With the coming into force last month of the Consumer Rights Act 2015, there has understandably been a significant focus on the civil remedies available to consumers who purchase defective products (see our recent blog post commenting on the new Act). However, consumer businesses should also give close attention to the potential for criminal prosecution where products they supply turn out to be not just defective but unsafe. In this blog post we discuss the various criminal offences which arise in the context of defective products.
Important changes to the US Federal Rules of Civil Procedure (FRCP), which govern the conduct of civil proceedings (including product liability cases) in US federal district court, will take effect on 1 December 2015 (absent US Congressional action, which appears unlikely). While various amendments are slated, the most significant amendments will limit the scope of civil discovery while simultaneously reducing the potential for sanctions for the unintentional loss or destruction of e-mails and other electronically stored information. Joseph G Falcone, a partner in our New York office, and Julia Qi, an associate in New York, review the key amendments on our blog.
The Consumer Rights Act 2015 represents a significant development in the regulation of consumer contracts under UK law. It consolidates and brings consistency to rules that were previously spread across a wide range of different Acts and Regulations. It also introduces new rules, particularly in relation to digital content, remedies available to consumers and unfair contract terms.
The Act comes into force on 1 October 2015 and will apply to contracts entered into after that date. In this article we consider the most important changes to existing consumer law of which consumer businesses need to be aware.
The UK government has now published the principal legislation that will implement the European ADR Directive and the European Online Dispute Resolution (ODR) Regulation, both of which seek to encourage the use of alternative dispute resolution schemes to resolve consumer disputes across the EU. Continue reading
In Boston Scientific Medizintechnik GmbH v AOK Sachsen-Anhalt and Another the European Court of Justice gave a purposive interpretation to the definition of “defect” for the purposes of the EC Product Liability Directive 85/374/EEC in the context of medical devices. Continue reading
The recent decision of the Full Court of the Federal Court of Australia in FWBC v CFMEU has significant implications for regulators and respondents seeking to agree on a penalty in civil penalty proceedings. The decision is likely to alter the long-standing practice for negotiated outcomes with regulators including the Australian Competition and Consumer Commission (ACCC) which regulates product safety and related issues in Australia. Continue reading
Following almost two years of deliberation, and notwithstanding a nearly 80 percent drop in the consumption of trans fats over the past decade (due in part to industry’s movement away from the use of partially hydrogenated oils), the FDA has made “a final determination that there is no longer a consensus among qualified experts that partially hydrogenated oils … are generally recognized as safe for any use in human food.” The plaintiffs’ class-action bar will attach itself to this measure like barnacles or pilot fish. Continue reading
Lawyers for class-action plaintiffs in the US often “piggyback” on the work of government regulators and prosecutors — swooping in to file class actions against the recipients of FDA warning letters or the targets of government enforcement proceedings. In some ways, they are to the administrative state what the pilot fish is to sharks. Not unlike the latter (in Melville’s words), they “lurk in the port of serrated teeth … and there find a haven when peril’s abroad … An asylum in jaws of the Fates!”
The Franchising Code of Conduct – One of the ACCC’s strategic compliance and enforcement priorities in 2015
On 1 January 2015, the new Franchising Code of Conduct (Franchising Code) (see http://www.comlaw.gov.au/Details/F2014L01472) commenced operation in Australia.
The Franchising Code is a mandatory code under the Competition and Consumer Act 2010 (Cth). Subject to limited exceptions, the Franchising Code imposes obligations on all franchise agreements entered into, renewed, extended or transferred on or after 1 October 1998.
The Franchising Code introduces significant changes and imposes strict obligations on both franchisors and franchisees, especially in relation to good faith obligations and information disclosure.
Among other requirements, the Franchising Code:
(a) introduces an obligation on both franchisors and franchisees to act with good faith in respect of any matter arising under or in relation to the franchising agreement and the Franchising Code. While ‘good faith’ is not specifically defined, the Franchising Code sets out the matters to which a court may have regard including whether a party has acted honestly and not arbitrarily, and whether the party cooperated to achieve the purposes of the agreement. Further, the ACCC has foreshadowed (see http://www.accc.gov.au/speech/enforcing-the-franchising-code-recent-activities-proposed-reforms) that:
Fundamentally, good faith will require both parties to a franchise agreement to remain loyal to the contract they have entered into. Acting for an ulterior purpose, or in a way that undermines or denies the other party the benefits of the contract are examples of conduct that may qualify as bad faith.
(b) obliges franchisors to provide to prospective franchisees a disclosure document. The purpose of the disclosure document is to give prospective franchisees information to assist them in making a reasonably informed decision about the franchise and to give them current information that is material to the running of the franchised business. Subject to exceptions, the franchisor must update the disclosure document within 4 months after the end of each financial year. There are also obligations as to the provision of an information statement that outlines the risks and rewards of franchising;
(c) imposes disclosure obligations on franchisors to provide franchisees with a copy of certain documents (such as a lease where the franchisee leases premises from the franchisor for the purpose of the franchised business);
(d) regulates the content of franchise agreements (such as the transfer and termination of franchise agreements), as well as prohibiting the inclusion of certain terms (such as a general release of liability) and mandating a complaint handling procedure;
(e) prohibits franchisors from requiring a franchisee to undertake significant capital expenditure in relation to a franchised business except in limited circumstances; and
(f) obliges franchisors to set up a separate bank account for marketing and advertising fees contributed by franchisees.
Penalties under the Franchising Code
There are 24 civil penalty provisions in the Franchising Code, including in respect of the good faith and disclosure document requirements. Penalties will apply to conduct from 1 January 2015.
The ACCC has indicated that ‘failure to comply with a penalty provision could result in the ACCC taking court action seeking a financial penalty, or issuing an infringement notice for the breach’ (see http://www.accc.gov.au/business/franchising/franchising-penalties-infringements).
Time to review
The ACCC’s Compliance and Enforcement Policy issued on 19 February 2015 includes as a core enforcement priority “ensuring compliance with new or amended industry codes of conduct, including the Franchising Code”.
Accordingly, it is important that franchisors be proactive in ensuring that their franchise agreements and any dealings with franchisees (and prospective franchisees) are compliant with the new Franchising Code provisions.
For further information, please contact:
Iva BacvicSolicitor, Melbourne
+61 3 9288 1917
Tristan SmithSolicitor, Brisbane
+61 7 3258 6777
A new Consumer Rights Act, which will streamline key consumer rights covering contracts for goods, services, digital content and the law relating to unfair terms in consumer contracts into one place, has received Royal Assent. The Act is expected to come into force on 1 October 2015.
The Consumer Rights Act replaces eight existing laws, including the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982.
Under the Act consumers will have the right to:
- get some money back after one failed repair of faulty goods (or one faulty replacement);
- demand that substandard services are redone or failing that get a price reduction; and
- get a repair or a replacement of faulty digital content such as film and music downloads, online games and e-books.
The Act introduces a set 30 day time period during which consumers can return faulty goods and get a full refund and clarifies when terms and conditions can be considered unfair.
The Act also makes a number of important changes to the UK competition regime to give private parties, in particular small and medium sized enterprises and consumers, the necessary tools to enforce competition law through private class actions on an “opt out” basis and to provide effective redress for loss caused by anti-competitive behaviour.
Our Competition, Regulation and Trade team has produced an e-bulletin on the new competition law provisions in the Act, which is available here.
The Consumer Rights Act 2015 is available on the legislation.gov.uk website.