OFT Issues Guidance for IT Consumer Contracts Made At A Distance

08 December 2003

Tom Frederikse

Drafting contracts for on-line sales with consumers is a complicated balancing act. The written terms must comply with existing legislation, which have an ever-increasing pro-consumer slant, whilst at the same time they must make sense for commercial suppliers. Two of the key laws in the UK are:

  • The Unfair Terms in Consumer Contracts Regulations 1999 – in force since 31 October 1999; and,
    The Consumer Protection (Distance Selling) Regulations 2000 – in force since 31 October 2000.
  • This legislation, as many companies know all too well, is far from user-friendly – so much so that the OFT has issued guidance in the past explaining the legislation and demonstrating how it can be applied.

This topic is now of acute significance in the IT sector. In December 2002, the Office of Fair Trading (OFT) completed a market investigation into “Consumer IT goods and services” and issued a report which, among other things, highlighted any specific findings of unfair terms in consumer contracts (especially regarding guarantee/warranty terms being “lost in small print” or being misleading). That report promised a follow-up in the form of specific guidance to the IT sector.

The OFT has now published that follow-up in the form of a consultation paper entitled ‘IT Consumer Contracts Made at a Distance – Guidance on Compliance with the Distance Selling and Unfair Terms in Consumer Contracts Regulations’. These draft guidelines are written for use by IT businesses that contract with consumers at a distance, to help them to fulfil their legal requirements and achieve the “minimum standard of fairness and transparency”. The guidance, once in final form, will be a helpful and important part of a consumer protection law ‘compliance pack’ for industry.

The consultation paper provides concise explanations of the regulations and organises the material around commonly-occurring contractual topics such as price and additional charges, performance and delivery, product warranties and support services, supplier’s liability, software and risk. It also provides samples of contract terms that the OFT has challenged as unfair and/or in breach of the distance selling requirements. The guidance then suggests revisions which are “seen as being sufficient” for compliance with the regulations and are intended to illustrate how unfairness can be addressed.

The OFT is now seeking comments and views on the draft guidelines from the industry and will take into account all those received by 30 January 2004. The resulting guidelines will have a significant impact on the trading practices of the entire IT sector and, as such, IT and technology companies now have an unusual opportunity to contribute to the OFT’s consultation and help to shape the outcome.

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