Global menu

Our global pages

Close

UK Consumer Rights Bill - how will it impact the transport sector?

  • United Kingdom
  • Shipping
  • Consumer
  • Transport

28-01-2015

The Government has recently announced that the Consumer Rights Bill is intended to become law on 1 October 2015, subject to the ongoing Parliamentary process. The Bill is relevant to businesses in the transport sector as it will introduce significant changes to consumer laws, including those dealing with the provision of goods, services and digital content. There will also be changes to the present unfair terms legislation, which will affect all contractual relationships with consumers, including those made in person and formed online. The changes will also need to be considered alongside any existing regulatory framework that applies in the transport sector.

Whilst in no way an exhaustive list of the provisions contained in the current draft of the Bill, set out below are the three key areas which we believe are likely to impact the transport sector to the greatest extent.

The effect of pre-contractual information

Businesses in the transport sector need to be aware of the inclusion of provisions in the Bill which relate to pre-contractual information provided to consumers by businesses and their agents (including third party ticket agents).

Under the Bill, every services contract, including those in the transport sector, will be treated as including, as a term of the contract, anything said or written to a consumer, where:

(i) it is taken into account by the consumer when deciding whether to enter into the contract; or

(ii) it is taken into account by the consumer when making a decision in relation to the service, after entering into the contract.

In theory, this could make it easier for consumers to be able to say that what they have been told overrides the written terms of a contract. This could happen when the contract is being formed, for example, where a consumer claims to have been given incorrect information about any limitations on the use of a travel ticket. It could also happen after the point of sale, for example, where a passenger is told by a member of staff on the platform that he/she can get on a particular train, when in fact the ticket is not valid on that service.

Many businesses in the transport sector already have procedures in place from a customer service point of view to minimise consumer challenges. However, in light of the proposed changes, transport sector businesses will need to consider the extent to which communications made to consumers will incorporate additional terms into their contracts, which will be enforceable by consumers. This may require businesses to undertake critical reviews of, for example, marketing materials, telephone scripts, websites, third party agents and other pre-contractual documentation and processes as well as training for staff interfacing with consumers.

Fairness of terms in transport services contracts and notices

The key changes to unfair terms legislation for businesses in the transport sector are:

  • the change in the assessment of “fairness”; and

  • the extension of the fairness test to consumer notices.

Under current legislation, a term in a contract will not be assessed for fairness to the extent that it specifies the main subject matter of the contract, or the assessment of the appropriateness of the price payable. However, under the Bill, price/subject matter contract terms will only be exempt from the test of fairness if they are “transparent and prominent”. A term will be considered transparent if it is in plain and intelligible language and is legible (if in writing). A term will be considered prominent if it is brought to the consumer’s attention in such a way that an average consumer would be aware of it. This will be of particular importance for those businesses who offer reduced price travel tickets which are non-cancellable and non-refundable. An unfair term will not be binding on a consumer.

In addition, the test of fairness will now apply to both oral and written consumer notices to the extent that the notice either relates to rights and obligations between a trader and a consumer or purports to exclude or restrict a traders liability to a consumer. All written terms of a consumer notice must be transparent, i.e. expressed in plain and intelligible language and legible. Consumer notices which are unfair are not binding on the consumer. This could apply, for example, to safety notices for children’s car seats.

These are important changes, which will require businesses to review how they present and emphasise to consumers key provisions and pricing terms in contractual documentation and notices.

Statutory remedies – service contracts

The Bill introduces the following “tiered” statutory remedies in respect of a supplier’s non-conformity with a services contract with a consumer:

  • Tier 1 - Re-performance: a right to require a business to perform defective services again, to the extent necessary to complete its performance in conformity with the contract.

  • Tier 2 - Reduction in price: a right to a “reduction in price of an appropriate amount” (i.e. the price is reduced by the difference between what consideration was paid for the service, and the value of the service actually provided).

This is the first time statutory remedies have been introduced for services and apply generically, for example, to everything from the services of a plumber to a life insurance policy and related services.

A consumer cannot require re-performance if it is not possible, for example, if the service was time specific. As a result, due to the very nature of many transport sector contracts, it is unlikely that re-performance will be possible. A consumer is, therefore, more likely to want to rely upon the “tier 2” reduction in price remedy. However, it will not always be clear how this will be applied by the courts.

Please note that these statutory remedies do not prohibit a consumer from seeking other remedies for a breach of a contractual term. Such additional remedies include damages, seeking specific performance and a right to treat the contract as terminated.

What does this mean for the transport sector?

The Bill will clearly have an impact on the transport sector in relation to its core services. In addition, the Bill is much wider reaching and will also impact those businesses who, for example:

(i) sell tickets to consumers via mobile applications; or

(ii) have ancillary operations, such as retail shops (online, on-board or in-store).

Such businesses will also need to be aware of the other new rules relating to digital content and the sale of goods. Transport sector businesses will need to consider what steps are needed to ensure their business is ready for the different obligations that they will owe to consumers under the Bill. The clock is now ticking; there is less than a year before the law is in place and there is likely to be a six month transition period following its introduction.

For more information contact

< Go back

Print Friendly and PDF
Subscribe to e-briefings