Guide to business-toconsumer contracts

Business-to-consumer contracts are governed by extensive consumer protection laws to protect consumers by providing them with certain inalienable rights.

Businesses have increased responsibilities and obligations when dealing with consumers which, in some cases, may give rise to criminal prosecution.

1. Recognise whether you are dealing with a consumer.

Consumers are individuals acting for purposes which are wholly or mainly outside their trade, business, craft or profession. Therefore, a company or a limited liability partnership cannot be a consumer but, depending on the purpose of the transaction, a sole trader could be. An individual can be considered a consumer if their main purpose is consumer use, even if it includes some element of business use.

2. What type of consumer contract are you dealing with? The subject matter of the contract dictates the consumers’ legal (statutory) rights and remedies, so it is critical that you know which category you are dealing with: Goods; Services; or digital content. Some contracts may involve a mix of these and payment does not need to have passed for a consumer contract to exist for goods or services. Where and how the consumer enters into the contract also dictates certain provisions and rights: A distance contract – concluded exclusively by means of distance communication, such as online, over the telephone, via social media. An off-premise contract – concluded either on the customer’s doorstep or at any other location which is not the trader’s premises; or concluded after the consumer has been addressed in such a location by the trader.

An on-premise contract – concluded on the trader’s premises (plus contracts outside the scope of the definitions above).

Broadly, for each category of contract, businesses are required to provide consumers with: certain information, express prior consent to additional payments; a ban on premium rate help-lines; rules on delivery in relation to goods; and additional cancellation rights for distance and offpremises contract.

3. Are the contract terms transparent? Contracts must be in plain and intelligible language and legible. The consumer should be able to evaluate, based on clear intelligible criteria, the economic consequences of entering into the contract.

4. Are any of your terms “blacklisted” or “unfair”? Any provision which is “blacklisted” is automatically not binding on consumers. Its use in standard terms of business is liable to be misleading and, therefore, may give rise to action on unfair commercial practice which can, in certain circumstances, involve criminal prosecution.