Consumer Rights Bill (HC Bill 161)

22 Paragraph 11 (variation of contract without valid reason) does not include a
term by which a supplier of financial services reserves the right to alter the
rate of interest payable by or due to the consumer, or the amount of other
charges for financial services without notice where there is a valid reason,
5if—

(a) the supplier is required to inform the consumer of the alteration at
the earliest opportunity, and

(b) the consumer is free to dissolve the contract immediately.

Contracts which last indefinitely

23 10Paragraphs 11 (variation of contract without valid reason), 12
(determination of characteristics of goods etc after consumer bound) and 14
(determination of price after consumer bound) do not include a term under
which a trader reserves the right to alter unilaterally the conditions of a
contract of indeterminate duration if—

(a) 15the trader is required to inform the consumer with reasonable notice,
and

(b) the consumer is free to dissolve the contract.

Sale of securities, foreign currency etc

24 Paragraphs 8 (cancellation without reasonable notice), 11 (variation of
20contract without valid reason), 14 (determination of price after consumer
bound) and 15 (increase in price) do not apply to—

(a) transactions in transferable securities, financial instruments and
other products or services where the price is linked to fluctuations in
a stock exchange quotation or index or a financial market rate that
25the trader does not control, and

(b) contracts for the purchase or sale of foreign currency, traveller’s
cheques or international money orders denominated in foreign
currency.

Price index clauses

25 30Paragraphs 14 (determination of price after consumer bound) and 15
(increase in price) do not include a term which is a price-indexation clause
(where otherwise lawful), if the method by which prices vary is explicitly
described.

Section 70

SCHEDULE 3 35Enforcement of the law on unfair contract terms and notices

Application of Schedule

1 This Schedule applies to—

(a) a term of a consumer contract,

(b) a term proposed for use in a consumer contract,

(c) 40a term which a third party recommends for use in a consumer
contract, or

(d) a consumer notice.

Consideration of complaints

2 (1) A regulator may consider a complaint about a term or notice to which this
Schedule applies (a “relevant complaint”).

(2) 5If a regulator other than the CMA intends to consider a relevant complaint,
it must notify the CMA that it intends to do so, and must then consider the
complaint.

(3) If a regulator considers a relevant complaint, but decides not to make an
application under paragraph 3 in relation to the complaint, it must give
10reasons for its decision to the person who made the complaint.

Application for injunction or interdict

3 (1) A regulator may apply for an injunction or (in Scotland) an interdict against
a person if the regulator thinks that—

(a) the person is using, or proposing or recommending the use of, a term
15or notice to which this Schedule applies, and

(b) the term or notice falls within any one or more of sub-paragraphs (2),
(3) or (5).

(2) A term or notice falls within this sub-paragraph if it purports to exclude or
restrict liability of the kind mentioned in—

(a) 20section 31 (exclusion of liability: goods contracts),

(b) section 47 (exclusion of liability: digital content contracts),

(c) section 57 (exclusion of liability: services contracts), or

(d) section 65(1) (business liability for death or personal injury resulting
from negligence).

(3) 25A term or notice falls within this sub-paragraph if it is unfair to any extent.

(4) A term within paragraph 1(1)(b) or (c) (but not within paragraph 1(1)(a)) is
to be treated for the purposes of section 62(4) and (5) (assessment of fairness)
as if it were a term of a contract.

(5) A term or notice falls within this sub-paragraph if it breaches section 68
30(requirement for transparency).

(6) A regulator may apply for an injunction or interdict under this paragraph in
relation to a term or notice whether or not it has received a relevant
complaint about the term or notice.

Notification of application

4 (1) 35Before making an application under paragraph 3, a regulator other than the
CMA must notify the CMA that it intends to do so.

(2) The regulator may make the application only if—

(a) the period of 14 days beginning with the day on which the regulator
notified the CMA has ended, or

(b) 40before the end of that period, the CMA agrees to the regulator
making the application.

Determination of application

5 (1) On an application for an injunction under paragraph 3, the court may grant
an injunction on such conditions, and against such of the respondents, as it
thinks appropriate.

(2) 5On an application for an interdict under paragraph 3, the court may grant an
interdict on such conditions, and against such of the defenders, as it thinks
appropriate.

(3) The injunction or interdict may include provision about—

(a) a term or notice to which the application relates, or

(b) 10any term of a consumer contract, or any consumer notice, of a similar
kind or with a similar effect.

(4) It is not a defence to an application under paragraph 3 to show that, because
of a rule of law, a term to which the application relates is not, or could not
be, an enforceable contract term.

(5) 15If a regulator other than the CMA makes the application, it must notify the
CMA of—

(a) the outcome of the application, and

(b) if an injunction or interdict is granted, the conditions on which, and
the persons against whom, it is granted.

20Undertakings

6 (1) A regulator may accept an undertaking from a person against whom it has
applied, or thinks it is entitled to apply, for an injunction or interdict under
paragraph 3.

(2) The undertaking may provide that the person will comply with the
25conditions that are agreed between the person and the regulator about the
use of terms or notices, or terms or notices of a kind, specified in the
undertaking.

(3) If a regulator other than the CMA accepts an undertaking, it must notify the
CMA of—

(a) 30the conditions on which the undertaking is accepted, and

(b) the person who gave it.

Publication, information and advice

7 (1) The CMA must arrange the publication of details of—

(a) any application it makes for an injunction or interdict under
35paragraph 3,

(b) any injunction or interdict under this Schedule, and

(c) any undertaking under this Schedule.

(2) The CMA must respond to a request whether a term or notice, or one of a
similar kind or with a similar effect, is or has been the subject of an
40injunction, interdict or undertaking under this Schedule.

(3) Where the term or notice, or one of a similar kind or with a similar effect, is
or has been the subject of an injunction or interdict under this Schedule, the

CMA must give the person making the request a copy of the injunction or
interdict .

(4) Where the term or notice, or one of a similar kind or with a similar effect, is
or has been the subject of an undertaking under this Schedule, the CMA
5must give the person making the request—

(a) details of the undertaking, and

(b) if the person giving the undertaking has agreed to amend the term or
notice, a copy of the amendments.

(5) The CMA may arrange the publication of advice and information about the
10provisions of this Part.

(6) In this paragraph—

(a) references to an injunction or interdict under this Schedule are to an
injunction or interdict granted on an application by the CMA under
paragraph 3 or notified to it under paragraph 5, and

(b) 15references to an undertaking are to an undertaking given to the CMA
under paragraph 6 or notified to it under that paragraph.

Meaning of “regulator”

8 (1) In this Schedule “regulator” means—

(a) the CMA,

(b) 20the Department of Enterprise, Trade and Investment in Northern
Ireland,

(c) a local weights and measures authority in Great Britain,

(d) the Financial Conduct Authority,

(e) the Office of Communications,

(f) 25the Information Commissioner,

(g) the Gas and Electricity Markets Authority,

(h) the Water Services Regulation Authority,

(i) the Office of Rail Regulation,

(j) the Northern Ireland Authority for Utility Regulation, or

(k) 30the Consumers’ Association.

(2) The Secretary of State may by order made by statutory instrument amend
sub-paragraph (1) so as to add, modify or remove an entry.

(3) An order under sub-paragraph (2) may amend sub-paragraph (1) so as to
add a body that is not a public authority only if the Secretary of State thinks
35that the body represents the interests of consumers (or consumers of a
particular description).

(4) The Secretary of State must publish (and may from time to time vary) other
criteria to be applied by the Secretary of State in deciding whether to add an
entry to, or remove an entry from, sub-paragraph (1).

(5) 40An order under sub-paragraph (2) may make consequential amendments to
this Schedule (including with the effect that any of its provisions apply
differently, or do not apply, to a body added to sub-paragraph (1)).

(6) An order under sub-paragraph (2) may contain transitional or transitory
provision or savings.

(7) An order under sub-paragraph (2) is subject to annulment in pursuance of a
resolution of either House of Parliament.

(8) In this paragraph “public authority” has the same meaning as in section 6 of
the Human Rights Act 1998.

5Other definitions

9 In this Schedule—

• “the CMA” means the Competition and Markets Authority;

• “injunction” includes an interim injunction;

• “interdict” includes an interim interdict.

10The Financial Conduct Authority

10 The functions of the Financial Conduct Authority under this Schedule are to
be treated as functions of the Authority under the Financial Services and
Markets Act 2000.

Section 75

SCHEDULE 4 15Amendments consequential on Part 2

Misrepresentation Act 1976

1 (1) Section 3 of the Misrepresentation Act 1967 (avoidance of provision
excluding liability for misrepresentation) is amended as follows.

(2) At the beginning insert “(1)”.

(3) 20At the end of the subsection (1) so formed insert—

“(2) This section does not apply to a term in a consumer contract within
the meaning of Part 2 of the Consumer Rights Act 2014 (but see the
provision made about such contracts in section 62 of that Act).”

Unfair Contract Terms Act 1977 (c. 50)Unfair Contract Terms Act 1977 (c. 50)

2 25The Unfair Contract Terms Act 1977 is amended as follows.

3 In section 1(2) (scope of Part 1) for “to 4” substitute “, 3”.

4 In section 2 (negligence liability), after subsection (3) insert—

“(4) This section does not apply to—

(a) a term in a consumer contract, or

(b) 30a notice to the extent that it is a consumer notice,

(but see the provision made about such contracts and notices in
sections 62 and 65 of the Consumer Rights Act 2014).”

5 (1) Section 3 (liability arising in contract) is amended as follows.

(2) In subsection (1) omit “as consumer or”.

(3) After subsection (2) insert—

“(3) This section does not apply to a term in a consumer contract (but see
the provision made about such contracts in section 62 of the
Consumer Rights Act 2014).”

6 5Omit section 4 (unreasonable indemnity clauses).

7 Omit section 5 (“guarantee” of consumer goods).

8 (1) Section 6 (sale and hire-purchase) is amended as follows.

(2) After subsection (1) insert—

“(1A) Liability for breach of the obligations arising from—

(a) 10section 13, 14 or 15 of the 1979 Act (seller’s implied
undertakings as to conformity of goods with description or
sample, or as to their quality or fitness for a particular
purpose);

(b) section 9, 10 or 11 of the 1973 Act (the corresponding things
15in relation to hire purchase),

cannot be excluded or restricted by reference to a contract term
except in so far as the term satisfies the requirement of
reasonableness.”

(3) Omit subsections (2) and (3).

(4) 20After subsection (4) insert—

“(5) This section does not apply to a consumer contract (but see the
provision made about such contracts in section 31 of the Consumer
Rights Act 2014).”

9 (1) Section 7 (miscellaneous contracts under which goods pass) is amended as
25follows.

(2) After subsection (1) insert—

“(1A) Liability in respect of the goods’ correspondence with description or
sample, or their quality or fitness for any particular purpose, cannot
be excluded or restricted by reference to such a term except in so far
30as the term satisfies the requirement of reasonableness.”

(3) Omit subsections (2) and (3).

(4) After subsection (4) insert—

“(4A) This section does not apply to a consumer contract (but see the
provision made about such contracts in section 31 of the Consumer
35Rights Act 2014).”

10 Omit section 9 (effect of breach of contract).

11 Omit section 12 (“dealing as consumer”).

12 In section 13(1) (varieties of exemption clauses) for “and 5 to” substitute “, 6
and”.

13 40In section 14 (interpretation of Part 1), at the appropriate places insert—

• ““consumer contract” has the same meaning as in the Consumer
  Rights Act 2014 (see section 61);”;

Consumer Rights BillPage 56

• ““consumer notice” has the same meaning as in the Consumer
  Rights Act 2014 (see section 61);”.

14 (1) Section 15 (scope of Part 2) is amended as follows.

(2) In subsection (2) for “to 18” substitute “and 17”.

(3) 5In subsection (3)—

(a) for “to 18” substitute “and 17”, and

(b) in paragraph (b) omit sub-paragraph (ii) and the “or” preceding it.

15 In section 16 (liability for breach of duty), after subsection (3) insert—

“(4) This section does not apply to—

(a) 10a term in a consumer contract, or

(b) a notice to the extent that it is a consumer notice,

(but see the provision made about such contracts and notices in
sections 62 and 65 of the Consumer Rights Act 2014).”

16 (1) Section 17 (control of unreasonable exemptions in consumer or standard
15form contracts) is amended as follows.

(2) In the heading omit “consumer or”.

(3) In subsection (1)—

(a) omit “a consumer contract or”,

(b) in paragraph (a) omit “consumer or”, and

(c) 20in paragraph (b) omit “consumer or”.

(4) After subsection (2) insert—

“(3) This section does not apply to a term in a consumer contract (but see
the provision made about such contracts in section 62 of the
Consumer Rights Act 2014).”

17 25Omit section 18 (unreasonable indemnity clauses in consumer contracts).

18 Omit section 19 (“guarantee” of consumer goods).

19 (1) Section 20 (obligations implied by law in sale and hire-purchase contracts) is
amended as follows.

(2) After subsection (1) insert—

“(1A) 30Any term of a contract which purports to exclude or restrict liability
for breach of the obligations arising from—

(a) section 13, 14 or 15 of the 1979 Act (seller’s implied
undertakings as to conformity of goods with description or
sample, or as to their quality or fitness for a particular
35purpose);

(b) section 9, 10 or 11 of the 1973 Act (the corresponding things
in relation to hire purchase),

shall have effect only if it was fair and reasonable to incorporate the
term in the contract.

(1B) 40This section does not apply to a consumer contract (but see the
provision made about such contracts in section 31 of the Consumer
Rights Act 2014).”

(3) Omit subsection (2).

20 (1) Section 21 (obligations implied by law in other contracts for the supply of
goods) is amended as follows.

(2) In subsection (1), for paragraphs (a) and (b) substitute “such as is referred to
5in subsection (3) below shall have no effect if it was not fair and reasonable
to incorporate the term in the contract.”

(3) In subsection (2)(b) omit “unless it is a consumer contract (and then only in
favour of the consumer)”.

(4) After subsection (3A) insert—

“(3B) 10This section does not apply to a consumer contract (but see the
provision made about such contracts in section 31 of the Consumer
Rights Act 2014).”

21 Omit section 22 (consequence of breach of contract).

22 (1) Section 25 (interpretation of Part 2) is amended as follows.

(2) 15In subsection (1)—

(a) omit the definition of “consumer”,

(b) for the definition of “consumer contract” substitute—

• ““consumer contract” has the same meaning as in the
  Consumer Rights Act 2014 (see section 61);”, and

(c) 20at the appropriate place insert—

• ““consumer notice” has the same meaning as in the
  Consumer Rights Act 2014 (see section 61);”.

(3) Omit subsections (1A) and (1B).

(4) In subsection (5), for “and 16 and 19 to” substitute “, 16, 20 and”.

23 25In section 26(2) (international supply contracts) omit “or 4”.

24 (1) Section 27 (choice of law clauses) is amended as follows.

(2) In subsection (2)—

(a) omit “(either or both)”, and

(b) omit paragraph (b) and the “or” preceding it.

(3) 30Omit subsection (3).

25 Omit section 28 (temporary provision for sea carriage of passengers).

26 (1) Schedule 1 (scope of sections 2 to 4 and 7) is amended as follows.

(2) In the heading, for “to 4” substitute “, 3”.

(3) In paragraph 1, for “to 4” substitute “ and 3”.

(4) 35In paragraph 2—

(a) for “to 4” substitute “, 3”, and

(b) omit “except in favour of a person dealing as consumer”.

(5) In paragraph 3—

(a) for “, 3 and 4” substitute “and 3”, and

(b) 40omit “, except in favour of a person dealing as consumer,”.

27 In Schedule 2 (“guidelines” for application of reasonableness test), for “6(3),
7(3) and (4),” substitute “6(1A), 7(1A) and (4),”.

Companies Act 1985 (c. 6)1985 (c. 6)

28 (1) Schedule 15D to the Companies Act 1985 (specified descriptions of
5disclosures for the purposes of section 449) is amended as follows.

(2) In paragraph 17—

(a) omit paragraph (i), and

(b) after paragraph (k) insert—

“(l) Schedule 3 to the Consumer Rights Act 2014”.

(3) 10For paragraph 25 substitute—

“25 A disclosure for the purposes of enabling or assisting a regulator
under Schedule 3 to the Consumer Rights Act 2014 other than the
Competition and Markets Authority to exercise its functions
under that Schedule.”

15Merchant Shipping Act 1995 (c. 21)1995 (c. 21)

29 In section 184 of the Merchant Shipping Act 1995 (application of Schedule 6
to carriage within British Islands) omit subsection (2).

Arbitration Act 1996 (c. 23)1996 (c. 23)

30 The Arbitration Act 1996 is amended as follows.

31 (1) 20Section 28 (application of unfair terms regulations to consumer arbitration
agreements) is amended as follows.

(2) In subsection (1), for “the Unfair Terms in Consumer Contracts Regulations
1994” substitute “Part 2 (unfair terms) of the Consumer Rights Act 2014”.

(3) For subsection (2) substitute—

“(2) 25In those section “the Part” means Part 2 (unfair terms) of the
Consumer Rights Act 2014.”

32 For section 90 (regulations apply where consumer is a legal person)
substitute—

“90 Part applies where consumer is a legal person

30The Part applies where the consumer is a legal person as it applies
where the consumer is an individual.”

33 In section 91(1) (arbitration agreement unfair where modest amount sought)
for “Regulations” substitute “Part”.

Unfair Terms in Consumer Contracts Regulations 1999 (S.I. 1999/2083S.I. 1999/2083)

34 35The Unfair Terms in Consumer Contracts Regulations 1999 are revoked.

Enterprise Act 2002 (c. 40)2002 (c. 40)

35 In Schedule 15 to the Enterprise Act 2002 (enactments for the purposes of

which disclosures may be made), at the end insert—

• “Schedule 3 to the Consumer Rights Act 2014.”

Companies Act 2006

36 The Companies Act 2006 is amended as follows.

37 (1) 5Section (A) of Part 2 of Schedule 2 (specified descriptions of disclosures for
the purposes of section 948) is amended as follows.

(2) In paragraph 25—

(a) omit paragraph (h), and

(b) after paragraph (j) insert—

“(k) 10Schedule 3 to the Consumer Rights Act 2014”.

(3) For paragraph 33 substitute—

“33 A disclosure for the purposes of enabling or assisting a regulator
under Schedule 3 to the Consumer Rights Act 2014 other than the
Competition and Markets Authority to exercise its functions
15under that Schedule.”

38 (1) Part 2 of Schedule 11A (specified descriptions of disclosures for the purposes
of section 1224A) is amended as follows.

(2) In paragraph 39, for paragraph (i) insert—

“(i) Schedule 3 to the Consumer Rights Act 2014”.

(3) 20For paragraph 48 substitute—

“48 A disclosure for the purposes of enabling or assisting a regulator
under Schedule 3 to the Consumer Rights Act 2014 other than the
Competition and Markets Authority to exercise its functions
under that Schedule.”

25Consequential repeals

39 In consequence of the amendments made by this Schedule—

(a) omit paragraph 19(b) of Schedule 2 to the Sale of Goods Act 1979,
and

(b) in paragraph 21 of that Schedule, omit “and (2)(a)” and “(in each
30case)”.