New Law Regarding Service Contracts in the UK

The law regarding the purchase of goods on the internet is pretty clear : The customer has the right to cancel the order and, if received, to return the goods to the online shop. On the other side, a service contract can also be cancelled, but the law has just changed and it could be hard to understand all the special features. Here are some tips to help you managing your service contracts.

Usually a service contract, like a rental service, a gym membership or a cleaning service for example can be cancelled up to 14 days after the day on which the contract was entered into.

Retailers have it in their hand to determine when the contract is concluded and should make use of this. Clear information on when and how the contract is formed should be included into the terms and conditions to avoid any ambiguity later on. Basically the retailer must not start the service before the end of the 14 days cooling off period.

This however might not always be what the consumer wants. Therefore the law provides for the opportunity to start the service earlier. This can be done only with the consumer's express request. Even if the consumer requested the start of the service he can still cancel the contract, as the right to cancel ceases after full performance of the service only.

To safeguard the retailer against the loss of work he might have provided until cancellation the Consumer Contracts Regulations provide the retailer with a right for compensation if the consumer cancels his contract even though he was informed that his cancellation right would cease if he requested the start of the supply of the service before the end of the cooling off period. The amount the consumer has to be is to be calculated in proportion to what has been supplied in comparison to the full coverage of the contract.

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Regulation 28 of the Consumer Contracts Regulations 2013 lists the cases for which consumer cannot cancel a service contract, i.e.:

• Contracts for services for which the price is dependent on fluctuations on the financial market that cannot be controlled by the retailer. The supply of water, gas, electricity and district heating are not excluded.

• Contracts for a visit from the retailer that have been specifically requested by the consumer to do some urgent repair or maintenance work.

• Contracts for accommodation, transport of goods, vehicle rental services, catering or services related to leisure activities where such services are bought for a specific date.