Digital Content and the Consumer Rights Act 2015

07 August 2015

Practice Area: Commercial Law

M_mcclean

The Consumer Rights Act 2015 (the “Act”), the legislation being hailed by the Department for Business, Innovation & Skills as the “biggest overhaul of consumer rights in a generation,” received royal assent on 26th March 2015 and the majority of the provisions under same are set to come into force by 1st October 2015. The Act streamlines previous consumer rights legislation from eight different pieces of legislation into one, with the aim of bringing consumer law into the modern market, implementing a system which is more easily understood, and increasing the rights of consumers.

Digital Content

The treatment of digital content, for example software, mobile phone apps and computer games, has in the past caused legal uncertainty in relation to consumer rights. Previous legislation failed to deal with this growing market, resulting in debate over whether or not digital content can be classified as goods. Therefore, one of the key points of interest in the Act is the introduction of digital content as a separate category of product with its own rights and remedies.

Rights and Remedies for Digital Content

For the most part, the rights and remedies relating to digital content mirror those in relation to tangible goods. Digital content is required to (i) be of satisfactory quality; (ii) be fit for purpose; and (iii) meet any description given. These three core principles will apply also to any modifications made to the goods, a point which is particularly relevant for digital content given the frequency with which such traders tend to modify their products, to remedy minor issues or upgrade software.

The Act also sets out remedies available for breach of the rights in relation to digital content, which, although in many respects reflect those remedies available for tangible goods, also helpfully take into account the nature of digital content and therefore the more bespoke remedies required. Under the Act, consumers of digital content may be able to avail of a right to repair or replacement; a right to a price reduction (up to 100% of the price) where it is not possible to repair or replace the goods (or where the repair or replacement is not carried out within a reasonable time and without significant inconvenience to the consumer); and, where goods do not conform to the contract, rights to reject, rights to a price reduction, or rights to repair or replacement.  

The Act covers digital content supplied through business to consumer contracts only and at a price. Digital content provided for free will not fall under the ambit of the Act, unless it is supplied in conjunction with something which is paid for or the digital content supplied causes damage to a device or other digital content where the trader has not exercised reasonable care and skill.

Right to supply

The Act imposes a requirement that the trader will be deemed to have a right to supply the digital content, whether or not this is actually the case. This position is not a departure from the position in relation to tangible goods (save for the reference to a right to supply rather than a right to sell or transfer), however it is particularly relevant for digital content, given that often the trader will have a licence to use it rather than being the owner.

This section serves as a reminder to traders to ensure they do in fact have the right to supply any digital content they are supplying, as breach of intellectual property law can attract severe penalties.

One to watch

Section 33 of the Act gives the Secretary of State power to extend the rights under the Act to digital content which is supplied under a contract, consideration for which is something of value other than money, if there is significant consumer detriment. Traders providing digital content in exchange for, for example, personal data, should keep in mind that they too may potentially face liability under the Act.

What should we take from this?

The introduction of digital content as a separate category of product marks a major step forward for consumer rights law, and traders of such products should be aware of this and prepare themselves for the potential liability by reviewing their terms and conditions and identifying potential liabilities. Liability under the Act cannot be excluded or limited and the rights will be implied into the contract if not expressly set out. The majority of the provisions of the Act will be in force by 1st October 2015, so traders should be using the next two months to ensure they are ready.

For more information or to discuss any of the issues covered in this article please contact Maeve McClean.

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