Thursday 9th January 2014 Mr Nicholls Year 11 Business Thursday 9th January 2014 Mr Nicholls

Objectives To consider how consumer law can protect us, and businesses in certain situations.

Sale and Supply of Goods Act 1994 This Act says that all products have to be of a 'satisfactory quality'. This means that they have to: be safe last for a reasonable amount of time be fit for their intended purpose have nothing wrong with them (unless the defect was noted at the time of sale) If a seller breaks any of these conditions then you: have the right to ask for your money back do not have to accept a replacement; if you do accept a replacement, ask for written agreement that if the replacements are faulty you will still get your money back do not have to accept a credit note if you agree to a repair and it is unsatisfactory, then it will not stop you claiming your money back.

Trade Descriptions Act According to the Trade Descriptions Act, false or misleading information must not be given about products. For example, accurate information must be given about who made the product. Fake designer goods that are marketed as genuine are a clear breach of the Trade Descriptions Act The most common example of the Trade Descriptions Act coming into play is with second hand cars and their mileage – often cars are ‘clocked’ to make them appear better than they are – so the mile counter is effectively rewound and so it appears the car has less miles than it actually does, thus making it worth more.

Consumer Credit Act This Act protects you when you borrow or buy on credit. The Consumer Credit Act states that: Businesses must have licences to give credit. No one under 18 is to be invited to borrow or buy on credit. Businesses have to state an Annual Percentage Rate (APR). If you sign a credit agreement at home you have several days in which you can tear up the agreement. This is called a 'cooling off period' Section 75 of the act gives people the right to their money back from credit card companies if they use their card to buy something which turns out to be faulty. It only applies to goods and/or services worth more than £100and less than £30,000, and it doesn't apply to debit, charge cards, bank loans or certain shop cards. It does, however, apply to purchases made abroad or to goods purchased from overseas by telephone, internet or mail order for delivery into the UK

Impacts on Business… There is an important issue here. On the one hand, consumers need some degree of protection. On the other hand, all these laws and regulations add to business costs. Consumer protection regulation can add the following to business costs: The costs of reading, understanding and complying with the laws (time and money). The costs of employing specialists to deal with the laws and their consequences. The costs of changing business practices eg re-training sales staff or re-designing labelling and packaging. The costs of dealing with complaints, especially if they end up in the courts. The costs of fines. The costs of a damaged reputation and image with customers.

Also… These costs are especially difficult for small businesses which lack the time, money and expertise to deal with it all. New small businesses sometimes become the big businesses of the future; growth and employment depend on new business start-ups. If entrepreneurs are discouraged by too many regulations and don’t start new businesses, then future growth and employment may suffer.

Question… Why do you think these laws are important? What examples could you think of to do with the Trade Descriptions Act? What examples could you think of to do with the Sale of Goods Act? What examples could you think of to do with the Consumer Credit Act? Why do you think we need to learn this when studying business?