The Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008
Posted: 08 April 2009
I am sure you are aware of the Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008, which came into force on 1st October 2008 and which may have wider implications in relation to retainers, conditional fee agreements and other contractual documents you might enter into with your clients.
Briefly, the regulations require the ‘consumer’ to be given the right to cancel an agreement within a seven day ‘cooling off period’ and oblige the ‘supplier’ to provide the ‘consumer’ with certain information about the agreement. Failure to do so renders the agreement null and void, and is also a criminal offence. Liability is personal as well as against the corporate or partnership body.
I understand that in making these regulations, no law firms or professional bodies such as the Law Society or APIL were consulted by the Government, so it is unclear whether or not they were intended to regulate the legal profession. Although it seems from the consultation paper that they were designed to apply to ‘door-to-door’ sales staff, the regulations are so generally drafted that they do not appear to exclude professional services. Indeed, APIL have sought clarification on this point from The Department for Business, Enterprise and Regulatory Reform. However, I understand the department were unable to provide a definitive view, but did indicate that the regulations were intended to apply to all contracts between a ‘consumer’ and ‘trader’ and therefore personal injury lawyers may well fall within these regulations as there is no specific exception relating to the legal profession.
If the Regulations do apply, what do you need to do to comply?
Section 7 of the regulations says that a consumer has the right to cancel a contract which falls within the scope of these regulations within the cancellation period. The cancellation period is 7 calendar days starting from the date of receipt by the consumer of a notice of the right to cancel. Section 7 of the regulations provides the notice must:
• Be in writing;
• Be given at the time the contract is made;
• Be dated;
• Indicate the right to cancel within the cancellation period;
• Be easily legible;
• Contain the information listed in Part I, Schedule 4 of the regulations;
• Contain a cancellation form in the format prescribed by Part II of Schedule 4, which must be provided as a detachable slip and completed by the trader;
• Indicate (if applicable) that the consumer is required to pay for the goods/services supplied if performance of the contract begins with his written agreement before the end of the cancellation period;
• Indicate (if applicable) that a related credit agreement will be automatically cancelled if the contract for goods/services is cancelled;
• Where the contract is wholly or partly in writing (such as a retainer letter/CFA) the notice must be incorporated in the same document and set out in a separate box with the heading “notice of the right to cancel”.
If these requirements are not followed, the contract is unenforceable and in those circumstances it seems unlikely that costs would be recoverable from a paying party.
Given the potential implications and until there is clarification to the contrary, it would in my view, be sensible to assume that these regulations affect all solicitors and their representatives who go out to see clients in their own home, another’s home, or any other ‘out of office’ situations where the client is asked to sign a retainer, conditional fee agreement or other contractual document.
The full statutory instrument can be found on the HMSO website at the following address:
http://www.opsi.gov.uk/si/si2008/pdf/uksi 20081816 en.pdf
And the explanatory notes can be found at:
http://www.opsi.gov.uk/si/si2008/em/uksiem 20081816 en.pdf
You will see that the regulations together with the explanatory notes run to more than 40 pages so are clearly outside the scope of this correspondence. However, I do hope you will find my brief summary to be of some assistance. Naturally, should you wish to discuss any aspect with me or indeed if you would like me to have a look at any draft changes to your Conditional Fee Agreement/retainer documentation then I would be happy to do so.
Jonathan Cape
Technical Director
Calculus Legal Costs Ltd
Email: joncape@calculuslegal.co.uk
