Provisions on services contracts in the CRA 2015

Chris Willett considers new provisions of the Consumer Rights Act 2015 relating to services, covering pre-contractual information and new remedies

The provisions on services in the Consumer Rights Act 2015 (CRA) apply to what we might call 'pure' services such as advice, education, utility services, leisure, and so on, and to services supplied along with goods, but also to services which are applied to property or digital content (DC) already owned by the consumer - for example, repair, cleaning, or storage of consumer goods, or installation of goods already owned by the consumer.

According to section 48(1) CRA, the provisions apply when there is a 'contract for a trader to supply a service'. This clearly covers:

• Contracts for pure services;

• Contracts in which services are supplied together with goods (e.g. car service involving parts being supplied), with the reasonable care term applying to the service element (under section 8, such mixed contracts are also contracts for the 'transfer of goods', so the goods supplied are covered by the outcome-based terms on quality); and

• Contracts for services applied to consumer goods.

However, note that where a trader sells and installs goods under the same contract (e.g. garages supplying and fitting new car parts), section 15(1)(c) provides that there is a non-conformity if the goods are installed 'incorrectly' (reflecting article 2(5) of the Consumer Sales Directive (99/44/EC)). This seems to refer to the final installed condition of the item, unlike the pre-existing provision, section 11S of the Supply of Goods and Services Act 1982 (SGSA), which required that the incorrect installation involved lack of reasonable care and skill.

In services contracts, the CRA reproduces the pre-existing terms contained in sections 13 to 15
of the SGSA: a service must be carried out with reasonable care and skill (section 49(1) CRA); and
if no price or time for performance has been paid
or expressly fixed - and no means has been agreed to fix such a price or time for performance - under the contract or via any information to be treated as part of the contract, then the consumer must pay a reasonable price and no more, or, as the case may be, the service must be performed within a reasonable time (sections 51 and 52). The provisions of the SGSA now only apply to business-to-business contracts.

Pre-contractual information

Section 50 also creates a new provision to the effect that:

'(1) Every contract to supply a service is to be treated as including as a term of the contract anything that is said or written to the consumer,
by or on behalf of the trader, about the trader or the service, if-

(a) it is taken into account by the consumer
when deciding to enter into the contract, or

(b) it is taken into account by the consumer when making any decision about the service
after entering into the contract.

(2) Anything taken into account by the consumer as mentioned in subsection (1)(a) or (b) is subject to-

(a) anything that qualified it and was said or written to the consumer by the trader on the same occasion, and

(b) any change to it that has been expressly agreed between the consumer and the trader (before entering into the contract or later).'This is potentially important. It is clear that the effect is to make pre-contractual information (e.g. in brochures, websites, and face-to-face or phone discussions) contractually binding. As it is, such information would only be contractually binding under common law principles, if it satisfied the accepted criteria (importance, being made close
to the time of the contract, etc.). Certainly none of this seems to be required here.

Of course, if the pre-contractual information
was incorrect, then it would count as a misrepresentation, so long as it was material
and had played some role in inducing the consumer to enter the contract - in other words,
it would not need to satisfy the traditional requirements as to importance and so on to
be treated as an actual term of the contract.

However, an action for misrepresentation, while allowing for rescission and sometimes damages (either for the tort of deceit or under section 2 of the Misrepresentation Act 1967), does not give rise to the sort of useful statutory remedies available under the CRA, remedies to which we now turn.

In addition, misrepresentation only provides
any sort of remedy where it has induced a contract, whereas it is clear from section 50(1)(b) that this provision covers information provided post-contractually, which influences a 'decision' about the service (i.e. it need not influence the consumer to enter a new contract).

New remedies

The CRA provides for new remedies of repeat performance and price reduction where the service does not conform to the contract.

In cases where the service does not conform
in the sense that the trader breaches a term that section 50 requires to be treated as part of the contract (based on pre-contractual information), but this does not relate to the service, or where the trader breaches the term as to performance of the service within a reasonable time, the only available statutory remedy is price reduction (sections 54(3) and (5)).

Where the service does not conform in the sense that the trader is in breach of the term to carry out the service with reasonable care and skill (section 49), or if the trader breaches a term that section 50 requires to be treated as part of the contract, which relates to the service (e.g. information that indicates how the service will be performed, what result will be achieved, etc.), then the following scheme applies.

Under section 55, the consumer is entitled
to repeat performance unless this is impossible. 'Repeat performance' is defined as 'a right to require the trader to perform the service again,
to the extent necessary to complete its performance in conformity with the contract'. Repeat performance must be carried out within
a reasonable time and without significant inconvenience to the consumer.

Under section 56(3), if repeat performance is impossible, or if it has not been carried out within
a reasonable time and without significant inconvenience to the consumer, then the consumer is entitled to a price reduction.

The rules on price reduction are very similar to those applicable to this remedy in goods and DC contracts. So the key provisions in section 56 read as follows:

'(1) The right to a price reduction is the right to require the trader to reduce the price to the consumer by an appropriate amount (including the right to receive a refund for anything already paid above the reduced amount).

(2)The amount of the reduction may, where appropriate, be the full amount of the price...

(4) A refund under this section must be given without undue delay, and in any event within 14 days beginning with the day on which the trader agrees that the consumer is entitled to a refund.

(5) The trader must give the refund using the same means of payment as the consumer used to pay for the service, unless the consumer expressly agrees otherwise.

(6) The trader must not impose any fee on the consumer in respect of the refund.'Non-binding terms

A contract term is not binding on the consumer if it excludes the trader's liability for breach of the term as to reasonable care and skill. Note that previously such a term was valid so long as it satisfied the reasonableness test under the Unfair Contract Terms Act 1977 and the unfairness test under the Unfair Terms in Consumer Contract Regulations 1999.

Likewise, under section 57, a contract term will not be binding if it excludes the trader's liability arising under section 50 (the provision making information about the trader or service binding). This covers:

• Excluding the basic obligations (i.e. the obligation as to reasonable care, and whatever obligation is created by the information provided) and the remedies (repeat performance and price reduction) that flow from breach of these obligations;

• Making such rights or remedies or their enforcement subject to a restrictive or onerous condition;

• Allowing a trader to put a person at a disadvantage as a result of pursuing such a right or remedy; or

• Excluding or restricting rules of evidence or procedure.

Finally, a contract term is not binding on the consumer if it restricts the trader's liability for breach of the term as to reasonable care or
for breach of any obligation created by the information provided, and, where they apply, the provisions as to reasonable price and reasonable time, if it would prevent the consumer in an appropriate case from recovering the price paid
or the value of any other consideration.

All other exclusion clauses and other potentially unfair terms are covered by the new general test of unfairness contained in part 2 of the CRA, to which we shall turn in the next article.

Chris Willett is a professor in commercial law at the University of Essex School of Law and a council member of Which? @EssexLawSchool www.essex.ac.uk/law