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Sell Sell Sell – but don’t overdo it – here’s a couple of legal issues you need to be aware of when selling

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This is a guest blog post by Steven Mather Solicitor, The Right Lawyer for You and Your Business and an expert on contract law.

Firstly, thank you to Rob and the team for inviting me to write a blog post on their website. I’ve seen a number of Rob’s seminars on sales and he really knows his stuff. I for one can’t wait to get his next book.

Rob asked me to write a blog about some of the legal issues that businesses involved in sales might typically face. There’s a lot! So this blog isn’t intended to be a comprehensive thesis on all of the legal risk involved in marketing and selling, but covers some key pointers to think about

  1. Consumer Protection Regulations and “unfair practices”
  2. Contractual misrepresentation
  3. Breach of contract

Consumer Rights Act 2015 and other consumer protection rules and regulations

The Consumer Rights Act 2015 brought into law a number of protections for consumers, or at least clarified what were grey areas previously. The law sets out what should happen when goods are faulty, when services don’t’ match up with what was agreed or services are not provided with reasonable care and skill, outlawing unfair terms in a contract for example.

The power lies with the consumer, and the are therefore entitled to ask that you bring the service in line with what was agreed, or give some/all money back to the customer.

In terms of selling, what it means is that more than ever before you need to DELIVER on what you/your sales team say they will.

You see this overselling all the time on The Apprentice programme, and it gives us an easy to understand example. In the latest series, they were offering drink/dine seats on a luxury train. The team promised prospective customers all you can drink, but ended up delivering one drink only. Consumer Law would entitle the consumer to a refund, at least partially, but arguable more (indeed as set out below, more likely to be more).

There is a lot of protection for consumers, not just this act.

Take distance selling – contracts concluded away from your premises – that is, online, by telephone, at the customers house, at a coffee shop etc. The law states that consumers must have a 14-day cooling off period and you must give them notice of this right and the option to cancel the contract without cost within 14 days. If you do not provide them with a notice on their rights, then they can cancel at any time until you do provide the notice. This means that you could potentially carry out work and not get paid for it. So it’s really important to ensure that you get things in order before you start any work.

Contractual Misrepresentation & Misleading Claims

A representation is a statement made to the buyer which causes them to buy.  

For example, if you promise that your services will be delivered within 24 hours and they aren’t, and they are not, then that was potentially a misrepresentation.

In law, the test for misrepresentation is as follows:

  1. There is a statement of fact (not merely an opinion or obvious sales patter)
  2. That statement is relied upon and induces the buyer to enter into the contract (that is they take your word for it being true)
  3. That the buyer suffers some loss

If there is a misrepresentation, then the buyer can seek to terminate the contract. This usually means getting a full refund particularly if nothing has started at the time the customer learns of the misrepresentation, or a partial refund or other damages if it has started or finished and is not what they were expecting.

Misleading claims is a similar offence, but can also bring in to play Trading Standards and Advertising Standards Agency. So for example, rarely can you promote something as being “the best” unless you have independent evidence of this, hence the “probably…” used by a beer manufacturer.

Being misleading in your sales materials can land you in trouble with Trading Standards as well, and you could be fined prosecuted or even imprisoned.

The Consumer Protection from Unfair Trading Regulations means you cannot mislead or harass consumers, by including false or deceptive sales messages, leaving out important information, or using aggressive sales techniques.

Breach of Contract

Linked to all of the above is the right for one party in a contract to claim the other has breached the contract. This requires an analysis of what the agreed terms of the contract were, and sometimes that’s an easier question than other times. Typically issues such as price, specification, style, etc are usually quite clear cut.

If the customer can identify that there has been a breach of contract, then the contract can be terminated without further payment. If payment is made, then the customer would be entitled to a full or partial refund, or maybe even more – if your breach of contract causes extra damage or loss, then the customer would be entitled to sue you for extra. For instance, if the contract is the supply of services, say a tradesperson, and the workmanship was below standard, the customer could be entitled to claim breach of contract, and sue the tradesperson for the costs incurred in rectifying the job, even if that cost is twice the original price.

I hope this is a useful summary of how selling and the law can interact. I have to say that this is not legal advice and it should not be relied upon, and you should seek independent legal advice on any area that you’re unsure about.

About the author

Steven Mather Solicitor is The Right Lawyer for You and Your Business. He can say this because he has helped thousands of clients in disputes worth tens of millions of pounds. He is experienced, recommended and approachable. See more on his website at http://www.stevenmather.co.uk 

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