An introduction to the rights customers have when buying goods or services from you including the right to complain and protection from unfair contract terms
If your business sells goods or services you'll sometimes have to deal with people who are unhappy with some aspect of the transaction.
This means you need to think carefully about your approach to customer service - and make sure you're aware of customers' legal rights. You should note that where your customer is a consumer that is not acting on behalf of a business, they have additional rights.
Knowing the basics of the law puts you in a better position if a dispute occurs. Respecting customers' rights will help you build a good reputation and retain their custom.
This guide sets out the fundamental rights customers have when they buy goods or services from you.
Customers' key rights when buying or hiring goods
How to make sure your products meet the rights of customers by ensuring they match the description, are of satisfactory quality and are fit for purpose
When customers buy or hire goods from you they have certain key legal rights.
Requirements for goods
The goods must match the description you give of them. If you say a computer has an 500Gb hard drive it can't be 250Gb. You don't have to say a country cottage is in a quiet location but if you do it can't be next to a busy lorry route. For more information, see fair trading, trade descriptions and Trading Standards.
The goods must be of satisfactory quality - which means they must be of a standard that any 'reasonable person' would regard as satisfactory. They should be safe, work properly, and have no defects in their appearance or finish.
The goods must be fit for the purpose specified - meaning they should be capable of doing what they're meant for. A watch should tell the time - and if the customer said they wanted to use it while swimming and you didn't say it was unsuitable, it should be able to perform this task.
Who is responsible?
In law, the customer has these rights against the supplier of these goods. That means your business, if you have sold them, rather than the manufacturer.
In some cases, the goods may be covered by a manufacturer's guarantee, meaning the manufacturer will repair an item free of charge. But this doesn't affect a customer's rights against you as a supplier. For more information, see returns and refunds, warranties and complaints.
Consumer vs business customers
In addition to these rules, if your customers are consumers they are also protected from unfair treatment by traders. You must not use unfair commercial practices that are misleading or aggressive or omit or hide key information that a consumer might need to make a free and informed purchasing decision.
If your customer is a business or acting on behalf of a business, they are protected by rules that prohibit misleading advertising.
Customers' rights to reject goods and claim refunds
What customers are entitled to do if they believe goods are inadequate including when they have the right to reject good and get a refund from the business
If customers believe that goods hired or purchased from you aren't as described, fit for their purpose, or of satisfactory quality, they can reject them. There is an exception where they are hiring or purchasing in the course of a business and the fault is so slight it would be unreasonable to do so.
This generally means you must refund all money paid and pay compensation for any loss or expense the customer has incurred as a result of the rejection.
When goods are purchased the customer loses the right to reject goods if they accept them. Customers are considered to have accepted goods when they:
- tell you they have accepted them
- alter them
- keep them for a reasonable length of time - this varies according to the nature of the goods
Even if the goods have been accepted, the customer may still be able to claim some money back.
Customers in Northern Ireland have six years to claim that goods are faulty.
During the first six months of that period, if the customer is a consumer, you must prove that the goods weren't inherently faulty. After that time it's up to the consumer to prove that they were faulty at the time of sale. If they can, you'll have to offer a repair, replacement or compensation.
If you sell goods or services online, by telephone, by mail order or away from your normal trading premises, consumers may have a right to cancel a contract within a 14 day cooling off period and make a return. For more information see distance and online selling rules.
Customer complaint exemptions
Circumstances in which customers can't reject goods, including the time frame in which they have to complain and exemptions such defects that are pointed out
In some circumstances customers don't have a legitimate right to complain about goods.
Customers in Northern Ireland can't complain about goods if the purchase was more than six years ago.
Neither can they complain that goods aren't of satisfactory quality if you pointed out the defect before the sale. Similarly, if the customer examined the goods before buying them and a defect was obvious, they can't later reject them as unsatisfactory.
Customers can't reject goods as being unfit for their purpose if you made it clear when you sold them that you were unsure whether they would be suitable.
Customers' key rights when buying services
How to make sure your services meet the rights of customers by meeting your duties to deliver services with reasonable care and skill, within reasonable time
When you agree to provide a service to a customer you enter a legally binding contract under which the customer has certain legal rights.
The customer is entitled to the service defined in the contract you make with them. If you tell them you'll be using certain materials you must use them. If you say you'll have the work completed by a certain date, you must do so.
Under the Consumer Rights Act you must also:
- carry out the work with reasonable skill and care
- provide the service within a 'reasonable' amount of time and at a 'reasonable' price, if your contract with the customer doesn't specify exact dates or prices
There's no set definition of reasonable - but you can work on the assumption that it applies to how another supplier might carry out the service, how quickly and for what price.
Information you must provide
Under the Consumer Rights Act, almost all service providers are required to provide certain information to the recipients of their services. If this applies to you, the required information includes:
- your business name, legal status and form
- your business address and, if available, an email address
- details of any UK or European Economic Area authorisation schemes or professional and regulatory bodies you are regulated by or must belong to
- details of any trade or other similar public registration and your registration number
- your VAT number, if the service is subject to VAT
- details of any terms, conditions and after-sales guarantees
- the price - where it is pre-determined - and details of the service to be provided
- details of any professional indemnity insurance you hold and contact details for the insurance company
- contact details for any complaints
If requested, there is further information you may be required to provide. You must also ensure that you do not discriminate on the grounds of nationality or location unless it can be justified by objective criteria.
Customer rights for unsatisfactory services
Customers' rights if services are unsatisfactory or overdue, or costs are unreasonable the obligations of servicers including the information they must supply
If customers aren't satisfied with a service you have provided, they have a number of rights under the Consumer Rights Act.
If the service is unsatisfactory and you haven't used reasonable skill, you must put the work right at no extra cost. Failing that the customer can ask another supplier to put the work right and claim the cost of this from you.
Reasonable time and price
If a customer complains on the grounds that you have charged more for the service than was agreed (a quotation not an estimate), they're only obliged to pay the price you have given them in the quotation. If no price was agreed beforehand, they're legally obliged to pay a reasonable price.
If you have agreed a deadline for completion of the service, you're in breach of contract if you don't keep to that time. The customer will be entitled to claim compensation for any losses. For instance, they may have to eat out because their kitchen is unfinished.
Service provider obligations
Under the Consumer Rights Act you are required to:
- Provide details of how customers can complain - such as your contact details including telephone number and emails address - in an easily accessible form.
- Inform your customer if you are subject to a code of conduct or are a member of a trade association or professional body that provides dispute resolution services. Details of where information on the code of conduct or resolutions procedures can be found should be provided.
- Resolve any complaints as quickly as possible.
Customers' rights to challenge unfair contract terms
Limits on restrictions and exclusions of liability, unfair and unclear contract terms that protect customers from businesses using unfair small print
Customers have legal protection against businesses using unfair small print.
The Consumer Rights Act prohibits the use of some terms and limits the use of others. In practice this means:
- You must not include in a contract or notice terms which try to exclude or limit liability for death or personal injury resulting from negligence.
- If you use terms excluding or restricting liability for other loss or damage resulting from negligence, they must be reasonable.
- You cannot use standard terms in contracts restricting or excluding liability for breach of contract, providing an inadequate service, or providing goods that have been misdescribed, are not of satisfactory quality or are not fit for their purpose. This is the case unless such a term is reasonable, although exceptions exist, for example when selling or hiring goods to consumers such a term cannot be used.
Unreasonable terms can be challenged. For example, a customer might object to a notice displayed in a restaurant that 'any damage to possessions or injury caused on the premises is not the owner's responsibility'. It would be for a court to decide whether this was fair and reasonable.
The Consumer Rights Act provides additional protection for consumers only. These state that any contract term other than a core term - that is a term dealing with the price or describing the goods or services concerned - must be in clear understandable language and must not be unfair.
If a consumer believes your contract contains an unfair term they can complain to the Competition and Markets Authority (CMA) or to one of several consumer-related organisations that can act against unfair consumer contracts. Such a complaint may lead to court action.
The Competition and Markets Authority have produced a video on top tips for writing contract terms:
Consumers' rights and distance sales
Consumers have the right to a 14 day cooling-off period when they buy goods or services worth more than £42 after a sales visit. This applies whether the sales visit was solicited or unsolicited. Sales visits made to a consumer's home, workplace or at a location arranged by the trader (away from their business premises) are all covered. Individual consumers buying online, by mail order or by phone, have similar rights.
This applies to most businesses selling goods and services off-premises or at a distance. However there are exemptions for some businesses eg those providing financial services, holidays, personalised products or some short-life products.
For more detailed information on consumer contract rights and exemptions, see consumer contracts.
Consumer credit and financial services
Businesses that offer or arrange credit, including credit for the supply of goods or services, are generally subject to the Consumer Credit Act. This Act provides a number of important protections for consumers and sole traders and partnerships of two or three partners.
Consumer credit rules
If you advertise credit, you must ensure advertisements containing the cost of credit also include a representative example including certain information such as the annual percentage rate.
Before granting or increasing any credit limit, you must carry out a credit check using information provided by the consumer or from a credit reference agency. Consumers have the right to withdraw from any credit agreement or increased credit limit within 14 days of concluding the credit agreement, or - if later - once they receive a copy of the agreement or notification of a credit limit. Consumers also have the right to settle a credit agreement early.
You must provide certain information about the credit agreement before a consumer enters into the agreement. The information must usually be provided in a standard pre-contract credit information form. The borrower must be able to take the information away and be allowed to ask questions or for further information if they require it.
You must also provide regular statements during the lifetime of the credit agreement - including a breakdown of the balance, clearly stating interest payments and default charges. Failure to do so means you cannot enforce the agreement and cannot charge interest for the period you were in non-compliance.
In addition to these rights, consumers can also make claims against both the supplier and the credit provider for faulty goods costing between £100 and £30,000.
If you provide hire-purchase agreements, then you - rather than your supplier - are responsible for the quality of goods. And consumers have the entire length of the hire-purchase agreement in which to reject faulty goods.
For more information on the duties of businesses offering credit, see consumer credit.
Additionally, consumers have a number of rights when they purchase financial products and services.
Customer rights: key terms, laws and organisations
Get familiar with common terms, laws and organisations relating to customer rights:
Competition and Markets Authority - a government agency that protects consumer interests, while ensuring that businesses are fair and competitive.
Consumer Credit Act - contains provisions that can make credit providers jointly liable for any problems that arise with a purchase.
Consumer - someone who is buying your goods and services but is not doing so for business purposes.
Consumer Protection from Unfair Trading Regulations - protects consumers from unfair treatment by traders and places a general requirement on traders to act fairly and honestly. The regulations repealed most of the provisions of the Trade Descriptions Act.
Customer - someone who is buying your goods and services. A customer may be a consumer or someone acting on behalf of a business.
Financial Conduct Authority - a government agency that protects consumer interests while promoting healthy competition between financial services firms.
Reasonable - not defined in law but generally taken to mean in comparison with another supplier as the Supply of Goods and Services Act (see below).
The Consumer Rights Act - requires goods to be as described, fit for their purpose and of satisfactory quality. If they are not, the customer can reject them.
Trading Standards Service - operates at local government level and enforces the law and regulations concerning goods available in that region.
Unfair Commercial Practices Directive - transposed into UK law by the Consumer Protection from Unfair Trading Regulations 2008 which protects consumers from unfair treatment by traders.
Writing fair contract terms: seven top tips
Contracts between businesses and consumers are only legally binding when the terms are fair. Unfair terms are those that give the business an unfair advantage or try to limit the consumer's legal rights.
Having clear and fair terms in your contract will save you time, help prevent disputes and reputational damage and protect your business if things go wrong. Follow these top tips to ensure your contracts are fair:
1. Respect your customer's interests, don't use terms that you wouldn't like to sign up to yourself.
2. Avoid ambiguity - ensure that your terms are not open to a number of different interpretations.
3. Be open and fair - don't hide important wording or use 'small print' that might surprise or mislead your customer. Wording that has a significant impact for customers should be particularly drawn to their attention.
4. Use ordinary words and avoid legal jargon or technical language. Put yourself in your customer's shoes to make sure the effect of the term is likely to be understood by them.
5. Ensure that your written contract is reader-friendly. Make the terms legible. Use short sentences and subheadings.
6. Consider whether terms describing the contract's main subject matter and those setting the price (ie the essential obligations of the contract) are specifically brought to the customer's attention and are easy to understand.
7. Take particular care with terms that could potentially work against your customer. For example, terms that limit your liability when thing go wrong, terms that allow you to keep a deposit or terms that impose financial sanctions (eg cancellation fees).