Can consumers cancel contracts for goods made to their specifications?
Kate Hobson and Jan Carton look at the issue of consumers who cancel goods made to their specifications.
The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (CCRs) give consumers a 14 day right to cancel contracts that are not made on a trader’s premises. The cancellation, or cooling off period, starts when the contract is entered into and generally lasts until the end of a 14 day period starting the day after goods are delivered or service contracts have been entered into.
Section 28(1)(b) of the CCRs excludes ‘the supply of goods that are made to the consumer’s specification or are clearly personalised’ from the right to cancel. This introduces confusion for consumers and advisers, as it means that some traders may supply both goods that are excluded from the CCRs right to cancel and goods where there is a right to cancel. It is important to note that this exemption, which refers to items being made to a consumer’s specifications, only applies to:-
● goods, so a pure service contract or one with only an incidental supply of goods, such as nails or glue, e.g. installation, would not be exempt(1);
● the supply contract, so any later alterations of standard products, e.g. on site to ensure correct fitting, will not make the supply contract an exempt one
● where the supplier/seller is a trader and the other party is a consumer(2);
● contracts concluded at a distance or off-premises(3)
The rationale for such an exemption is most probably based on a trader’s reduced likelihood of a re-sale, where goods have been customised for a specific consumer.
The CCRs implement the EU Consumer Rights Directive (CRD)(4). The Directive appears to be a full harmonisation one(5). Study of the CRD, CCRs and the EU guidance(6) enables consideration of when there may be a cancellation right, and when one may not apply.
How the exemption applies to goods in a home improvement contract - i.e. no cancellation right for consumers
The CRD exempts ‘the supply of goods made to the consumer’s specifications or clearly personalised’(7) e.g. tailor made curtains(8) and the CCRs almost mirror this wording(9).
‘Goods made to the consumer’s specifications’ are defined in the CRD but not in the CCRs, as ‘non-prefabricated(10) goods made on the basis of an individual choice of or decision by the consumer’(11).
If a trader, or a representative/agent, visits a consumer’s premises and takes precise measurements and then makes a product to match those precise measurements, the goods are likely to be bespoke and therefore exempt.
When the exemption is unlikely to apply to goods in a home improvement contract - i.e. a cancellation right for consumers
It is important to remember the origin and purpose of these provisions since ‘a national court must interpret domestic legislation, so far as possible, in the light of the wording and purpose of the Directive which it seeks to implement’(12).The purpose of the CRD is to achieve a ‘high level of consumer protection’(13) and ‘Since this is an exception, it should be interpreted narrowly’(14).
Where a consumer is simply choosing from a list of options, (however long), normally provided by a trader, e.g. types of window opening, style of handle or glass finish, then products are unlikely to be exempt, even though they may result in a unique product for each consumer.
On the other hand, if a trader simply checks that a consumer has standard window openings and/or then assembles parts that have been manufactured beforehand, then the resulting goods are unlikely to be bespoke and will not be exempt from the requirement to give a cancellation right. Measurements may also be taken to supply, or compile, a best or nearest fit product from stock parts or complete products.
If a consumer purchases, or a trader sources, standard products direct from a supplier, e.g. window units from a large DIY retailer, these will not be exempt.
If the goods in the home improvement contract are exempt
There would be no automatic right to cancel the supply of the goods under the CCRs and by refusing to go ahead with the contract, a consumer would be in breach of it. A trader would be able to recover their reasonable losses providing this had been mitigated. If the cancellation was made soon after the contract was concluded, construction of any items, e.g. a conservatory or window units, may not have commenced so a trader’s losses may be minimal, depending on whether there was an element of installation included in the contract and how much time is available to find other work for the installers.
There may be a cancellation charge in the contract where there is no requirement to provide a cancellation right and this may be considered to be a liquidated damages clause or a penalty clause, depending on the amount and various other factors(15). A cancellation charge or other clause imposing a specific fee on a consumer is likely to be subject to the fairness test(16).
A trader could choose to give a cancellation right and would then have to honour it as an express term of the contract. FENSA(17) registered installers and Glass and Glazing Federation (GGF) members are required to offer a 7 day cancellation period where the statutory 14 day one does not apply, as part of their membership and other trade associations may have similar requirements.
Even if the contract is exempt under the CCRs from having to give a cancellation right, a trader must still comply with the requirements for pre-contract information (PCI). This includes informing a consumer that the contract is not exempt(18).
If a trader is choosing to provide a cancellation right when one is not legally required, there is no provision to suggest that this has to be done in a manner that complies with the CCRs, however, the terms covering the process would be subject to the fairness test(19).
If the goods are not exempt
A consumer should be provided with cancellation rights(20) in accordance with the CCRS if the contract was concluded at a distance or off-premises(21) and a consumer should be correctly informed of the appropriate details(22) in accordance with Schedule 2 of the CCRs(23). A failure to do so will extend the consumer’s cancellation period up to to a maximum of 14 days and 12 months.
If consumers want services to be provided during the cooling-off period, they can specifically ask for this and the trader needs to make sure that the consumer: makes such a request on a durable medium for off-premises contracts(24); acknowledges the loss of the right to cancel for fully provided services; is informed of the need to pay for partially performed services and is supplied with the relevant cancellation details, otherwise the consumer may not have to pay(25).
If goods are supplied and are to be fitted, the 14 day period for cancelling does not start until the day after the goods are delivered(26), which might mean that in theory a consumer can cancel, unless exemptions apply, even after fitting has started, however, the contract may include terms requiring the consumer to return any cancelled items, pay for such a return and or have a reduced refund if the value of the goods has been diminished by unnecessary handling(27).
Whether goods are exempt will very much depend on the facts of each individual case(28). Using GGF members as an example, the vast majority take specific measurements of consumers’ window openings and other relevant areas for products, such as conservatories, patio doors and verandas; they then construct products to fit them, rather than assembling standard parts that have already been manufactured and these would therefore be exempt from having to give a cancellation right.
It is really important for advisers to ask appropriate questions of consumers who think they may have been given the wrong, or no, cancellation rights, to be able to address the issue of whether contracts are exempt, what remedies are available if not but also to establish whether there is in fact an off-premises contract at all. Some traders visit consumers at home but then leave a quote for them to consider. Even if the trader rings the consumer back a few days later, this will be an on-premises contract under the CCRS, despite neither party having been anywhere near a trade premise throughout the whole process, and therefore not eligible for a cancellation period.
If a consumer is unable to establish exactly how their product has been made, they may wish to consider reporting it to Trading Standards (via the Citizens Advice consumer service) who would be able to use statutory powers to ascertain this(29).
This is only an opinion and is very much subject to interpretation and only a court could decide at the end of the day. It should also be noted that traders may have sought tailored advice from trading standards in relation to a specific product(s) or contract.
(1) Although r28(1)(e) also exempts contracts where a consumer invites a trader to their home to carry out urgent repairs or maintenance
(2) Recital 8 CRD
(3) Recital 9 CRD
(4) Consumer Rights Directive 2011/83/EU
(5) Recital 5 CRD — this would mean that Member States cannot go beyond the provisions of the Directive and provide additional protection to consumers, although they can choose how to provide the protection permitted
(6) DG Justice Guidance on the CRD
(7) Article 16© CRD
(8) Recital 49 CRD
(9) CCRs r28(1)(b)
(10) Prefabricated is not defined
(11) Article 2(4) CRD
(12) Para 20 Robertson v Swift  UKSC 50 — Lord Kerr
(13) Recital 65 CRD
(14) EU guidance para 6.8.3
(15) Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd  UKHL 1
(16) CRA 2015, s62
(17) Fenestration Self Assessment Scheme
(18) CCRs Schedule 2, para (o) as required by Article 6(1)(k) and Article 16© CRD
(19) CRA 2015 s62
(20) For the goods only not the service, CCRs r28(1)(b)
(21) CCRs r29
(22) CCRS r10 & r13 — r11 may allow a reduced list of PCI in certain circumstances where a consumer asks a trader to visit to do low cost repairs
(23) Replicating Article 16 CRD
(24) CCRs r36(1)(b)
(25) CCRs r36(6)
(26) CCRS r30
(27) CCRs r34(9) — (12)
(28) Supported by the BIS Implementing Guidance Section H, para 13
(29) CRA Schedule 5
Kate Hobson and Jan Carton are Consumer Experts in the Expert Advice Team at Citizens Advice.
This article was first published in Issue 178 of Adviser magazine (November/December 2016)