Solicitors who see clients at home need to be aware of new regulations for cancelling contracts, says District Judge Pal Sanghera

The Cancellation of Contracts made in a Consumer’s Home or Place of Work etc Regulations 2008 came into force on 1 October 2008. In a nutshell, the regulations give a consumer the right to cancel a contract for the supply of goods or services made during a visit to the consumer’s home or place of work by a trader.

A consumer is defined as a natural person who is not acting in the course of his trade or profession. A trader is defined in the regulations as someone who is acting in his commercial or professional capacity. Solicitors are therefore caught by this definition and necessarily become tradesmen. It does not matter whether the visit was solicited or unsolicited. The visit could be to the home of an individual other than the consumer concerned. The total value of the contract has to be over £35 and a cooling-off period of seven days – within which the contract can be cancelled – has been set.

It is important to note that the regulations do not permit any contracting out of its provisions. Any term that is inconsistent with the regulations, particularly one that imposes any duties or liabilities on the consumer additional to or different from those In the regulations, is void.

The regulations also require the cancellation rights to be clearly and prominently set out in any written contract or otherwise provided in writing if there is no written contract. Failure to provide this information is an offence that carries a fine on summary conviction not exceeding Level 5 on the standard scale. The written notice of the right to cancel must be dated, legible and contain the information prescribed by part 1 of schedule 4 to the regulations.

This comprises the identity of the trader (including his trading name, and any contract reference number), a statement of the consumer’s cancellation rights and how they may be exercised, the address to which such notice may be sent, and that the notice is deemed served once posted or emailed.

A cancellation form must be provided as a detachable slip and completed with the salient information by the trader. In the prescribed information, the consumer must also be told that he can use the cancellation form if he wishes. However, the notice need not be in that or any prescribed form, as long as the intention to cancel is plain from it. As a practical rule, the notice being served once posted, a prudent trader will, therefore, allow additional time before starting work as the notice may be posted by second-class post on the seventh day.

The regulations do not apply to certain contracts (known as Excepted Contracts). These Excepted Contracts are set out in schedule 3 to the regulations. They include a contract for the sale or rental of immoveable property. Therefore, they will not apply, for example, to conveyancers.

However, they have clear implications for litigation lawyers, particularly those who see clients at home and conduct work on a conditional fee basis and accept work from accident management companies. The definition of trader includes someone who was acting in the trader’s name or on his behalf. Indeed, the trader who makes the visit need not be the trader that supplies the goods or services.

There will need to be clear documentation to show that there has been compliance, otherwise not only is the contract unenforceable, but criminal sanctions can follow. While there is a defence of due diligence it is an unwise solicitor who would rely on it. It is only available where it can be shown that the commission of the offence was due to the act or default of another or due to reliance on information given by another. Solicitors will need to satisfy themselves that everything is in order.

It is now possible for counsel to contract with his client or with his instructing solicitor, and as the regulations apply to the performance of the contract as a whole, they, by necessary extension, will also apply to counsel. In many cases, the visit that originated the contract with counsel will have been made by the solicitor who, in respect of counsel’s advice and advocacy, was acting on behalf of counsel. Solicitors may wish to include any such contract with counsel’s instructions. Even if counsel is not directly affected by the regulations, the solicitor will not want to have to pay counsel out of his own pocket if he gets the formalities wrong under the regulations.

For limited liability partnerships, corporate liability is imposed where it can be shown that the offence was committed with the consent, connivance or otherwise due to neglect by an officer of the corporate body.

A duty to enforce these regulations has been imposed and considerable powers have been given for this purpose. The enforcement authority can require the production of a document relating to the business and to copies of it. Furthermore, any documents can be seized or detained if the investigating officer has reasonable grounds to believe that such documents may be required as evidence in proceedings. Document, of course, means information recorded in any form. Legal professional privilege is however retained, as is the right to silence. It is otherwise an offence to intentionally obstruct an officer carrying out his functions under the regulations.

What about a client that wants work to commence straight away? Regulation 9 provides that is possible in respect of certain contracts provided the consumer makes the request in writing. The supply of services of any kind is one such contract. Accordingly, where work needs to commence within the cancellation period not only must the consumer request that in writing, it must also be explained, again in writing, that the consumer may be required to pay for goods and services supplied during the cancellation period. Unless this is done, any money paid must not only be refunded but there is no right to charge for any work done but not paid for.

Solicitors need to ensure that any staff who see clients at home are aware of all that they need to do.

District Judge Sanghera sits at Coventry County Court