Unfair Contract Terms - Your Rights as a Consumer

UK consumer protection legislation is robust, giving them substantial rights and imposing significant obligations on traders. Indeed, in some cases the actions of a vendor may be sufficient to constitute an ‘unfair commercial practice’ (UCP). UK law prohibits UCPs and, in many cases, they represent a breach of the criminal law  under the Unfair Terms in Consumer Contracts Regulations 1999.

What is a UCP?

A UCP is any commercial act, omission or course of conduct, representation or communication which:

• does not meet the usual standards of professional diligence (which means it is not in good faith and in accordance with honest market practice); and
• does or is likely to distort materially the economic behaviour of an average consumer (which means it causes the consumer to behave in a way they would not if they were properly informed. This usually means that the customer is persuaded by the presence of the UCP to buy something they otherwise would not).

A term which is misleading (by inclusion or omission) may be unfair – for example by the inclusion of false or deceptive information.

In certain cases, unfair contract terms can be UCPs. Unfair contract terms are always unenforceable.

Where UCPs are carried out knowingly or recklessly and distort or are likely to distort consumer behaviour or involve misleading acts or omissions, this is a breach of the law which may lead on conviction to a fine of up to £5,000 and/or a sentence of up to two years’ imprisonment.

Faulty Goods: Know Your Rights

In the UK, customers have various rights in respect of faulty goods. The Sale & Supply of Goods to Consumers Regulations 2002 were introduced in the UK on 31 March 2003. These also apply to 'non-retail' transactions, such as hire purchase sales. They also include purchases of second hand goods, but not goods bought at auction. As with the previous regulations, the protection is for the consumer and the responsibility is placed on the supplier. Trade transactions and the supply of services are not covered by these regulations.

The provisions contain many interesting features. Whilst they cover only defects which existed at the time of purchase, they include the presumption that any defects becoming apparent within six months were present at the time of purchase, so for the first six months the 'burden of proof' that the goods were not defective rests with the seller.

Under the old regulations, your remedy was to require the seller to give a refund. The new regulations permit you to require a repair or replacement. While replacing faulty items has been standard practice in many cases, it has not before been a requirement. If a repair or replacement is not possible, you can insist on a refund of the whole or part of the purchase price as appropriate.

The remedies also apply where the 'public statements' concerning a product do not match the item itself and in cases of faulty installation or seriously deficient instructions (watch out DIY furniture manufacturers!). The practical effect is that the descriptions contained in advertising claims and the information on packaging effectively form part of the contract with the consumer.

The rules made no change to the period of guarantee nor did they alter the period (currently six years) after the sale during which it is possible for the purchaser to bring an action relating to a faulty item.

It is also worth mentioning that attempts to limit the rights of consumers will (if the limitations imposed are unfair) be void under the Unfair Contract Terms Act 1977, regardless of whether the limitations are agreed to or not.

A 2007 case has established that if goods are received damaged and the consumer accepts an offer by the supplier to repair them, then the consumer cannot subsequently reject the repaired goods.

UK credit card holders are protected by the Consumer Credit Act 1974. This means that if the merchants selling the goods are in breach of contract or misrepresent them in any way, the credit card company is required to compensate their customer. This protection applies even where the card is used to buy goods abroad or via the Internet. Revised guidance was issued in 2008, which you will find on the link above.

There are additional requirements where the sale has been made at a distance (i.e. over the Internet), in the form of the Distance Selling Regulations. The Regulations provide additional consumer protection.

The Citizens Advice Bureau website contains additional information on consumer rights.

See our guide to your rights as a consumer  if a vendor uses unfair commercial practices.

Package Tour Problems and Travel Delay - Your Rights

We often hear of problems associated with package tour holidays and customers' attempts to gain compensation. It is important, therefore, to know what is and what is not a package tour for the purposes of working out who is responsible if things go badly wrong.

Fortunately, the European Court has recently given a judgment which clarifies matters. The case involved a family seeking compensation after a Club Med holiday was ruined by a wasp infestation.

The court decided that a package tour is one that includes 'tourist services', sold at an inclusive price, where two or more of transport, accommodation or 'other services' are included and where these are arranged at the time of the original sale. This would exclude, therefore, a holiday for which the hotel and flights are booked separately.

The Government published guidance for package tour operators outlining the definition of a package tour. In this context, a 'package' means the pre-arranged combination of at least two of the following components when sold or offered for sale at an inclusive price and when the service covers a period of more than twenty-four hours or includes overnight accommodation:

a) transport;
b) accommodation;
c) other tourist services not ancillary to transport or accommodation and accounting for a significant proportion of the package, and:

1. the submission of separate accounts for different components shall not cause the arrangements to be other than a package;
2. the fact that the combination is arranged at the request of the consumer and in accordance with his specific instructions whether modified or not shall not of itself cause it to be treated as other than pre-arranged.

Whether a holiday is a package or not is important from the point of view of protection in the case of the insolvency of the holiday provider or carrier. Where a package holiday is sold an ABTA registered travel agent will carry a bond which will pay for the repatriation of the holiday maker in the event of the insolvency of the tour company. However, where the elements comprising the holiday are sold separately and not as a package, no ABTA bond is required.

The principal legislation relating to package tours is found in the Package Travel, Packing Holidays and Package Tours Regulations 1992.

In 2012, travellers were given enhanced compensation rights for travel delay for travellers leaving the EU with any airline or arriving in the EU form a carrier registered in the EU, Iceland, Norway or Switzerland.

Citizens Advice has published a short guide to these rights.

In May 2014, two significant cases were decided in which airlines were ordered to pay compensation for long delays suffered by passengers due to mechanical failures on aircraft. In the first case, the court decided that these were not exceptional circumstances (as, say, the volcanic dust cloud was in 2010) which would exclude them from liability. In the second case, the court ruled that the time limit for making a claim was the general UK lime limit of six years, not two as argued by the airline.

A series of decisions in 2016 have also made it clear that the courts will act vigorously to uphold the legal rights of travellers incorrectly denied compensation by the airlines.

Charity Trustees - Guidance

The regime governing charities has been progressively tightened up over the years, making the sort of scandals that were once not uncommon much more of a rarity. This means that trustees now have to adopt a more professional attitude to the management of a charity’s affairs than was necessary in the past.

However, the Charities Act 2006 also contains provisions which will assist many charities by providing clarity on matters in which trustees are paid by charities or have commercial links with them

The Charity Commission has published guidance for the trustees of charities. This states that they must:

• have and accept ultimate responsibility for directing the affairs of the charity and ensure that it is, and remains, solvent and well-run and that it delivers the charitable outcomes for which it has been set up;
• ensure that the charity complies with charity law and with the requirements of the Charity Commission as regulator – in particular to ensure that the charity prepares reports on what it has achieved and annual returns and accounts as required by law;
• ensure that the charity does not breach any of the requirements or rules set out in its governing document and that it remains true to the charitable purpose and objects set out therein;
• comply with the requirements of other legislation and other regulators (if any) which govern the activities of the charity;
• act with integrity and avoid any personal conflicts of interest or misuse of charity funds or assets;
• use charitable funds and assets reasonably and only in furtherance of the charity’s objects;
• avoid undertaking activities that might place the charity’s endowment, funds, assets or reputation at undue risk;
• take special care when investing the funds of the charity, or when borrowing funds for the charity to use;
• use reasonable care and skill in their work as trustees, using their individual skills and experience as needed to ensure that the charity is well-run and efficient; and
• consider getting external professional advice on all matters where there may be material risk to the charity, or where the trustees may be in breach of their duties.

For more detail see the Charity Commission website and, in particular the FAQs about running a charity (scroll down that page if needed).

In 2013, the Charity Commission published updated guidance for charity trustees called 'It's Your Decision'.

The Charity Commission also has a comprehensive range of downloads for charity trustees and prospective trustees. In particular, guidance on avoiding conflicts of interest has been provided. Conflicts of interest are a common issue, particularly in smaller charities.

From 2014, the Charity Commission accelerated the number of investigations into charities it suspects are not being properly managed. One of the criteria it uses to determine whether an investigation is warranted is the late filing of accounts.

Structured Settlements

Structured settlements are those that are paid over time, rather than as a lump sum. They are becoming increasingly common following a recommendation that they be more widely used and, in particular, that where cases involve children or patients, the court should not approve the settlement of a claim unless satisfied that a structured settlement has been considered. In addition, the costs of reasonable financial advice should be regarded as a cost of the litigation.

It is likely that, over time, the 'lump sum' settlement for major claims will cease to be used. The Courts are able to order that where appropriate periodical payments rather than lump sums will be paid to injured parties who bring successful actions in personal injury cases. We have recently started to see examples of this. In the case of Walton v Calderdale NHS Trust, the Trust was ordered to pay the claimant – who was nineteen years old with a life expectancy of 70 years – an annual payment of £50,548 in respect of his annual care costs, rather than a lump sum.

Structured settlements are becoming more common in medical negligence cases, especially where the actuarial calculations indicate that the life expectancy of the injured party is substantial. In 2014, a new record for payment under a structured settlement was set, a cliamant receiving a seven figure lump sum with annual payments of more then £400,000.

There are now companies in the market which will buy for a cash lump-sum the annuity stream agreed under a structured settlement. What is clear is that negotiating an appropriate settlement as a lump-sum or structured settlement should be undertake only with the benefit of high quality legal and financial planning advice.

Credit Card Purchases: Know Your Rights

When you order something and pay using a credit card, you are protected against loss...or are you?

Although many people think that the protection that applies is absolute, it is not. Unless your credit card contract specifies otherwise, your protection is normally limited. The criteria that normally apply are:

• The purchase of the goods or services must have involved the use of a UK-issued credit (not debit) card;
• Protection only applies where the purchase cost is £100 or more;
• There must have been a breach of contract or misrepresentation by the supplier; and
• Where goods are purchased overseas, local contract law will apply.

In June 2014, extensive new consumer protection was introduced by  the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013  which enhance the rights for consumers that enter into 'doorstep' and distance selling contracts in particular.

Keeping Your Identity Safe

With the practice of fraud by impersonation becoming ever more frequent, clients are advised to take precautions to prevent being taken for a ride by thieves. Sorting out the problems caused by impersonation fraud can be an arduous and stressful procedure. Prevention is far better than cure.

Two of the most common frauds are 'skimming', in which credit card details are stolen and used to buy goods by use of a counterfeit card or by mail order, and identity theft, in which goods are obtained on credit after the 'theft' of your identity.

Skimming occurs at the point at which you use your credit card and is very difficult to stop. It is particularly common in some popular holiday destinations. Precautions you can take are:

• Use a credit card, rather than a debit card where possible at least then you won't find that you cannot withdraw cash because your account has been overdrawn;
• Don't let your credit card out of your sight if you can avoid it;
• Do not attempt to use a cashpoint or pay by credit card unless you are sure the machine is legitimate;
• Never give your PIN number to anyone else;
• Never give card details to any telephone enquirer;
• Check your bank statements and credit card statements carefully;
• Make a note of all your credit card etc. details and keep it in a safe place; and
• Include the telephone numbers of the card companies, so that you can put a stop on a card as soon as something is amiss.

Identity theft is, in theory, easier to stop. In this case, the fraudster will obtain details about you (your address etc.) and apply for credit in your name. It is surprisingly easy, as the information necessary to establish credit can often be stolen from the contents of your dustbin.

The easiest way to minimise this risk is to make sure you never give out personal details to anyone you are unsure should have them and also to shred all paper waste that contains your personal details. This should include offers of credit cards etc. which are sent as advertising flyers.

It is also sensible to check credit card and bank statements carefully. If you are denied credit terms when there appears to be no good reason, you should beware – this is often a sign that attempts have been made to obtain credit using your address.

If you think you may be the victim of identity theft you can check with a credit reference agency (such as Experian) to see if credit searches are being undertaken by finance houses. Applications for credit normally attract a credit search, so this can be a valuable early warning. If your suspicions are well-founded, inform the Police immediately.

Any email from any source (eg your bank or HM Revenue and Customs) which requests any confidential information (such as your pin code or bank account details to be confirmed) should be treated with the greatest suspicion. Never open attachments from unknown sources and always make sure your internet security system is up-to -date..

If you use social media, it is worth checking your safety settings carefully. in some cases GPS information may be attached to a picture you post - enabling a viewer to find the location from which the picture was posted within a radius of 30 metres.

For advice on avoiding identity theft, see the ICO website.

In May 2018, new legalislation is being introduced which will add additonal protections to consumers under the General Data Protection Regulation, which imposes significant new responsibilites on anyone holding your personal data.

Compensation for Loss of a Chance

Most claims for damages are claims for damages or losses which have actually happened. For example, if a lorry mounted the pavement and smashed a garden wall, the claim would be for the cost of restoring the wall to its former condition. The law relating to compensation for losses in the UK is based on  the principle of restoring the person who has suffered the wrong being restored to the position they would have been in had the wrong not happened. There is no concept of ‘punitive damages’ such as exists in the USA, where higher levels of compensation than are needed for mere restoration may be paid as a form of punishment in some cases.

However, there is another type of loss that can occur – where the loss is the loss of the chance of making a gain or avoiding a loss. This type of action normally arises when someone who owes a duty of care to someone else fails in that duty, resulting in the claimant losing the chance to make the gain. For example, in a case in which a firm failed to take action against insurers (who had denied liability for the insurance claim) on behalf of a client, so that the claim fell outside the time limit for bringing the claim and could not therefore be brought, the value of the claim against the firm was calculated as being based on the value of the claim and the likelihood  (‘chance’) that it would have been successful.

The claim for the loss of a chance is based on the value of the gain that would have accrued or the loss avoided and the probability of the gain or loss arising. For example, where a gain of £300,000 would have accrued and the probability of the gain arising is assessed, by the court, at 25 per cent, the claim should be settled at £75,000. If a further event, with a probability of 50 per cent, had to occur for the gain to have arisen, the claim should settle at £37,500 (£300,000 x  50% x 25%).

Where, on the other hand, there are alternative outcomes (for example, where there is a 25 per cent probability of a £300,000 gain or a 75 per cent probability of a £100,000 gain), then the claim would be for the values of the respective losses of a chance added together. In this example, the claim should settle at £150,000 (£300,000 x 25% + £100,000 x 75%). In real life the gain would have been £300,000 or £100,000 and the settlement reflects the relative likelihood of each.

Where the loss of a chance represents the loss of a greater sum than was actually received, or suffering a greater loss than should have been suffered, it gets a little more complicated. In this case, the compensation is calculated based on the probability of the greater sum being received and the difference between the sum that was received and the the sum that should have been received. For example, where £300,000 would have been received with a 50 per cent probability, but £100,000 was actually received, the claim would be for £100,000 (50% x [£300,000 - £100,000]).

Treasure Trove - The Law

There are countless stories of buried treasure, for example, the recent a huge find of Roman artefacts  unearthed in London, but the public at large know little of the law relating to treasure trove and especially the law relating to items washed up on shore - most commonly because they have  washed overboard from a ship during a storm.

In England and Wales, such finds are regulated by the Treasure Act 1996.

Strictly, any item washed ashore from a ship, whether wrecked or not, constitutes ‘wreck’ under the law. Such goods belong to whoever had title to them before they fell into the sea. Where the goods are washed up as the result of a shipwreck, they must be declared to the receiver of the wreck, by the person finding them, within 28 days. The receiver may subsequently pass them back to the finder (if the owner cannot be found). Otherwise, a payment for the salvage of the goods may be payable by the receiver to the finder.

Failure to report items of wreck found is a criminal offence and the retention of goods ‘unofficially salvaged’ could lead to a prosecution for theft.

The position relating to buried treasure is completely different. If something has been found buried, is made substantially of gold or silver and its owners or their heirs are unknown, it will be classed as ‘treasure’. In some instances, the pre-1996 requirement that such items had to have been buried with the intention that they would be recovered still remains. Discoveries of treasure must be reported to the local coroner and it is a criminal offence not to report them. It is also necessary to report any finds to the landowner. The coroner will decide on the fate of the treasure and the finder is entitled to a finder’s fee if the find is ruled to be treasure. In such cases, ownership passes to the Crown.

Neighbours From Hell: Local Authority Powers

The Housing Act 2004 contains a variety of measures designed to protect householders from the ‘neighbour from hell’, through measures targeting private landlords who turn a blind eye to disruptive behaviour by their tenants.

The Act includes a regime of compulsory licensing of landlords in designated problem areas. All private landlords are required to obtain from their local housing authority a licence to rent properties used for multiple occupation. The granting of such licences depends on whether the landlord is a fit and proper person to let property and requires that certain minimum standards are met. Landlords now have to manage their tenants properly, policing noisy or disruptive tenants appropriately and evicting them where necessary. This measure was introduced with the intention of helping local authorities to stop bad landlords and anti-social tenants from undermining other measures in place to help neighbourhoods that are in decline.

In addition, the Government  strengthened the hand of local authorities to deal with problem tenants by updating the Anti-social Behaviour Act 2003. One of the more controversial aspects of this was the introduction in June 2005 of Part 8 of the Act, which gives local authorities powers to deal with complaints about high hedges, if a recalcitrant neighbour refuses to do so.

Recently, it has been proposed that landlords be given the right, in appropriate circumstances, to evict tenants who have been proven to have acted in an anti-social manner. The proposals are described as part of ‘a radically simplified and streamlined toolkit of powers for social landlords and other agencies to tackle anti-social behaviour’, which it is hoped will reduce the time lag between an application for possession being made and the order being granted.

The proposals would allow a court to grant the landlord possession in cases in which there has been violent disorder or theft linked to violent disorder (looting), and would apply where the guilty party is the tenant or a member of their household. It would not be necessary for the misbehaviour to be linked to the vicinity of the property occupied by the tenant. Other grounds on which a possession order may be sought are serious housing-related offences, breaches of Anti-Social Behaviour Orders and behaviour giving rise to a closure order. What is strikingly different from the current position is that the possession order will be mandatory. It will not depend on whether the repossession is reasonable or proportionate.

IN 2012, the Government introduced legislation that effectively allows social landlords to give new tenants 'trial' leases and to evict them if they are disorderly and disruptive to their neighbours.

EHRC Publishes Revised Tips for Disabled Travellers

Under European law, disabled persons and persons with reduced mobility have a right to receive help to get through the airport and board their plane when travelling on flights to and from the UK and Europe, including on domestic flights, provided they give the tour operator or air carrier at least 48 hours' notice.

The Equality and Human Rights Commission (EHRC) has updated its free guidance on this topic, 'Your Passport to a Smooth Journey (Top tips for disabled and less mobile air passengers)', which outlines the right to assistance for disabled and less mobile people in a passport-sized leaflet.

 
More detailed information on this subject can be found in the EHRC's leaflet 'Your Rights to Fly: What You Need to Know (A step-by-step guide for disabled and less mobile air passengers)'.

Both publications can be downloaded from the EHRC's website.

If things do not go smoothly and you believe you have experienced disability discrimination when travelling by air, you can make a complaint to the Civil Aviation Authority (CAA), which is responsible for handling complaints about airports in England, Scotland and Wales and any airlines flying from them. Information on accessing special assistance at the airport and general guidance on how to make a complaint or claim reimbursement or compensation from your airline after a flight delay can be found on the CAA's website.

If matters are not settled to your satisfaction, you can pursue a claim through the court system. It is important to bear in mind that the time limit for making a claim is six months, less one day, starting from the date on which the discrimination occurred.

Correcting Your Credit Rating

Most people require credit at some time, whether it is in the form of a credit card, a loan or an overdraft. However careful you are, it is possible to find yourself blacklisted for credit purposes.

When you apply for credit, the lender will apply to either Experian or Equifax, the two Credit Reference Agencies (CRAs) that provide financial data to lenders, for information to help them make a decision. CRAs hold a regularly updated database of information about consumer credit applications, court judgments and so on.

When a lender checks with a CRA, following a customer's request for credit, it is logged on that person's file. A large number of applications from one person in a short time may indicate fraud or excessive borrowing.

Under the Data Protection Act 1998 and the Consumer Credit Act 1974 you have the right to know what information about you is held by a CRA. The statutory credit reference report costs £2. You can see details of who has searched for information about you and request information as often as you wish without a record of this being seen by a lender.

If you are refused credit, the lender is not obliged to tell you why but they should tell you if information supplied by a CRA was material in the decision to refuse credit. The lender should give you the name and address of the agency.

If you think the information is inaccurate, you can make a complaint to the CRA, who must then contact their information provider. Meanwhile, your file should be marked as "disputed" so that prospective lenders realise that the information may not be reliable. Agencies have 28 days to answer complaints.

Usually, people only contact a CRA if they run into difficulties when applying for credit. However, you may wish to know what information is stored, even if you have never had any problems.

Difficulties can occur because at present lenders are allowed to take into consideration information about people with the same surname living at the same address, even if their financial affairs are completely unconnected to the individual seeking credit. For example, if you have children living at home who have debts, it could affect your own credit worthiness.

In 2014, a claimant was awarded £116,000 by the Supreme Court for damage to his credit rating caused when he returned a defective lap-top and stopped paying the HP payments on it, which led to the lender marking him out to be a credit risk and made obtaining future loans difficult.