge or encumbrance until
ownership of them is to be transferred, and

(c) the consumer will enjoy quiet possession of the goods except so far as
it may be disturbed by the owner or other person entitled to the benefit
of any charge or encumbrance so disclosed or known.

(3) 30Every contract for the hire of goods is to be treated as including a term that the
consumer will enjoy quiet possession of the goods for the period of the hire
except so far as the possession may be disturbed by the owner or other person
entitled to the benefit of any charge or encumbrance disclosed or known to the
consumer before entering into the contract.

(4) 35This subsection applies to a contract if the contract shows, or the circumstances
when they enter into the contract imply, that the trader and the consumer
intend the trader to transfer only—

(a) whatever title the trader has, even if it is limited, or

(b) whatever title a third person has, even if it is limited.

(5) 40Every contract within subsection (4) is to be treated as including a term that all
charges or encumbrances known to the trader and not known to the consumer
were disclosed to the consumer before entering into the contract.

(6) Every contract within subsection (4) is to be treated as including a term that the
consumer’s quiet possession of the goods—

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(a) will not be disturbed by the trader, and

(b) will not be disturbed by a person claiming through or under the trader,
unless that person is claiming under a charge or encumbrance that was
disclosed or known to the consumer before entering into the contract.

(7) 5If subsection (4)(b) applies (transfer of title that a third person has), the contract
is also to be treated as including a term that the consumer’s quiet possession of
the goods—

(a) will not be disturbed by the third person, and

(b) will not be disturbed by a person claiming through or under the third
10person, unless the claim is under a charge or encumbrance that was
disclosed or known to the consumer before entering into the contract.

(8) In the case of a contract for the hire of goods, this section does not affect the
right of the trader to repossess the goods where the contract provides or is to
be treated as providing for this.

(9) 15See section 19 for a consumer’s rights if the trader is in breach of a term that
this section requires to be treated as included in a contract.

18 No other requirement to treat term about quality or fitness as included

(1) Except as provided by sections 9, 10, 13 and 16, a contract to supply goods is
not to be treated as including any term about the quality of the goods or their
20fitness for any particular purpose, unless the term is expressly included in the
contract.

(2) Subsection (1) is subject to provision made by any other enactment (whenever
passed or made).

What remedies are there if statutory rights under a goods contract are not met?

19 25Consumer’s rights to enforce terms about goods

(1) In this section and sections 22 to 24 references to goods conforming to a
contract are references to—

(a) the goods conforming to the terms described in sections 9, 10, 11, 13 and
14,

(b) 30the goods not failing to conform to the contract under section 15 or 16,
and

(c) the goods conforming to requirements that are stated in the contract.

(2) But, for the purposes of this section and sections 22 to 24, a failure to conform
as mentioned in subsection (1)(a) to (c) is not a failure to conform to the contract
35if it has its origin in materials supplied by the consumer.

(3) If the goods do not conform to the contract because of a breach of any of the
terms described in sections 9, 10, 11, 13 and 14, or if they do not conform to the
contract under section 16, the consumer’s rights (and the provisions about
them and when they are available) are—

(a) 40the short-term right to reject (sections 20 and 22);

(b) the right to repair or replacement (section 23); and

(c) the right to a price reduction or the final right to reject (sections 20 and
24).