How to identify whether your contracts are classed as on-premises, off-premises or distance
About this series of articles
This article is the second one in a series about the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, often abbreviated to CC (ICAC). This law came into effect from 13 June 2014, replacing older doorstep selling law and distance selling regulations.
The series explains the law, and how to apply it to your business so that you remain compliant.
Unfortunately, like most European law, the Regulations are anything but clear and practical. We hope that our information articles are thorough and easy to digest and make understanding the implications for your business easier.
Identify whether you sell off-premises, on-premises or at distance
The Regulations differentiate three types of contract: those formed off-premises, those formed on-premises, and those formed at a distance. Unfortunately, none of these is defined in the same way as in any older act or regulation.
It is important that you identify in what category your customer contracts fall because there are different rules for different categories, particularly regarding the customer’s cancellation rights.
According to the Regulations, an off-premises contract means “one formed at a place which is not the business premises of the trader”.
The first ambiguity arises because business premises are not defined so while it is reasonable to guess that these will include your shop, offices or showroom. If you sell from other locations, whether those locations qualify as business premises will vary from one local authority enforcer to another.
If you sell door-to-door, your contracts will certainly be made off-premises.
In addition, some other types of contracts made are specifically mentioned as being made off-premises, such as those made while you are away from home with your prospects, as when selling holiday property abroad.
But it has been left open as to whether some premises are "places of business". Examples of these include:
An airport car hire booth
We guess this would be considered a place of business.
A concession in a department store
We guess this would be considered a place of business.
A consumer targeted exhibition
If an order is taken for future delivery, certainly a contract is made off-premises. But if the goods or services are sold on the spot, the exhibition may be considered a place of business and the Regulations may not apply.
A lecture, exhibition or gathering where visitors are encouraged to order later
This could be deemed to be on-premises or off-premises. The Regulations aren’t clear.
An agricultural show
Clearly none of the traders will have his main place of business in a field. However, it is likely that a stand selling directly will be treated as a place of business. Check with the local weights and measures department for that location.
If the customer places an order and pays during the show for delivery later, we think that the Regulations will probably not apply because the contract would be deemed to be on-premises. If the contract is not completed until the customer returns home (for example, he completes an order form at the stand, but doesn’t pay until he returns home), the contract will certainly be treated as off-premises.
A charitable event enticing donations
A donation at the time or later is outside the Regulations as it is not a contract. However, if the donor signs to make a regular payment, there is a contract and the contract is deemed to be made off-premises.
If you talk to a prospective customer off-premises, even to discuss something not related to the products or services (such as the weather or sports results) and later complete a contract with that person (regardless of where the contract is completed), that contract will be most likely treated as a regulated off-premises contract. The Regulations aim to close a loophole where salesmen can persuade a customer to buy off-premises, perhaps when he is relaxed and not thinking as critically as normal, but “technically” complete the contract on-premises, by asking the customer to “pop-by and give a signature”.
The Regulations say that an: “on-premises contract means a contract between a trader and a consumer which is neither a distance contract nor an off-premises contract”.
Because the Regulations do not define this term any further, so we will not try to do so either. The Regulations still bite, but to a lesser degree, on sales from shops or contracts made at your office.
Because of this, if you are in your office or shop with a prospective client or customer, encourage him or her to sign up at that time. If he or she decides not to buy then and there but to return to you later, then e-mails an order to you, an off-premises contract is formed and the tougher regulations for that category of contracts apply.
The term distance selling as used in the Distance Selling Regulations 2000, has now been dropped. The new reference is to distance contract. This is defined as:
“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 and including the time at which the contract is concluded.”
That definition is very broad and will include almost any contract where you are not face to face (for example, by phone, post or over the Internet) with your buyer or customer or client when the contract is made. It covers all contracts for goods and services except those specifically listed as excluded in Section 6.
What to do after identifying the types of contracts you create
In practice, businesses are likely to make contracts with customers in more than one of the ways above. For example, you might sell from a shop, but also from an Internet site, or via consumer exhibitions.
You should make sure that for each category of contract, you comply with the Regulations affecting that category. But how you comply might also depend on the product or service you sell.
We recommend that you read about Practical examples of businesses affected by the Regulations next, but if you haven’t already done so, you might like to read the first article in this series, about how the Consumer Contracts Regulations affect your business beforehand.
Unless you are exempt from the Regulations or are already compliant, you are likely to need to update your customer contract templates. These are likely to include your website terms and conditions if you sell online and your offline customer contract if you sell offline.
If you have any questions about the Consumer Contract Regulations 2013, or would like help updating your contracts to comply, please ask us. We’d be delighted to help.
Please note that the information provided on this page:
- Does not provide a complete or authoritative statement of the law;
- Does not constitute legal advice by Net Lawman;
- Does not create a contractual relationship;
- Does not form part of any other advice, whether paid or free.
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