The 13th June 2014 saw the coming into force of the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. These Regulations replace the Consumer Protection (Distance Selling) Regulations 2000 and the Cancellation of Contracts Made in a Consumers Home or Place of Work etc Regulations 2008.
Keen credit hire litigators will already be familiar with these regulations, as they will have scrutinised them anxiously, either to ensure that credit hire agreements comply with them or to see whether there is scope to argue that particular agreements do not.
The Regulations potentially have effect for solicitors more generally: there is no reason why solicitors retainers should be exempted from the Regulations and indeed the legal profession and its retainers do not feature in the lengthy list of exemptions contained within the Regulations.
The Regulations probably represent an easing in the burden of red tape, as they have repealed the penalty of absolute unenforceability which bedevilled the 2008 Regulations and led to the mass redrafting of Conditional Fee Agreements.
The Regulations broadly define contracts into three types: a distance contract which means a contract concluded between a trader and a consumer under an organised distance sales or service provision scheme without the simultaneous physical presence of the trader and the consumer, with the exclusive use of one or more means of distance communication up to an including the time at which the contract is concluded.
Many contracts of retainer concluded over the internet, and which are part and parcel of bulk personal injury litigation may fall into this category. Regulation 13 provides that the trader must provide to his consumer client in this instance, a lengthy list of information prescribed by schedule 2 of the Regulations. But failure to do so will only result in a deemed breach of contract by the trader: see regulation 18. As every lawyer knows, breach without more, does not terminate a contract. It has to be accepted by the innocent party. It can reasonably be assumed that many clients will simply not notice whether the prescribed information is provided or not, and unless or until the contract of retainer is terminated, there is not a point for a paying party to take.
In relation to off premises contracts, which are tortuously defined to include contracts made in the physical presence of the trader and the consumer in a place away from the trader’s office, or contracts where at least the offer was made away from the business premises, or contracts where the consumer was personally and individually addressed by the trader off site or where the contract was made on an excursion, there is a more draconian consequence. In certain contexts such contracts carry a right to cancel: if the requirements to provide information and notices of the right to cancel are not met, then a criminal offence is committed.
Such a contract is likely to be illegal: by which I mean that it is not only unenforceable, but as these Regulations have a consumer protection element to them, any sums paid over under the contract by the wronged consumer are likely to be capable of being clawed back by a restitutionary remedy.
On premises contracts mean a contract which is neither a distance contract or an off-premises contract: a potentially very wide residuary class indeed. In this respect there is an obligation to provide prescribed information under schedule 1, albeit qualified by the notion “if that information is not already apparent from the context”. Again, failure to do so will put the trader in breach: but there is no right to cancel in an on-premises contract and hence no criminal offence exists for failures in this regard.
In the last 14 years, I have had precisely one case where the Consumer Protection (Distance Selling) Regulations 2000 have proved material to the recovery of costs: in relation to the Cancellation of Contracts made in a Consumer’s Home or Place of Work Regulations 2008 I have had rather more: but after standard form credit hire agreements and conditional fee agreements were redrawn to cope with the Regulations, those cases tended to die away.
I suspect it will prove to be the same with the current set of Regulations: their implementation will prove to be largely a non-event.
What is proving rather more interesting at the moment is the question of compliance with the Damages Based Agreements Regulations 2013: although relatively few solicitors are using those agreements, they remain standard fare for claims management companies who must comply scrupulously with those Regulations or suffer the fate that their retainer is unenforceable.
The Damages Based Agreements Regulations 2013 remain a horribly flawed piece of legislation but there is no sign of any appetite to amend them and so drafting problems will continue to surface for some time yet.