Session 10 Client cancellation rights

Contents Part 1: Cancellation rights before 13 June 2014 Part 2: The new regulations Part 3: Different types of contract Part 4: Information requirements Part 5: Cancellation Part 6: Failure to comply Part 7: Why should you care? Part 8: What should you do?

Cancellation rights before 13 June 2014

Which Regulations applied Type of clientScenarioRegulations ConsumerContract made: during visit to client's home/workplace during visit to home of another individual during excursion you organise that takes place away from your business premises after an offer made by the client during such a visit or excursion Cancellation of Contracts made in a Consumer's Home or Place of Work etc Regulations 2008 ConsumerYou do not meet your client before entering into a contract to provide legal services Consumer Protection (Distance Selling) Regulations 2000

Cancellation notice Relevant Regulations TimingPrescribed wording Cancellation period Cancellation of Contract Regs 2008 At the time the contract is made Yes, plus notice must be incorporated into the contract Seven days, starting from the day client receives notice of cancellation rights Distance Selling Regs 2000 In good time prior to the conclusion of the contract, ie before both parties become bound by the contract No, but cancellation notice should state: when and how to exercise right to cancel consequence of agreeing to you starting work within cancellation period Depends on when you notify client of their right to cancel

Failure to give cancellation notice Relevant RegulationsConsequence of not giving cancellation notice Cancellation of Contract Regs 2008 Offence—fine on summary conviction You will not be able to enforce your contract with the client—meaning you will not be able to charge the client for the work you have done Distance Selling Regs 2000Client has three months and seven working days to cancel the contract. If they do: contract treated as if it had never existed you will have to refund any sum paid by or on behalf of the client

The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013

Different types of contract

Qualifying requirements Consumer client AND Off-premises or distance contract

Off-premises contract DefinitionWhen might this apply? 1Contract concluded somewhere other than at your business premises in the simultaneous physical presence of you and the client You meet the client: at their home, place of work or a hospital at a neutral venue, eg a hotel meeting room or café 2Contract for which an offer was made by the client in your physical presence in a place somewhere other than at your business premises Difficult to apply this definition to retainer with a consumer client

Off-premises contract DefinitionWhen might this apply? 3Contract concluded at your business premises, or through any means of distance communication immediately after the client was personally and individually addressed somewhere other than at your business premises in the simultaneous physical presence of you and the client You meet the client at their home and immediately afterwards, you either: return to your office to conclude the retainer, or you conclude the retainer by phone or 4Contract concluded during an excursion organised by you with the aim or effect of promoting services to the client Contract concluded on the golf course, where you arranged to meet the prospective client

Distance Contract contract was concluded under an organised distance sales or service-provision scheme (see old OFT guidance) without the simultaneous physical presence of you and the client with the exclusive use of one or more means of distance communication up to and including the time at which the contract is concluded (see old Distance Selling Regs) (All components must be present)

Information requirements

Information requirements (pre-contract) Feature/requirementOff-premises contractDistance contract Information to be given before the client is bound by the contract 1.Information required by Schedule 2 of the Regulations 2.Instructions for cancellation 3.Cancellation form How to give this information On paper or, if the client agrees, on another durable medium In a clear and comprehensible manner Give or make available in clear and comprehensible manner, and a way which is appropriate to the means of distance communication Extra requirements for contract concluded by electronic means/phone? NoYes

Information requirements (post-contract) Feature/requirementOff-premises contract Distance contract Information to be given after the client is bound by the contract Copy of the signed contract, or confirmation of the contract Confirmation of the contract How to give this information On paper or, if the client agrees, on another durable medium, eg Durable medium Additional reqs if contract is for digital content not on a tangible medium Yes, if client wants you to start work during cancellation period When Within a reasonable time after conclusion of the contract, but in any event before you begin to provide services under the contract

Cancellation

Cancellation rights Feature/requirementOff-premises contract Distance contract Cancellation period14 days How does the client cancel? By using the cancellation form or making any other clear statement setting out the decision to cancel the contract Can the client cancel via your website? Yes Can you start work during the cancellation period? Yes, but you need the client’s express consent on a durable medium Yes, but you need the client’s express consent (no requirement for a durable medium)

Effect of cancellation Feature/requirementOff-premises contractDistance contract Effect of cancellation within 14 days 1.parties’ obligations to perform the contract ends 2.unless client asked you to start work, reimburse all payments 3.Ancillary contracts cancelled Timescale and method of reimbursement Without undue delay In any event not later than 14 days Timescale and method of reimbursement Same means of payment as client used for the initial transaction unless the client expressly agrees otherwise Can you charge for reimbursement No

Cancellation rights if client asks you to start work Feature/requirementOff-premises contract Distance contract Effect on cancellation rights if client asks you to start work during cancellation period Client can still cancel within the 14 day cancellation period unless: the work is finished contract relates to digital content and you have started to deliver What can you charge if the client asks you to start work then cancels during the cancellation period Pro-rata for the work you’ve done

Failure to comply

Feature/requirementOff-premises contract Distance contract Offence, punishable on summary conviction to a fine of up to £5,000 YesNo Cancellation period is extended by 12 months from the date the cancellation period should have expired, ie a total of 12 months and 14 days from the date of the contract) Yes

What should you do? Wherever you are in doubt about whether or not a client is entitled to cancel the contract you should refer the matter to your manager for a decision. If it is decided that the client has a right to cancellation you must: 1.Include the relevant paragraph in the client care letter 2.Enclose the ‘Instructions for Cancellation’ and the ‘Cancellation Form’ 3.Ensure that you do not engage in any work for which we may not be paid.

Final comments Any questions? to Update your training records in Compliance Manager