CANCELLATION OF CONTRACTS & ADR REGULATIONS – UNIFIED
CLIENT’S RIGHT TO CANCEL
(a) Cancellation of Contracts etc Regulations 2008
In Kupeli & Others v Cyprus Turkish Airlines & Another  EWHC 1125 (QB)
the Queen’s Bench Division of the High Court held that clients who had entered into Conditional Fee Agreements with solicitors in a community centre rather than the solicitor’s office, in circumstances where that location had been agreed jointly because of the large numbers attending, were not entitled to notice of the right to cancel the contract.
The decision turned on whether the Conditional Fee Agreements had been made “during or after an excursion organized by the trader away from business premises”.
These are the words used in the Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008 (SI2008/1816]
The High Court said that the word “excursion” had to be given its broadest interpretation to reflect the intentions of the regulations to protect people from high pressure salesmanship but the mere fact that a consumer travelled to meet a trader away from the trader’s business premises did not mean that they were vulnerable to such salesmanship.
Had the regulations intended to cover such a situation they would have provided for the protection whenever a contract was not signed on business premises.
Consequently the meeting here should not be classified as an excursion.
It should be noted that those regulations only apply to contracts made before 13 June 2014 as then the 2008 regulations were replaced by the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (SI 2013/3134).
Those regulations do indeed provide that protection applies whenever a contract is not signed on business premises.
Under the 2013 regulations the definition of an “off-premises contract” is a contract “concluded in the simultaneous physical presence of the trader and the consumer, in a place which is not the business premises of the trader”.
Thus this decision is only of interest and use in relation to the contracts still governed by the 2008 regulations.
(b) Alternative Dispute Resolution for Consumer Disputes Regulations 2015
The Alternative Dispute Resolution for Consumer Disputes (Amendment) (No 2) Regulations 2015 (SI 2015/1972) (ADR Amendment Regulations No 2) have been published.
- Introduce one provision which implements a provision of Regulation (EU) 524/2013 on online dispute resolution for consumer disputes (ODR Regulation) to provide that a competent authority and an ADR entity (including a body applying to become an ADR entity) must provide a link to the online dispute resolution platform on its website. Although the ODR Regulation, which applies from 9 January 2016, is directly applicable in the UK, this provision requires specific transposition into domestic law in order to make the obligation it contains enforceable.
- Correct minor errors (namely, to omit the definition of “ADR official” which is redundant) made by the Alternative Dispute Resolution for Consumer Dispute (Amendment) Regulations 2015 (SI 2015/1392) (ADR Amendment Regulations), which were published in June 2015 (see Legal update, The Alternative Dispute Resolution for Consumer Disputes (Amendment) Regulations 2015 published). The ADR Amendment Regulations, in turn, amend the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015 (SI 2015/452) (ADR Regulations). The ADR Regulations implement the majority of Directive 2013/11/EU on alternative dispute resolution for consumer disputes (ADR Directive), which member states were required to implement by 9 July 2015.
The ODR Regulation and the ADR Directive were published in the Official Journal on 18 June 2013 and aim to step up the use of out-of-court schemes in the EU by giving shoppers a fast, cheap and informal way to settle disputes with traders, as an alternative to often lengthy court proceedings. For further information on these initiatives, see Practice note, The EU Mediation Directive and other EU dispute resolution initiatives; ODR and ADR.
The ADR Amendment Regulations No 2 come into force on 9 January 2016.
Source: The Alternative Dispute Resolution for Consumer Disputes (Amendment) (No 2) Regulations 2015 and Explanatory Memorandum to the Alternative Dispute Resolution for Consumer Disputes (Amendment) (No 2) Regulations 2015.
I am grateful to Ben Williams and Roger Mallalieu for their helpful comments, many of which I have incorporated in this piece.
The 2013 Regulations
The 2013 Regulations have themselves been amended, with effect from 1 October 2015, by the Consumer Contracts (Amendment) Regulations 2015 (SI 2015/1629). The amendments make no substantive changes to the law as far as the provision of legal services is concerned. They reflect the fact that certain provisions formerly in the 2013 Regulations are now contained in the Consumer Rights Act 2015 and are therefore removed from the Regulations. Those provisions which have moved from the 2013 Regulations to the 2015 Act are those which:
– make any pre-contract information provided by the trader pursuant to the 2013 Regulations into a term of the contract;
– require that a change to any pre-contract information (whether the change is made before or after entering into the contract) must be expressly agreed between the consumer and the trader.
– Establishes rules for the delivery of goods and remedies if those rules are breached;
– Set out the rules for the transfer of risk in goods sold to consumers.
The provisions relating to the status of ,and changes to, pre-contract information in relation to digital content provided under a contract other than for a price remain in the 2013 Regulations. All but one of the digital content provisions of the Act apply only to digital content provided for a price, or bundled with something provided for a price.
There is a substantive change, which personal injury lawyers may or may not think applies to them, especially when acting under a conditional fee agreement, and that is that the 2013 Regulations have been amended to state specifically that they do not apply to contracts for the sale of national lottery tickets.
These Regulations apply to contracts made in the solicitor’s office as well as elsewhere and are very important and came into effect on 13 June 2014. Thus all contracts, other than those made with a business client, are now covered. The Regulations impose considerable obligations on lawyers.
This piece deals only with contracts for the provision of legal services but the other provisions of the Regulations are of key importance to your clients.
The Regulations came in on 13 June 2014 when the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (S.I. 2013 no. 3134) replaced the Consumer Protection (Distance Selling) Regulations 2000 and the Cancellation of Contracts Made in a Consumer’s Home or Place of Work etc Regulations 2008.
They complete the implementation of the European Union Consumer Rights Directive – 2011/83/EW.
The new Regulations apply in relation to contracts entered into on or after 13 June 2014 and the old Regulations continue to apply to contracts made before 13 June 2014.
The new Regulations regulate all contracts made between a trader and a consumer.
The Regulations unquestionably apply to solicitors as Regulation 4 defines a trader as: –
“a person acting for purposes relating to that person’s trade, business, craft or profession, whether acting personally or through another person acting in the trader’s name or on the trader’s behalf.” ( my italics)
A consumer is: –
“an individual acting for purposes which are wholly or mainly outside that individual’s trade, business, craft or profession.”
(c) Summary – Consumer Contracts Regulations 2013
The key exception is that the Regulations only apply where the client is a consumer and therefore if the client is a business there is no need to comply with the Regulations. However lawyers need to check that the work they are doing is really for the business. For example, where a solicitor is preparing a will for the Managing Director of a business that work will come within the Regulations.
The key changes are that On-Premises Contracts are now covered and the Regulations list extensive information that must be given to a client before the client is bound by the contract. An On-Premises Contract is where the solicitor and client are simultaneously physically present together in the solicitor’s office when the contract is made. The Regulations are badly worded and some people take the view that the information has to be given before the client is bound by the contract and that if it is not given then the client is not bound; in other words it is a condition precedent of the contract.
Others take the view that this is simply Parliament stating when the information needs to be given and if it is not given then that does not of itself void the contract. However it is likely to result in a finding of inadequate professional service and it is of course a breach of a statutory instrument and therefore for lawyers the consequences are likely to be the same – no compliance with the Regulations – no fee and an additional penalty payable to the client.
Regulation 31 deals with what happens if a business does not give the schedule 2 information in respect of cancellation. The result is that the consumer’s right to cancel the contract is extended by up to 12 months, but after that period the right to cancel is lost.
The argument is that this means that failure to supply information cannot result in the contract being unenforceable as this provision would be inconsistent with that concept.
The requirement of something needing to be done “before the consumer is bound” by the regulations is used also in Regulation 9, 10 and 13 and it is argued that in the contexts of for example Regulation 40(1) there could be no argument that the customer is not bound by the event of the breach. If so Regulation 40 would be meaningless.
It is also clearly a breach of the Solicitors Code of Conduct to fail to comply with consumer protection legislation passed by Parliament.
When simultaneous physical presence occurs off the premises that is an Off-Premises Contract and when there is no such simultaneous physical presence anywhere then that is Distance Selling.
In relation to Off-Premises Contracts and Distance Selling, in addition to all of the information being given to the client in advance of the contract the client has the right to cancel and that notice must be served by the solicitor on the client. This has been the case for some time now but the period of cancellation goes up from seven days to 14 days and is now calendar days and not working days.
Furthermore the client no longer has to cancel in writing; the contract is cancelled if the client makes it ‘clear’ that they wish to end the contract. This will cause enormous problems for businesses and it is evident that the Regulations are much tougher than the 2008 Regulations
In relation to Off-Premises and Distance Selling Contracts the wording of the right to cancel has changed and is much more extensive. The Regulations themselves give standard wording and a standard letter and the Law Society recommends that this is followed and I agree entirely.
In practice all client care letters should now contain all the extensive information that now needs to be given whether that is for On-Premises, Off-Premises or Distance Selling. I give the suggested text below.
Many of the new aspects of the Regulations are to be welcomed, for example it is no longer legal to use:
- premium telephone numbers, and
- pre-ticked boxes,
In other words clients must opt in or not opt out.
For the first time there are extensive statutory requirements even in relation to a contract made in a solicitor’s office. It is clear that these represent a much tougher approach to consumer/client rights.
Solicitors need to be very careful that contract has actually been made and my advice is that the client care letter containing the terms and conditions of business, and the funding agreement, whether that is a conditional fee agreement, a damages-based agreement, a contingency fee agreement, a contentious business agreement or an old-fashioned hourly rate agreement or whatever should be signed by the client in the solicitor’s office and should be witnessed by two members of staff, which can include the solicitor dealing with the matter.
The burden of proof is on the solicitor to show that they have complied with the Regulations and this should put it beyond doubt. If the contract is made in the office then there is no need to give the right to cancel.
Where the is a right to cancel the client does not now have to do this in writing so firms must have a procedure for logging every call because if a client phones up and cancels and that is not picked up, the firm may end up doing a huge amount of work for which they will not be paid.
The Law Society suggests that shortly after the end of the cancellation period the solicitor positively contacts the client for confirmation that they have not cancelled the contract. If the client agrees that they have not cancelled the contract, and it is after the period for cancellation, then there should be no problem.
The trend is towards making it difficult for lawyers to act for clients without seeing them and the end is in sight for Distance Selling for lawyers in my view. It is obviously good practice to see every client, for a whole host of reasons. Firstly, the solicitor can make an assessment of the client and the case which avoids fraud etc and it also builds a relationship and helps in cross-selling and building up the reputation of the practice. It is the factory firms that are going bust and their days are numbered.
My practical advice is to treat all solicitor-client contracts as attracting full protection-maximum information and the right to cancel. You are specifically allowed to go beyond the minimum protection. In any event, why take the risk? If solicitors give all of the information required by Parliament, then there is no problem.
- ON-PREMISES CONTRACT
An On-Premises Contract is one between a solicitor and client which is not an Off-Premises Contract nor a Distance Contract.
This covers all contracts made at a solicitor’s office where the client is not a business.
Regulation 9(1) provides that before a client is bound by an On-Premises Contract the solicitor must give or make available to the client the information described in Schedule 1 in a clear and comprehensible manner, if that information is not already apparent from the context. See above for a discussion of what “before a client is bound” may or may not mean.
No, or inadequate, information = no enforceable contract.
Regulation 9(3) incorporates such information into the contract and any change to any of that information is not effective unless expressly agreed by the client (Regulation 9(4)). Thus it will no longer be permissible for a solicitor to increase the hourly rate without the client’s consent unless this is set out in the information given in advance, that is the actual increase or its method of calculation must be given in advance, not just a statement that the solicitor will review the hourly rate each year or whatever.
If the solicitor fails to comply with the information requirements there is no specific provision rendering the retainer unenforceable, but Regulation 18 provides that the retainer is to be treated as including a term that there has been compliance with Regulation 9.
Regulation 18 does not provide a consequence; it describes a statutory state of affairs, very much like the equality clause provisions.
Likewise Regulation 45 – that is aimed at seeking an injunction to prevent a company trading, and is not aimed at interfering in any given contract.
Thus failure to give Regulation 9 information is clearly a breach of contract. That is also the view of The Law Society – see Practice Note of 15 May 2014 at paragraph 6.
It is hard to see how failure to comply with a Statutory Instrument could be anything other than a fundamental breach of contract, although that only gives the client the right to end the contract.
It is clearly a serious breach of the Solicitor’s Code of Conduct and will mean that the client will not have to pay the bill and indeed will receive additional compensation for inadequate professional service.
Non-compliance will thus give the client potential remedies for breach of contract and/or misrepresentation, as well as complaining to the Ombudsman in relation to inadequate professional service.
For all intents and purposes for lawyers non-compliance equals no fee. The key question is whether a paying third party, typically the losing party in litigation, will be able to challenge a between the parties bill under the indemnity principle.
That has now been put beyond doubt. Fail to comply with the regulations in a way which means that the client is not bound and the indemnity principle applies and YOU GET NOTHING from the third party.
In Cox v Woodlands Manor Care Home  EWCA Civ 415
the Court of Appeal held that solicitors fail to give a client notice of the right to cancel the agreement, which happened to be a Conditional Fee Agreement, then it would be unenforceable and no costs could be recovered from the paying party, this being as a result of the indemnity principle.
The decision was made under the 2008 Regulations which, as we have seen, have now been replaced by the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (SI 2013/3134), themselves amended by the 2015 Regulations, which although has been described in court as “somewhat less inflexible” imposed the same obligation and in my view the same result would arise in the event of failure to give proper notice.
The court also held that it made no difference that the Conditional Fee Agreement was subject to a condition which meant that the obligations under it might not come into immediate effect. The client was still legally committed at the time of signing and, therefore, the agreement was made at that time.
Following an accident at work the claimant wished to instruct a particular firm of solicitors but it transpired that the claimant had BTE insurance and the solicitors were not on the insurer’s panel. The claimant agreed with those solicitors that if the insurers will not authorise them being instructed then the matter would proceed under a CFA.
The solicitors visited the claimant at her home and she signed the CFA and the BTE insurer refused to allow the solicitors to act and so they continued under the CFA.
The Court of Appeal held that the parties had entered into a legally binding agreement at the claimant’s home and there was an intention to create legal relations and the claimant was legally committed at that time and had no control over the suspensory condition, which depended upon the attitude of the BTE insurer.
The aim of the regulations is to protect consumers in their homes as they might feel pressured into making a decision and that pressure operated at the time of the decision.
Regulation 9(4) makes it clear that any change in the information, whenever given is “not effective unless expressly agreed between the consumer and the trader.” That does not envisage the possibility of no information or inadequate information being given AFTER a contract has been formed. The very fact that there is no provision or penalty for post contract provision of original information, as opposed to a change in the information, strongly indicates that Parliament intends that there cannot be a binding contract unless the information is provided in advance.
Furthermore the word “bound” in Regulation 9(1) would be otiose; it clearly envisages there being a “contract” but not one by which the consumer is bound unless the information is provided “before”. It is a condition precedent.
Regulation 9(1) could be better worded – “No consumer shall be bound by an on-premises contract unless the trader provides the information….before…” etc, but I am satisfied that that is what it means.
The Explanatory Notes, which are not part of the Regulations, state that the information is that “which a trader must provider (sic) to a consumer before entering into an on-premises contract.” Must is mandatory.
These considerations apply to off-premises and distance contracts as well.
However if I am right about Regulation 9 and its equivalents for off-premises and distance contracts, then other provisions in the Regulations would be redundant. For example, Regulation 10(1) requires information in schedule 2 to be given before a customer is bound by an off-premises contract. Paragraph (f) of schedule 2 requires the customer to be informed of the price of the goods and services being supplied. Paragraph (g) requires the customer to be informed of ancillary charges like delivery charges. Regulation 10(4) provides that if the customer does not provide the information required by schedule 2(g) (i.e. in respect of delivery charges), then those charges cease to be payable. What is the point of this express provision if the whole contract is unenforceable? Note there is no such provision in respect of schedule 2(f). So, if you do not inform the customer of the primary charges, nothing in the regulations makes those unenforceable. This is consistent with the wider purpose of the regulations, which is to regulate ‘additional charges’, but not the main contract price.
- Information relating to On-Premises Contracts
The mandatory information to be given to a client in advance of the contract is set out in Schedule 1 at (a) to (k).
Here I set out the prescribed statutory information together with the relevant commentary from the Law Society Practice Note and, where useful the Implementing Guidance issued by the Department for Business Innovation and Skills.
- the main characteristics of the goods or services, to the extent appropriate to the medium of communications and to the goods of services;
This may not always be readily apparent in relation to solicitors’ services. However you are required under the Code of Conduct to ensure that clients are in a position to make informed decisions about their matters. This means that you need to make sure that they understand the characteristics of your service (outcome 1.12).
- the identity of the trader (such as the trader’s trading name), the geographical address at which the trader is established and the trader’s telephone number;
Your name and address may be obvious for clients who visit your premises. However, you must also tell your clients about a telephone number for further contact.
- the total price of the goods or services inclusive of taxes, or where the nature of the goods or services is such that the price cannot reasonably be calculated in advance, the manner in which the price is to be calculated;
If you cannot reasonably calculate the price in advance, as with many legal matters, then you should give information on how the price will be calculated. The Code of Conduct also requires you to provide the best possible information about the likely overall cost of their matter (outcome 1.13).
- where applicable, all additional delivery charges or, where those charges cannot reasonably be calculated in advance, the fact that such additional charges may be payable.
You should inform your client if these may be payable, even if you can’t reasonably calculate the charges in advance.
- where applicable, the arrangements for payment, delivery, performance, and the time by which the trader undertakes to deliver the goods or to perform the service;
This might include setting out what the next steps in the matter might be, estimated timescales and how frequently you will get in contact with your client.
(f) where applicable, the trader’s complaint handling policy;
You are already required to provide information about how to make a complaint. More information on this is available in our Client Care Information Practice Note.
- in the case of a sales contract, a reminder that the trader is under a legal duty to supply goods that are in conformity with the contract;
For example, the statement that the goods should be of satisfactory quality and be fit for purpose as required by consumer rights law.
(h) where applicable, the existence and the conditions of after-sales services and commercial guarantees;
(i) the duration of the contract, where applicable, or, if the contract is of indeterminate duration or is to be extended automatically, the conditions for terminating the contract;
Most retainers involving legal proceedings will be of an indeterminate duration, so you will need to provide information on how a client can end the retainer. We provide guidance on this in paragraph 5.2.7 of our Client Care Information Practice Note.
(j) where applicable, the functionality, including applicable technical protection measures, of digital content;
(k) where applicable, any relevant compatibility of digital content with hardware and software that the trader is aware of or can reasonably be expected to have been aware of.
If you are providing digital content, you must provide the following information:
- digital content functionality – for example, information about:
- file type
- internet connection
- geographical restrictions
- any additional purchases required
- digital content compatibility
You do not need to provide the above information if the contract involves a day to day transaction, where the consumer pays and gets the goods straightaway – for example if they buy a paper or a takeaway coffee.
Regulation 5 defines “digital content” as “data which are produced and supplied in digital form”.
In relation to a contract entered into in a solicitor’s office there is no right for the client to change his or her mind. Consequently no cancellation notice or similar document need be supplied to the client.
The telephone number offered by the solicitor for clients to contact the solicitor about services provided must be a number where the cost of the call is charged at no more than the basic rate. Thus premium rate telephone lines are banned.
There is no requirement that any phone calls be subsidised and the use of standard mobile numbers by the solicitor, at the standard mobile tariff, is permitted.
An On-Premises Contract requires the solicitor and client to be physically present together. That means what it says. Communication by Skype or any other electronic means does not make the contract an On-Premises Contract.
The burden of proof that the required information has been given rests with the solicitor.
The Law Society Guidance says: –
“Much of the information that solicitors are required to provide under the Regulations is likely to be included in your client care letters and terms of business.”
I agree. I advise that all of the information be contained in the client care letter, which itself should include the terms of business but you should not act for a non-business client until that client care letter has been signed and returned by the client. This letter will now inevitably run to 10 pages or more.
Under Regulation 18 every contract to which the Regulations apply will be treated as including the term that the solicitor has complied with the Regulations regarding the provision of information and therefore failure to provide the information will be a breach of contract and arguably the client will have a remedy in damages in the event of a loss
The following quote is from Hansard and was made by the Under Secretary of State for DBIS when promoting the draft Statutory Instrument (then referred to as the Consumer Rights Bill) through Parliament:
“We also agreed that in some cases, which we hope will be the minority, termination of the contract will unfortunately be the most appropriate remedy, so we make it clear in the Bill that it is still open to the consumer to terminate the contract, which they have a right to do under common law. Under common law this right is reserved for serious breaches, or for breaches of the most important terms. It is right that termination of a contract should be reserved for the most serious cases, rather than being an easy fall-back.”
The intention appears to be that a minor breach of the Regulations would not lead to unenforceability of the loss of payment for services.
However Regulation 19 makes it a criminal offence to fail to supply Schedule 2 (l), (m) and (n) information – yet (m) and (n) look minor breaches. Would a court consider the committing of a criminal offence a sufficiently minor breach as to not allow the consumer to end the contract?
In relation to an On-Premises Contract there is no criminal liability for failing to comply with the Regulations. This is in contrast to contracts that are not On-Premises Contracts, where there is a criminal liability.
- Third Party Funder
It is irrelevant as to who is funding the work.
The relevant contract for the purposes of the Regulations is between the client and the solicitor even if the solicitor receives payment from a third party funder, including the Legal Aid Authorities.
The Law Society Guidance specifically states that in a legally aided matter the client care letter should state that reapplying for legal aid for the same issue might be difficult if the contract is terminated.
- OFF-PREMISES CONTRACTS
The key difference between On-Premises Contracts and Off-Premises Contracts is that clients have the right to cancel the contract in relation to an Off-Premises Contract, but not in relation to an On-Premises Contract.
From 13 June 2014 the cancellation period was extended from seven calendar days to 14 calendar days.
The client does not have to give a reason and the cancellation period runs from when the contract is concluded in relation to the provision of legal services.
The client no longer has to cancel in writing and the cancellation is valid provided that the client makes a clear statement that they wish to cancel. The burden of proof that the contract has been cancelled rests with the client.
More information has to be given to the client in advance of the client being bound by the contract than is the case with On-Premises Contracts.
Off-Premises Contracts valued at less than £42 are exempt from the Information and Cancellation Provisions of the Regulations but are subject to the Regulations on additional payments and charges and delivery and risk. The Statutory Instrument, implementing European Union Directives, refers to Euros, so you need to keep an eye on the exchange rate if relying on this exception.
It is a criminal offence to fail to inform a client in an Off-Premises Contract of their right to cancel, (Regulation 19) but it is not a criminal offence in relation to a distance contract. The greatest protection is therefore in relation to off-premises contracts and I see the logic of that and that being reflected in the potential criminal liability for that type of contract alone. This is to deal with the historic abuse of high pressure selling by door to door operators. There is considerable research showing that consumers, especially vulnerable ones, will sign up to anything to get the seller out of the house. With distance-selling the remedy is rather easier – put the phone down.
If you do not give your client the required information regarding the right to cancel, including the time limit and procedures for cancelling, then the cancellation period is extended as follows: –
- 14 days after your client receives the information if it is given within a period of 12 months after the contract is entered into;
- if you do not give any information at all to the client the cancellation period ends 12 months and 14 days after the contract is entered into.
Consequently if the client is not given notice of the right to cancel then you are unable to enforce the contract against them until you either give them the relevant information or a period of 12 months and 14 days has passed.
The contract is not void, and thus still enforceable by the client against the solicitor.
If you give your client the option of filling in and submitting a cancellation form or other statement on your website, then they do not have to use it, but if they do so the solicitor must acknowledge receipt of the cancellation on a durable medium without delay.
The key date in relation to the 14 day period is when the cancellation is sent by the client and not when it is received by the solicitor.
The Law Society Practice Note, paragraph 8.4, recommends that in order to avoid any disputes and misunderstanding solicitors should check with their clients, shortly after the end of the cancellation period, to ascertain that the client has not exercised the right to cancel.
Cancellation of the contract by the client within the relevant period ends the obligations for both parties to the contract.
If this happens the solicitor must reimburse all payments to the client, using the same means of payment, unless expressly agreed otherwise by the client, without undue delay and no later than 14 days after the day on which the solicitor receives notification of the client’s decision to cancel the contract.
No fee must be charged to the client for reimbursing the fees.
the Queen’s Bench Division of the High Court held that the claimant was unable to enforce its debt for work done in circumstances where it had failed to give written explanation as the right to cancel the agreement as required by the Cancellation of Contracts made in a Consumers Home or Place at Work etc. Regulations 2008.
These regulations have since been replaced by the 2013 Regulations but the principles set out in this case will apply to those new regulations.
The successful defence was funded by Zurich Insurance plc, of whom the court were highly critical.
Here the whole contract was read to Mr Tang Pang and the court had no doubt whatsoever that he knew that he had the right to cancel as this had been explained to him in full and he knew it in any event and was a sophisticated customer with a degree in business studies and a master’s degree in marketing and management who worked for Legal in General Insurance company for seven years and as a management accountant at Clifford Chance Solicitors for two years.
The court accepted the claimant’s evidence in full and largely rejected the evidence of Mr Tang Pang. In what the court accepted was a genuine mistake the claimant accidently picked up the document containing the notice to cancel and realised that they had done so and later the same day sent an email to Mr Tang saying:-
“Our surveyor has just called to advise us he accidentally picked up your copy of the forms which were signed on site. As soon as he returns to office we will send these to you by post and also mail you a scanned copy.”
In fact they were not emailed that day and Mr Tang requested them and the claimant sent them by post.
The relevant regulations at the time were the 2008 Regulations, Regulation 7(2) provided:-
“The trader must give the consumer a written notice of his right to cancel the contract and such notice must be given at the time the contract is made except in the case of a contract to which regulation 5(1)(c) applies in which case the notice must be given at the time the offer is made by the consumer.”
Regulation 7(6) provided:-
“A contract to which these Regulations apply shall not be enforceable against the consumer unless the trader has given the consumer a notice of the right to cancel and the information required in accordance with this regulation.”
As the notice was not given at the time the contract was made the court held that the contract was not enforceable.
At paragraphs 84 and 85 the High Court said:-
“84. Accordingly, APC’s claim fails on one very narrow and technical ground, otherwise both on the underlying facts of the case and in relation to virtually all of the multiplicity of other arguments raised it has succeeded. Unfortunately, however, that does not avail APC in relation to the recovery of its fees.
- I think it is worth stating that in my view Mr and Mrs Kara [of APC] have behaved very properly and reasonably throughout this entire episode. As against that Mr Tang appears to have embarked on this very lengthy and involved defence of the claim at the behest of Zurich. Were it not for Zurich I cannot imagine this case would not or should not have settled at an early stage.”
This shows the extreme importance of complying with Regulations in relation to the cancellation of contracts.
- Ancillary contracts
If a client cancels a contract then any ancillary contracts are automatically terminated without any costs to the client. Solicitors should ensure that third parties are aware that the contract is subject to cancellation and the consequences of such cancellation. An ancillary contract is defined as a contract by which the consumer acquires goods or services related to the main contract, where those goods or services are provided by the solicitor or a third party on the basis of an arrangement between the third party and the solicitor.
Upon cancellation solicitors should notify third parties immediately. These may include counsel, medical experts, and after-the-event insurers etc.
- Digital contracts
Solicitors must not begin to supply digital content which is not on a tangible medium before the end of the cancellation period unless the client provides express consent and acknowledges that the right to cancel the contract will be lost.
- Urgent work
If the client wishes the solicitor to do work urgently the client can ask the solicitor to commence work before the cancellation period expires but the solicitor must not provide a service before the end of the cancellation period unless the client has made an express request on a durable medium.
The request then means that the client must pay for services provided even if the contract is later cancelled and the payment must be: –
- based on the supply of the service for the period for which it is supplied, ending when the solicitor is notified of the decision to cancel;
- in proportion to what has been supplied in comparison with the full contracted service.
However the client will not be liable for any costs if any of the following is true: –
- the solicitor fails to provide the client with information on the right to cancel;
- the solicitor fails to provide the client with information on payment of reasonable costs;
- the service is not supplied in response to a request to commence work during the cancellation period.
The client loses the right to cancel the contract if the service has been fully performed at the client’s request and the client has acknowledged that they would lose the right to cancel once the contract has been completed.
- The Detail
Regulation 5 defines an Off-Premises Contract as a contract between a trader and a consumer which is any of the following: –
- a contract concluded in the simultaneous physical presence of the trader and the consumer, in a place which is not the business premises of the trader;
- a contract for which an offer was made by the consumer in the simultaneous physical presence of the trader and the consumer, in a place which is not the business premises of the trader;
- a contract concluded on the business premises of the trader or through any means of distance communication immediately after the consumer was personally and individually addressed in a place which is not the business premises of the trader in the simultaneous physical presence of the trader and the consumer;
- a contract concluded during an excursion organised by the trader with the aim or effect of promoting and selling goods or services to the consumer.
Thus the key ingredient of an Off-Premises Contract is that there is a physical meeting between the trader and the consumer and that it was away from the trader’s business premises.
If there has been no simultaneous physical presence of the trader and the consumer, for which read solicitor and client, then the contract will be a Distance Contract – see below.
The Law Society’s practice note has this to say about Off-Premises Contracts: –
“It may be difficult to determine when and where a contract was made, if you discuss the contract with your client in your business office, either face to face or on the telephone, and then continue the discussions during an off-premises visit. The answer will depend on the facts of the particular case.
In other cases, it will be clear at which point the contract came into effect. For example, if a client telephones you, and you run through the terms of the agreement and inform them of costs, then send them a client care letter with their agreement prior to any visit or excursion, then the situation would be unlikely to fall within the definition of an Off-Premises Contract.
However, you must exercise caution if you make a subsequent agreement during a follow-up visit: this may be a new contract, and caught by the definition.
A contract may fall within the definition of an Off-Premises Contract even if it is made in your office, if it is made after an offer of the relevant kind made by the client.
For example, if you visit a client at home, the client offers to engage you to carry out legal work, and you then accept the offer by telephoning the client from your office the following day, this would be considered to be an Off-Premises Contract.
Contracts agreed on excursions are only considered to be Off-Premises Contracts if you organised the outing. For example, if a contract is made over dinner at a restaurant, and the meal was organised by your client, then it would be considered an On-Premises Contract and this section does not apply. However, if you organised the meal then it does apply.
The precise scope of what is defined as an excursion is currently unclear. Until it is clarified by case law, you should assume that this section would apply to any situation where you arrange to meet a client away from your business premises.
Therefore, if you arrange to meet a client in hospital, you should assume that this falls within this section, even though the meeting would not be social in nature and you and your client would not go anywhere or do anything together.”
Regulation 10(1) provides that before the client is bound by an Off-Premises Contract, the solicitor
- must give to the consumer the information listed in Schedule 2 in a clear and comprehensible manner, and
- if a right to cancel exists, must give or make available to the consumer a cancellation form as set out in part B of Schedule 3.
The information and any cancellation form must be given on paper or, if the consumer agrees, on another durable medium and must be legible (Regulations 10(2)).
Regulation 5 defines “durable medium” as paper or email, or any other medium that –
- allows information to be addressed personally to the recipient,
- enables the recipient to store the information in a way accessible for future reference for a period that is long enough for the purposes of the information,
- allows the unchanged reproduction of the information stored.
Note that the information and the cancellation form must be on paper unless the client agrees otherwise and therefore an email is not sufficient unless the client has positively consented to the information and cancellation form being given on a durable medium other than paper.
Note that this requirement does not apply to information to be provided before the making of an On-Premises Contract.
As with an On-Premises Contract any information the solicitor gives to the client as required by these Regulations is to be treated as included as a term of the contract and a change to any of that information, whether made before entering into the contract or later, is not effective unless expressly agreed between client and the solicitor.
Regulation 10(4) provides that if a trader has not complied with, among other things, paragraph (h) of Schedule 2 then “the consumer is not to bear the charges or costs referred to in those paragraphs”.
Paragraph (h) provides that information must be given as follows:
“(h) in the case of a contract of indeterminate duration or a contract containing a subscription, the total costs per billing period or (where such contracts are charged at a fixed rate) the total monthly costs”.
Failure so to do allows a client to challenge the bill on the basis that s/he is “not to bear the charges or costs” referred to in that paragraph. Whether or not the client has any objection a paying third party, typically a losing litigant, or rather their insurer, can take the point and challenge a between the parties bill under the indemnity principle. See Cox v Woodlands Manor Care Home  EWCA Civ 415 discussed above.
“indeterminate duration” is not defined, but will cover litigation as well as non-contentious matters such as probate and even conveyancing.
Schedule 2 contains the information relating to both the Distance Contracts and Off-Premises Contracts and here I give the information required as set out in that Schedule together with the Law Society Guidance where appropriate: –
- the main characteristics of the goods or services, to the extent appropriate to the medium of communication and to the goods or services;
This may not always be readily apparent in relation to solicitors’ services. However, you are required under the Code of Conduct to ensure that clients are in a position to make informed decisions about their matter. This means that you need to make sure that they understand the characteristics of your service (outcome 1.12).
- the identity of the trader (such as the trader’s trading name);
Your name and address may be obvious for clients who visit your premises. However, you must also tell your clients a telephone number for further contact.
- the geographical address at which the trader is established and, where available, the trader’s telephone number, fax number and e-mail address, to enable the consumer to contact the trader quickly and communicate efficiently;
- where the trader is acting on behalf of another trader, the geographical address and identity of that other trader;
If you are acting on their behalf.
- if different from the address provided in accordance with paragraph (c), the geographical address of the place of business of the trader, and, where the trader acts on behalf of another trader, the geographical address of the place of business of that other trader, where the consumer can address any complaints;
If it is different to the address supplied for the business or the third party trader you are acting on behalf of.
- the total price of the goods or services inclusive of taxes, or where the nature of the goods or services is such that the price cannot reasonably be calculated in advance, the manner in which the price is to be calculated,
If you can’t reasonably calculate the price in advance, as with many legal matters, then you should give information on how the price will be calculated. The Code of Conduct also requires you to provide best possible information about the likely overall cost of their matter (outcome 1.13).
- where applicable, all additional delivery charges and any other costs or, where those charges cannot reasonably be calculated in advance, the fact that such additional charges may be payable;
You should inform your client if these may be payable, even if you can’t reasonably calculate the charges in advance.
- in the case of a contract of indeterminate duration or a contract containing a subscription, the total costs per billing period or (where such contracts are charged at a fixed rate) the total monthly costs;
If the contract is of an indeterminate length or is a subscription, the monthly costs (where the contract is charged at a fixed rate) or billing period costs. If you have an ongoing retainer, you should give estimates at each stage.
[See above for discussion about the potential consequences of failing to comply with this provision].
- the cost of using the means of distance communication for the conclusion of the contract where that cost is calculated other than at the basic rate;
If they are above basic rate for instance where the contract is concluded via a telephone number which has a higher rate charge.
- the arrangements for payment, delivery, performance, and the time by which the trader undertakes to deliver the goods or to perform the services;
This might include setting out what the next steps in the matter might be, estimated timescales and how frequently you will get in contact with your client.
- where applicable, the trader’s complaint handling policy;
You are already required to provide information about how to make a complaint. More information on this is available in our client care information practice note.
- where a right to cancel exists, the conditions, time limit and procedures for exercising that right in accordance with regulations 27 to 38;
See section 8 for more information.
- where applicable, that the consumer will have to bear the cost of returning the goods in case of cancellation and, for distance contracts, if the goods, by their nature, cannot normally be returned by post, the cost of returning the goods;
- that, if the consumer exercises the right to cancel after having made a request in accordance with regulation 36(1), the consumer is to be liable to pay the trader reasonable costs in accordance with regulation 36(4);
- where under regulation 28, 36, or 37 there is no right to cancel or the right to cancel may be lost, the information that the consumer will not benefit from a right to cancel, or the circumstances under which the consumer loses the right to cancel;
- in the case of a sales contract, a reminder that the trader is under a legal duty to supply goods that are in conformity with the contract;
For example, a statement that the goods should be of satisfactory quality and be fit for purpose as required by consumer rights law.
- where applicable, the existence and the conditions of after-sale customer assistance, after-sales services and commercial guarantees
- the existence of relevant codes of conduct, as defined in regulation 5(3)(b) of the Consumer Protection from Unfair Trading Regulations 2008, and how copies of them can be obtained, where applicable;
Information on how your client can obtain a copy of the Solicitors Handbook – for example by providing a link to the SRA’s website.
- the duration of the contract, where applicable, or, if the contract is of indeterminate duration or is to be extended automatically, the conditions for terminating the contract;
Most retainers involving legal proceedings will be of an indeterminate duration, so you will need to provide information on how a client can end the retainer. We provide guidance on this in paragraph 5.2.7 of our client care information practice note.
- where applicable, the minimum duration of the consumer’s obligations under the contract;
- where applicable, the existence and the conditions of deposits or other financial guarantees to be paid or provided by the consumer at the request of the trader;
- where applicable, the functionality, including applicable technical protection measures, of digital content;
- where applicable, any relevant compatibility of digital content with hardware and software that the trader is aware of or can reasonably be expected to have been aware of;
If you are providing digital content, you must provide the following information:
- digital content functionality – for example, information about:
- file type
- internet connection
- geographical restrictions
- any additional purchases required
- digital content compatibility
- where applicable, the possibility of having recourse to an out-of-court complaint and redress mechanism, to which the trader is subject, and the methods for having access to it.
A notification that the Legal Ombudsman handles complaints about lawyers, and the details for contacting them. You are, in any case, required to provide this information in writing under outcome 1.10.
Note: in the case of a public auction, the information listed in paragraphs (b) to (e) may be replaced with the equivalent details for the auctioneer.
Method of giving information in an Off-Premises Contract
Regulation 10(3) provides that the information required in (l), (m) and (n) of Schedule 2,that is in relation to the conditions, time limit and procedures for exercising the right to cancel and the obligation on the consumer to pay the costs of returning the goods, be provided by means of the model instructions on cancellation set out in part A of Schedule 3. A solicitor who has supplied those instructions to the client, correctly filled in, is to be treated as having complied with Regulation 10(1) in respect of those paragraphs.
Regulation 10(4) provides that if the trader has not given the information required in paragraph (g), (h) or (m) of Schedule 2, that is in relation to additional delivery charges, the total costs per billing period in the case of a contract of indeterminate duration or containing a subscription and the total monthly costs for the costs of returning the goods, the client is not to bear the charges or costs referred to in those paragraphs.
Part B of Schedule 3 contains the model cancellation form that must be used.
Confirming an Off-Premises Contract
Regulation 12 provides that a solicitor must give the client a copy of the signed contract or confirmation of the contract.
If the information is supplied by way of confirmation that confirmation must include all the information referred to in Schedule 2 unless the solicitor has already provided that information to the client on a durable medium prior to the conclusion of the Off-Premises Contract.
By Regulation 12(3) – the copy or confirmation must be provided on paper unless the client agrees otherwise in which case it still must be on another durable medium. For definition of durable medium see above.
A copy or confirmation must be provided to the client within a reasonable time after the conclusion of the contract, but in any event
- not later than a time of the delivery of any goods supplied under the contract and
- before performance begins of any service supplied under the contract.
- DISTANCE SELLING
Distance Selling has been heavily regulated for many years and the changes here are fewer than in any other type of solicitor-client contract. A distance contract is any contract where the solicitor and client have not been physically and simultaneously present together, if concluded “under an organized 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”.
Nowhere is “organised distance sales or service provision scheme” defined. Does the word “organised” apply to both distance sales and service provision or just distance sales? Does a solicitor-client contract fall into the definition of a “service-provision scheme” whether organised or not? What provision of services by a business will not be “organised?”
If the words “organised distance sales or service provision scheme” were to be removed from the definition then it would apply to any distance contract. Therefore the inclusion of the words “organised distance sales or service provision scheme” suggests something more is required.
Consequently if there has been no “simultaneous physical presence of the trader and consumer” it is best to assume that the contract is a distance contract rather than an on-premises contract. It cannot ever be an off-premises contract as those contracts always require the simultaneous physically presence of the trader and consumer.
My advice is to play safe and assume that where there has been “simultaneous physical presence” that is an off-premises contract and where there has not been that simultaneous physical presence assume that it is a distance contract, that is assume that nothing is an on-premises contract with the lower information requirements and no requirement to give notice of cancellations rights.
It would be an unattractive defence for a solicitor to say the provision of the services was not organised, but rather it was chaotic! However – why the word “scheme” ? If I act for a one-off client without seeing them is that a “service-provision scheme” ? If I run adverts on radio or on my website about certain issues, never intending to see the clients does that then make it an organised service provision scheme? I can see the logic of that but it is far from clear.
Does the service provision need to be organised at all? The word “organised ” does not appear immediately before “service-provision”. If I ask you if you want sparkling wine or tea I am not envisaging that the tea will be sparkling. Thus if it simply needs to be a “service-provision scheme” then I think a one-off is caught, although we come back to what “scheme” brings to the party.
The now defunct Office of Fair Trading made the following statement in relation to the now repealed Consumer Protection (Distance Selling) Regulations 2000:
“Organised distance sales or service provision scheme is not defined in the DSRs. Each case must be considered on its merits. We take the view that where, for example, standard letters, emails or faxes are sent to potential customers who then order by returning them by post, email or fax then it is likely that such an arrangement falls within the definition.”
This suggests that for non-face to face solicitor client contracts we must assume that it is a Distance Contract and give the 14 day notice.
In December 2013 the Department for Business Innovation & Skills Implementing Guidance provides further clarification on what amounts to a distance contract.
“What is a distance contract or an off premises contract?
I sell on the phone but also visit people to sell my products. What kind of contracts are these?
- Phone and online sales, where the trader and consumer are not physically together, are distance contracts. Contracts concluded away from business premises and where both are present, e.g. when visiting homes, are off-premises contracts. Generally, the same information must be given for both, although requirements over the way information is given are slightly different and it remains a criminal offence not to inform a consumer buying off-premises of their cancellation rights.”
Thus it is the government’s view that taking instructions, over the phone, with a retainer letter etc. to follow, is a distance contract.
Little is lost by giving the client the right to cancel. The contract is terminable at will by the client anyway, and if the work has been done that is that. We have decided to do that, even though we see every client because it is often unclear where the contract was made.
The Regulations do not apply if your client is a business; if your client is not a business then the Regulations apply to all contracts with all clients wherever made, although here I am only dealing with Distance Selling.
A solicitor is required to provide to a client “before the consumer is bound by a distance contract” all of the information contained in Schedule 2 of the Regulations. This information is exactly the same as that to be supplied in Off-Premises Contracts and indeed is the same Schedule. Please see above re Off-Premises contracts, which contains all of the information required to be given together with appropriate Law Society Guidance. See On-Premises Contracts for a discussion of the effect of “before the consumer is bound”.
The information must be in a clear and comprehensible manner and in a way appropriate to the means of distance communication used.
The solicitor must give or make available to the client a cancellation form as set out in part B of Schedule 3. Again this is the same as for Off-Premises Contracts and the form and information is all in my piece on Off-Premises contracts.
The cancellation period is now 14 calendar days, up from seven days.
The client no longer needs to cancel in writing; any method is acceptable as long as it is “clear” that the client wishes to cancel.
Schedule 3 of the Underwoods Model Conditional Fee Agreement and the Law Society Model Conditional Fee Agreement need amending accordingly; each contains the Notice of Right to Cancel, and that has changed.
Where a distance contract is concluded by electronic means then the solicitor must ensure that before the request for the service is made the client is aware of her or his obligation to pay for that service.
There are specific requirements as to the labelling of buttons on websites and the clarity of the obligation to pay notice when an order is placed, for which read when instructions are given.
Regulation 14(5) provides that if these requirements are not met then the client is not bound by the contract and so does not have to pay. This again opens the door for a paying third party, such as a defendant’s insurance company to invoke the indemnity principle and refuse to pay between the parties’ costs.
There are also requirements as to the content of telephone conversations where contracts are concluded and also in relation to providing confirmation of the terms of the contract following its execution.
The pecking order, from least protection to most protection, is On-Premises contracts, distance selling and Off-Premises contracts. It seems strange, even given the wording, that an exchange of emails/phone calls requires only the same protection where solicitor and client have met in the solicitor’s office and gone through everything.
This piece only relates to solicitor-client contracts. Your own business clients are likely to need specific advice tailored to them.
- NOTICE OF RIGHT TO CANCEL AND REQUIRED INFORMATION
- Distance Selling, On-Premises and Off-Premises Contracts
It may be that you are entering in to more than one agreement with us, for example a pre-issue Contingency Fee Agreement under the Solicitors Act 1974 and a bridging agreement and a Conditional Fee Agreement. The information given to you in this document, including the information required under Schedules 1 and 2 of the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 applies to all such agreements, as does the Notice of the Right to Cancel and the Cancellation Form.
These matters are governed by the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 which give you the right to certain information about the agreement between us and the right to cancel that agreement within 14 days. I am setting out below the required information and your right to cancel including a Notice of Cancellation for you to use if you so wish.
- Information Relating to Distance Contracts, Off-Premises Contracts and On-Premises Contracts in accordance with the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013
- The main characteristics of the services are legal services which includes, but is not limited to, advice, both oral and written, preparation of documents, attendance in meetings, advocacy and representation.
- The identity of the trader is [ ] trading as [ ].
- The geographical address of the trader is [ ].
The telephone number is[ ].
The email address is [ ].
- The trader is not acting on behalf of another trader.
- The trading address for consumers to address complaints is as at (c) above.
- The total price of our service is set out in our Costs Schedule which is attached to this letter.
- Any costs which cannot be calculated in advance (if applicable) are estimated and details of that estimate are contained in the Costs Schedule.
- This contract is not of a fixed duration and the total costs (or an estimate if applicable) is contained in the Costs Schedule.
- As the costs of any distance communication in conclusion of the contact are not other than at the basic rate then there is no further information required to be given.
- The terms for payment of our fees to perform the services are upon receipt of an invoice or where required a payment on account of the services. Payment can be made on-line via our website at [ ] or by credit/debit card including American Express over the telephone.
We agree to perform the legal services for you within [ ] weeks/months of receiving your full and proper instructions and written confirmation that you agree to all of our terms and conditions of business (whichever is the later) although in certain matters it is not possible to give a timescale for completion as our arrangement may continue indefinitely but in those circumstances you may terminate the agreement between us – please see section relating to Termination.
- Please refer to the section relating to Complaints.
- You have the right to cancel this agreement as set out in the attached Notice of Cancellation.
- In the case of cancellation you will not have to bear any cost of returning goods.
- If you exercise your right to cancel having already made an express request in writing for us to do the work urgently and before the cancellation period runs out then you are liable to pay us our reasonable fees for the work carried out up until you have cancelled the contract between us. Those reasonable fees will be based upon a proportion of the work carried out when compared to the full service we have agreed to supply to you. If the service has been fully performed at your request prior to you cancelling the contract with us then you lose your right to cancel and you acknowledge that you have received notice of your loss of the right to cancel in these circumstances.
- There are no circumstances where your right to cancel may be lost within 14 days of us giving you notice of your right to cancel except as set out in this agreement between us at paragraph (n) above or where we have supplied you with digital content before the end of the cancellation period and you have provided your express consent for us to do so and have acknowledged that your right to cancel has been lost. In these circumstances you will not benefit from a right to cancel.
- We are under a legal duty to supply goods and/or services to you which conform with the agreement we have entered into with you for the supply of those goods and/or services as set out in the Supply of Goods and Services Act 1982.
- If you have at any time questions about the legal service provided then please contact the personal named in this agreement who will be dealing with your work.
- Our work for you is governed by the Solicitors Code of Conduct and a copy of this can be obtained from the Solicitors Regulation Authority from their website – sra.org.uk
or by request from Solicitors Regulation Authority, The Cube, 199 Wharfside Street, Birmingham B1 1RN.
- This contract between us will continue until we have completed the legal services required but in certain circumstances we cannot say how long that will take in which case the contract will continue until terminated in accordance with the agreement between us. Please see the section entitled Termination.
- The contract between us has no minimum duration of your obligations but please refer to the section in this agreement which sets out your responsibilities and these continue as long as the agreement between us continues.
- We may ask you to make a payment on account of fees and disbursements. These will be notified to you in advance with an explanation of why these payments are required. Payment on account of our fees will be held in our client account until such time as an invoice is prepared and delivered to you and at that time the money held on account will be transferred to us in payment of such invoice. Payment on account of disbursements will be held in our client account until we have discharged such disbursements and then the money will be transferred to us.
- We do not provide digital content as part of our legal services.
- Not applicable as we do not provide digital content.
- If you have any complaint about our legal service then please refer to the Section on Complaints for details of now to access our Complaints Procedure and details of the right to take up matters with the Legal Ombudsman.
(c) Underwoods Model Notice of the Right to Cancel
Under the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 you have the right to cancel this contract within 14 days without giving any reason.
The cancellation period will expire after 14 days from the day of the conclusion of the contract.
To exercise the right to cancel, you must inform us, [ ], [Address], [Telephone number], [Email] of your decision to cancel this contract by a clear statement (e.g. a letter sent by post or e-mail).
You may use the attached model cancellation form, but it is not obligatory.
To meet the cancellation deadline, it is sufficient for you to send your communication concerning your exercise of the right to cancel before the cancellation period has expired.
Effects of cancellation
If you cancel this contract, we will reimburse to you all payments received from you, including the costs of delivery (except for the supplementary costs arising if you chose a type of delivery other than the least expensive type of standard delivery offered by us).
We may make a deduction from the reimbursement for loss in value of any goods supplied, if the loss is the result of unnecessary handling by you.
We will make the reimbursement without undue delay, and not later than –
- 14 days after the day we receive back from you any goods supplied, or
- (if earlier) 14 days after the day you provide evidence that you have returned the goods, or
- if there were no goods supplied, 14 days after the day on which we are informed about your decision to cancel this contract.
We will make the reimbursement using the same means of payment as you used for the initial transaction, unless you have expressly agreed otherwise; in any event, you will not incur any fees as a result of the reimbursement.
In the case of sales contracts in which we have not offered to collect the goods in the event of cancellation we may withhold reimbursement until we have received the goods back or you have supplied evidence of having sent back the goods, whichever is the earliest.
If you requested to begin the performance of services during the cancellation period, you shall pay us an amount which is in proportion to what has been performed until you have communicated us your cancellation from this contract, in comparison with the full coverage of the contract.
To [ ], [Address ], [Telephone], [Email]
I/We [*] herby give notice that I/We [*] cancel my/our [*] contract of sale of the following goods [*]/ for the supply of the following service [*],
Ordered on [*]/ received on [*],
Name of consumer(s),
Address of consumer(s),
Signature of consumer(s) (only if this form is notified on paper),
[*] Delete as appropriate.
(6) ADR REGULATIONS FOR SOLICITORS: 1 OCTOBER 2015
On 1 October 2015 the Alternative Dispute Resolution for Consumer Disputes (Amendment) Regulations 2015 came in to force implementing the EU Directive on Consumer Alternative Dispute Resolution. These require solicitors to provide information about an ADR approved body but solicitors are not required to submit complaints to that body. The obligation in the ADR Directive and the Regulations is to give information, not to agree the use of ADR. Thus solicitors are free to use wording along the lines of “this is the name of an ADR body. We do not agree to use this body etc.”
The requirement is to point complaints to an ADR body in the final response letter. There is no requirement to have it in the complaints policy or initial acknowledgement letter or Client Care Letter but solicitors may consider it good practice to have the name of its ADR body in all of their documents.
The requirements in relation to the Legal Ombudsman remain unchanged whether or not solicitors agree to submit the claims to an ADR approved body. Solicitors remain obliged not only to give information about the Legal Ombudsman but to cooperate actively with that body.
Given the internal complaints procedure which solicitors are obliged to have and given the compulsory use by solicitors of the Legal Ombudsman and given the heavy and unique restrictions on solicitors enforcing bills and given the rights of clients to apply to the court for assessment of costs under the Solicitors Act 1974 solicitors may feel that yet another tier, that would be the fourth apart from resort to the ordinary courts, is wholly unnecessary and pointless.
That is the view that my firm has taken.
From 1 October 2015 solicitors must, at the end of the first tier complaints process, that is the internal complaint procedure:-
- provide information on the Legal Ombudsman as the Statutory Complaints Scheme for Solicitors, and
- inform the client, on a durable medium:
– that they cannot settle the complaint with the client;
– of the name and web address of an ADR approved body which would be competent to deal with the complaint, should both parties which to use the scheme;
– whether they intend to use that ADR approved body.
The Legal Ombudsman had applied to the Legal Services Board to become certified as an ADR approved body for the purposes of the ADR Directive and it was assumed that virtually all solicitors would name the Legal Ombudsman.
However the Legal Ombudsman has unexpectedly withdrawn its application.
The Chartered Trading Standards Institute (CTSI) has approved a number of ADR entities who will be able to provide ADR services and these can be checked by solicitors and indeed their clients on the list of approved providers on their website, that is the CTSI website.
The Law Society has published an updated guidance on 10 September 2015 on how to comply with the Directive.
It suggests the following text once the first tier complaints process has been concluded:-
“We have been unable to settle your complaint using our internal complaints process. You have a right to complain to the Legal Ombudsman, an independent complaints body, established under the Legal Services Act 2007, that deals with legal services complaints.
You have six months from the date of this (our final) letter in which to complain to the Legal Ombudsman.
PO Box 6806
Telephone: 0300 555 0333
Email address: firstname.lastname@example.org
Alternative complaints bodies (such as [include one of them and their website]) exist which are competent to deal with complaints about legal services should both you and our firm wish to use such a scheme.
We [state whether you do or do not] agree to use [include name of scheme].”
At present the following three alternative complaints bodies are approved:-
Small Claims Mediation
Clearly this or similar wording has to be used once the internal complaints procedure at the firm has been exhausted.
I advise that you also include the following in your Client Care Letter, which anticipates that wording, should there be a complaint and should the complaints procedure be exhausted:-
“At the conclusion of any internal complaints handling procedure you also have the right to complain to the Legal Ombudsman, full details of this, their address and our complaints procedure is set out below.”
I advise against having this information in a Conditional Fee Agreement or Damages-Based Agreement. It is perfectly proper and lawful, and indeed in my view advisable, for solicitors not to agree to utilise the scheme but I think that is better contained in the Client Care Letter rather than a Conditional Fee Agreement or DBA which is much more likely to be seen by the other side and the court who could take the point, albeit a dud point.
From January 2016 additional requirements will apply to online traders and online marketplaces, including, if appropriate, solicitors.
More information can be obtained from the Trading Standards website the January 2016 requirements stem from the EU Regulation on Consumer Online Disputes Resolution (ODR).
An online trader is defined as “a trader who intends to enter into online sales contracts or online service contracts with consumers” (Regulation 19A(7) of the Alternative Dispute Resolution for Consumer Disputes (Amendment) Regulations 2015).
This definition is likely to capture many solicitors who would not necessarily consider themselves to be online traders. The Department for Business, Innovation Skills, states that it will include solicitors who send and receive contracts, customer care information, etc. to clients via email and thus virtually every firm will be court by these new requirements.
The information to be given will depend on whether or not the Legal Ombudsman resubmits its application to the LSB and become certified as an ADR approved body.
If it does then solicitors will be required to:-
- provide a link to the ODR platform in any offer made to a client by email, and
- inform clients of;
– the existence of the ODR platform;
– the possibility of using the ODR platform for resolving complaints
The information in the second bullet point above must also be included in the general Terms and Conditions of online sales contracts and online service contracts, where such general Terms and Conditions exist. Thus that information will need to be in the Conditional Fee Agreement or Damages-Based Agreement as well as the Client Care Letter but there is no such requirement in relation to the information required from 1 October 2015 and indeed strictly that does not need to be in any document at the beginning but only included once the internal complaints process has been exhausted.
If the Legal Ombudsman does not become an ADR approved body by 1 January 2016 solicitors will be required to provide on their websites:-
- a link to the ODR platform
- the email address of the online trader
No decision as to whether the Legal Ombudsman will reapply for approval is expected until December 2015.
The Department for Business, Innovation Skills has issued detailed guidance for business.
Please note that the Consumer Contract (Information, Cancellation and Additional Charges) Regulations have been the subject of a very hard line by the courts – see Cox v Woodlands and the recent case of Allpropertyclaims Ltd v Mr Tang Pang and ITC Compliance Ltd  EWHC 2198 (QB) above. There is no reason to think that the courts will adopt any softer approach to these new regulations.