Consumer contracts: general – London Borough of Bromley

The rules when you form contracts, including how they are made

In this guide, the words 'must' or 'must not' are used where there is a legal requirement to do (or not do) something. The word 'should' is used where there is established legal guidance or best practice that is likely to help you avoid breaking the law.

This guidance is for England, Scotland and Wales

Consumer contracts are those between traders and consumers, and require agreement from at least two parties.

To understand your legal responsibilities when selling to consumers, you need to know how and when a contract is made. You also need to have a broad understanding of contract terms so that you can be sure they are fair to consumers.

This also applies to non-written contracts - for example, selling goods in a shop.

WHAT IS A CONSUMER CONTRACT?

A consumer contract is a legally binding agreement between you and the consumer concerning the sale of goods or digital content, or the supply of services (with or without goods).

Contracts can be made:

verbally
in writing
by your and the consumer's conduct ('silent contracts'). An example of a silent contract is when a customer picks up goods and pays for them using a self-service checkout in a supermarket. No words are spoken, but it is a contract all the same

INVITATION TO TREAT

When you display goods in your store, or display goods or services on your website or in a brochure, you are inviting the consumer to make an offer to buy. You then have the right to accept the offer or decline it.

What this means is that the consumer cannot legally insist that you sell the goods, service or digital content if you choose not to (for example, there may have been a mistake in the way you placed them on display, or included them in your website or brochure).

This invitation to make an offer to buy is known as an 'invitation to treat'.

Care is needed regarding invitations to treat as, in some cases such as incorrect pricing, there may be breaches of the law regarding unfair trading.

ELEMENTS OF A CONTRACT

A legally binding consumer contract is made only when specific parts come together.

OFFER

Firstly, there must be an offer.

Examples of a consumer offering to buy goods:

removes them from the shelf and takes them to the checkout
clicks 'add to basket' on your website
contacts you to place an order from your brochure

If you give the consumer a quote for a service, this is also an offer.

ACCEPTANCE

Then there must be acceptance of the offer.

Examples of you accepting the offer:

put the goods through the till
send a confirmation email to the consumer after an order was placed and payment received through your website
accept and take payment for an order placed from your brochure

If the consumer agrees to your quote for a service, this is also acceptance.

Some online businesses delay their acceptance / confirmation of the consumer's offer to buy, sometimes issuing an order acknowledgement in the first instance. This is to safeguard against any errors on the website. Businesses may then have the right to decline the consumer's offer, rather than a consumer being able to argue that they had a legally binding contract.

CONSIDERATION

In a consumer contract, this is usually 'money consideration' (payment), including promise to make a payment.

In Scots law, consideration is not essential to form a contract. However, in consumer contracts, the price of goods or services is normally part of the offer and acceptance.

INTENTION

Intention to make a contract means that you and the consumer must intend to be legally bound by the contract and you must both understand what the contract actually means.

LEGAL CAPACITY

The consumer must be legally capable of making a contract.

Examples of when people, depending on the situation, may not have legal capacity:

too young
mental health issues
under the influence of drugs

WITHDRAWING FROM A PROSPECTIVE CONTRACT

You have the right to withdraw from a prospective contract; in other words, you do not have to accept the consumer's offer to buy.

For example, if you made a mistake with the price, you do not have to sell at the incorrect price, providing that you can clearly establish that a contract has not been made.

You should take care because you run the risk of the consumer claiming they have been misled and that you are trading unfairly, in which case you may be in breach of the law. You will find more information on trading unfairly in the 'Protection from unfair trading' guide.

CONTRACT TERMS

Terms in consumer contracts set out the agreement you have with consumers - in other words, what you agree to do and what you expect the consumer to do.

Not all contracts will have written terms, but if the contract was verbal, you may find it difficult to prove what you and the consumer had agreed in the event of a dispute.

Your terms can appear:

on the back of the contract
on your website
in the back of your brochure, if you sell by mail order

Any terms that are individually agreed with the consumer are called 'express terms'. This could be the price of the goods or service if it is not fixed.

Any terms that are the same across all your consumer contracts, such as payment or delivery arrangements, are called 'standard terms'.

In consumer law, some terms are automatically part of a contract for the sale of goods or the supply of services (with or without goods). For example, it is to be expected that goods are all of the following:

of satisfactory quality
as described
fit for purpose

For more information on the requirements for goods, see 'Selling and supplying goods'.

It is also expected that services will be carried out with reasonable care and skill, within a reasonable time (if no time agreed beforehand) and at a reasonable charge (if the cost is not agreed beforehand).

See 'Supplying services' for more information.

It is against the law to try to take away a consumer's 'statutory rights', including in your contract terms, on your website or brochure or through a notice in your business premises.

UNFAIR CONTRACT TERMS

The Government department that leads on unfair terms is the Competition and Markets Authority; links to its guidance can be found in 'Unfair contract terms'.

BREACH OF CONTRACT

If you or the consumer do not do what you agreed to do, as set out in the contract (for example, you might not deliver the right goods or provide the service on time, or the consumer might not pay), this is called being in 'breach of contract'.

If you are in breach of contract, the consumer may, depending upon the circumstances and the type of contract, claim for repair or replacement of goods, full or partial refund, or damages (money compensation).

In cases where the consumer cancels the contract, there are circumstances where you are entitled to claim compensation for the reduction in value of goods sold or supplied under a distance or off-premises contract (see below).

ON-PREMISES, OFF-PREMISES AND DISTANCE CONTRACTS

There are very specific requirements for contracts, which vary according to where the contract is formed.

The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 provide consumers with a 14-day cooling-off period for most 'distance contracts' (those made via the internet etc) and 'off-premises contracts' (those made, for example, in a consumer's home).

For more information on these Regulations, see:

'Consumer contracts: on-premises sales'
'Consumer contracts: off-premises sales'
'Consumer contracts: distance sales'

FURTHER INFORMATION

For more information on contract law, see 'Contract law basics', which can be found in Business Companion's Business in Focus section.

TRADING STANDARDS

For more information on the work of Trading Standards services - and the possible consequences of not abiding by the law - please see 'Trading Standards: powers, enforcement and penalties'.

IN THIS UPDATE

New guidance: December 2024

Key legislation

Please note

This information is intended for guidance; only the courts can give an authoritative interpretation of the law.

The guide's 'Key legislation' links may only show the original version of the legislation, although some amending legislation is linked to separately where it is directly related to the content of a guide. Information on changes to legislation can be found on each link's 'More Resources' tab.