When cooling-off kicks in
Q: I have been asked to attend an elderly client in his care home for the purposes of making his will. I have heard there are new regulations which govern the making of contracts with clients away from my office. Is this the case and, if so, what should I do?
A: You are correct that contracts concluded with clients away from your place of business have enhanced requirements. The Professional Practice team has had a number of enquiries in respect of the new regulations, known as the Consumer Contract (Information, Cancellation and Additional Charges) Regulations 2013, which came into force on 14 June 2014, and their impact on solicitors operating in commercial practice. The regulations supersede the Consumer Protection (Distance Selling) Regulations 2000 and the Cancellation of Contracts made in a Consumer’s Home or Place of Work etc Regulations 2008.
How to comply?
To ensure they are compliant, solicitors are encouraged to review the regulations, then check that your procedure and specifically your letters of engagement are compliant. Failure to inform of the right to cancel is a criminal offence and, if found guilty, a solicitor could be fined. Firms should provide all relevant staff with appropriate training and take all reasonable steps to ensure that the right to cancel is provided to consumer clients. In addition to the criminal sanctions, solicitors should consider that failure to provide appropriate information to your client on their rights under the regulations may be deemed a breach of the practice rules.
Waiving the right to cancel?
It should be noted that a client in off-premises circumstances cannot properly waive their rights to cancel. For solicitors visiting clients off-premises, demonstrable care must be taken to explain cancellation policies, particularly if the solicitor and client discuss the option to commence work straight away. The client needs to request specifically and expressly that you start work within the 14-day period and acknowledge that by doing so, should they exercise their right to cancel within that period, they will be responsible for fees incurred up until the point at which they cancel. This should be evidenced by a clear written statement to the client to that effect. Solicitors should take care to ensure that clients understand they are able to cancel and are not pressured or coerced into instructing you to commence work within that period. It is recommended that, if in doubt, work should not commence until expiry of the 14-day period.
Additional factors
Many solicitors require to visit clients in their homes or at places away from their offices, such as in hospital, for a variety of reasons. Sometimes it is because the client has particular requirements and could be considered to be a vulnerable client. The Society’s guidance on vulnerable clients (see guidance relating to rule B1.5) should be considered carefully in tandem with the regulations. As some vulnerable clients may not be able to give consent for work to commence within the 14-day period, extra care should be taken in these circumstances.
First, define your contract
What are the new types of contract?
The rules differ depending on how the contract with the client is constituted. This falls into three categories: on-premises, off-premises and distance selling. On-premises contracts are entered into normally at the business premises of the service provider which, for these purposes, we will refer to as the solicitor’s offices.
Off-premises contracts comprise the following: where a contract is formed in the presence of you and the client away from your offices; where a client makes an offer to you away from your offices; where a contract is formed at your offices or by distance communication immediately after the client is addressed in a place away from your offices; and where a contract is concluded during an excursion organised by you with the aim of promoting your services (for example, during business development or client away days).
Where and when a contract is concluded is of course a matter of professional judgement, but conclusion of a contract in an off-premises environment has important consequences: not least, it gives the client enhanced rights of cancellation.
A distance selling contract occurs when the service provider uses an organised distance selling or service provision scheme without the presence of the provider and the client, and exclusively using distance communication up until the contract is concluded.
“Organised distance selling” is not defined but is likely to refer to services provided by websites, mail order or telesales. The client attending a solicitor’s office simply to gather information prior to concluding the contract at a distance means the contract is likely still to be deemed a distance selling contract.
Distance selling provisions will likely apply to websites offering services such as conveyancing, will writing or other such services where the contract is concluded at the requisite distance. Providing initial information by a website or telephone service would not of itself result in a distance selling contract, and providers of distance selling contracts should consider the impact of the regulations carefully as a full commentary on their effects is outwith the scope of this article.
What information requires to be provided for each type?
On-premises contracts: the client requires to receive information which a solicitor would expect to see in a fulsome letter of engagement, such as a description of the service, the fee or the mechanism for calculating the fee, delivery and performance information to include expected timescales, complaints procedures and cancellation provisions. Care should be taken that this information is provided in full at the time of conclusion; further details can be found in the regulations.
Off-premises and distance contracts require an enhanced level of information, particularly in respect of the client’s enhanced rights to cancel, notification of the cancellation period and the circumstances in which the cancellation period is lost, which should be clearly highlighted. When cancelling, there is no requirement for the client to use a specific form or provide any reasons, but they must do this via an express request on a “durable medium” such as letter or email. The client is entitled to a refund within 14 days of you receiving notice. Again, further details can be found in the regulations.
In this issue
- Keeping Government responsible
- Contempt, or good faith?
- Reform – 170 years on
- Employee ownership: adding trust
- The gender gap: coming clean
- Cyber risk - are you covered?
- Reading for pleasure
- Opinion: Graham Sykes
- Book reviews
- Profile
- President's column
- Land Register completion update
- People on the move
- Tools for today's titles
- Those elusive profits
- The Budget and the crystal ball
- Child of our time?
- Elephant in very many rooms
- Video: the best evidence?
- Who would be a legislator?
- Sustainability: applying the presumption
- A woman’s work…
- Scottish Solicitors Discipline Tribunal
- Living the dram
- Land information: a one-stop shop
- From the Brussels office
- Registered paralegals: what trends?
- Law reform roundup
- MHO reports – please help with timing data
- Plaque marks WW1 lawyer dead
- Selling yourself from day one
- View from the grass roots
- Keep it in the family
- Ask Ash
- When cooling-off kicks in
- Bottom line, the accountants are coming
- First day in the office