Trader Scheme Member Top Tips

Knowing the law is on your side can help you to trade confidently, especially if a dispute should arise. At the Isle of Wight Trader Approval Scheme, we know that trading standards regulations are among a range of laws which businesses are expected to be aware of and comply with, and we appreciate how time consuming it can be to keep up with changes when you are busy with other tasks. However, taking the time now to ensure your business is compliant with the law is vital to prevent the risk of future losses or even prosecution.

Listed below are some tips from the Isle of Wight Trader Approval Scheme (based on our experience of meeting with many businesses) which we hope may help you avoid some of the most commonly overlooked rules.

For a faster application process you may wish to read through this information in advance and make any necessary changes to your working practices. Some of these laws create criminal offences, which means that prosecution can result if they are not complied with. This guidance provides a brief overview of selected issues only and should not be relied upon as a complete or definitive statement of the law.

Guidance for the laws referred to can be found on Business Companion.

1. Disclose your identity

The law requires you to make it clear in communications with your customers and suppliers who they are actually dealing with and how to find you. This means it must be clear whether you are trading as a limited company and, if not, what the names of the proprietor or partners are and where they may be contacted.

Limited companies must give their registered company name, number, registered office address and place of registration on all business letters, order forms and websites. Electronic documents are subject to the same rules. Other types of business document are required to show the company's registered name.

Sole traders and partnerships are required to provide specific information if they trade under a business name. The disclosure requirements may not apply if the proprietor trades under their own name, without alterations or additional words (for example, 'Fred Smith').

Letters, invoices, receipts and demands, including electronic versions must show the proprietor's name and are also required to give an address at which documents can be served effectively. In the case of partnerships, all of the partners’ names must be given (however, if there are more than 20 partners, special rules will apply). The required name and address information must also be displayed prominently at any place of business where the customers or suppliers may visit.

Until October 2009, the requirements for sole traders and partnerships to disclose their name and address came from the Business Names Act 1985. The Companies Act 2006 came into force on 1 October 2009 and contains provisions which replace this part of the Business Names Act. View the Companies Act 2006. The rules relating to limited companies can be found in the Companies (Trading Disclosures) Regulations 2008. More information is available on Companies House.

Depending on the nature of your business, you may not need to use a standard set of terms and conditions. If your business does have contracts with small print, there is a legal requirement that the agreement is fair. This is especially important in contacts with consumers, who get more protection than businesses from the effects of unfair terms.

For a contract to be fair, it should be easy to read. This means the print should not be too small or faint. It should also use language which is not too complicated. The terms themselves must not attempt to take away the rights of consumers, these apply automatically and cannot be written out. The terms should give balanced rights to both parties, and should not contradict the pre-sales information given to the customer.

 3. Ensure your marketing is truthful and up-to-date - including membership claims and logos

Anything you tell your potential customers to encourage them to buy from you should be true and not misleading. This includes being transparent about pricing (including taxes), and making sure you have removed old membership logos when you leave an organisation.

Under laws which came into force in 2008, you can be asked to prove that an advertising claim is true, and you can be found to breach regulations by failing to disclose to customers the full and accurate information they need to make a buying decision. View the Consumer Protection from Unfair Trading Regulations 2008. 

Many of the contracts made with consumers must by law contain specific cancellation rights. Some of the key areas to look out for include the following:

These are legally cancellable and a specific notice of cancellation rights, along with a cancellation form must be provided to customers, even if you don't have a written contract (the Isle of Wight Trader Approval Scheme can provide guidance if required). This applies even if your visit to the customer's house was at their request.

The law which makes requirements in relation to contracts made in peoples homes is The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. If you make contracts in peoples homes as part of your working practice, guidance can be found on Business Companion. Failing to give the required cancellation rights and notice is a criminal offence and means the customer may not have to pay for the work which has been done.

If your business is organised to take orders or make agreements by telephone, internet, mail-order or another mechanism where a deal is struck before/without meeting face-to-face, your customers will be entitled to change their mind and must be informed of their right to cancel. In general, customers will have seven days to cancel goods orders (starting the day after the goods are delivered). In the case of services, the seven days starts to run when the order is agreed. These rules come from The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 and can be found on Business Companion.

Some types of credit agreements are cancellable by law. Unless your business is a financial service provider regulated by the Financial Services Authority, it is likely that the credit agreements you use are provided by a different company from your own. There are different cancellation rules depending on the type of credit being arranged. The terms and conditions of the credit agreement must explain the cancellation rights clearly and you should be able to check these for more information.

For some types of cancellable credit agreement, a seven day cancellation period will apply. Other types of cancellable credit require a reminder of cancellation rights to be sent by post, and must provide a five day cancellation period following the reminder notice.

Important general points to remember include the following:  

• Until the moment the credit agreement is properly completed and signed by both parties, the consumer is entitled to withdraw from the agreement
• If a contract is planned to be financed by a credit agreement, but the credit is not finalised for any reason then it is unlikely the consumer will have to buy the goods or services, even if they have simply changed their mind. In such circumstances, it would not be lawful to retain a customer's deposit (or a sum exceeding £5.00)
• Where a consumer exercises their right to cancel a credit agreement, it will usually also have the effect of cancelling the main agreement to buy goods or services as well.

There are some exceptions to the rules and if you require advice it is recommended that you contact us.

It is almost certain that from time to time there will be a problem with the goods or services which a customer has purchased from your business. Knowing at the outset the likely extent of your future obligations to offer assistance with faults can help you plan ahead financially. In addition, when a problem does arise, being certain of the extent of your responsibilities can help both parties reach a satisfactory conclusion in the shortest possible time.

Important provisions for most retailers and service providers can be found in the Consumer Rights Act 2015. This laws create civil law rights and responsibilities which govern the agreements between businesses and consumers and this means that customers will have the right to take legal action (such as a 'small claims' action) if their rights are not observed.

Some important aspects to be aware of include the following (none of these obligations can be written out or avoided by use of contract terms):

• If a consumer has bought goods or services from you, the law provides that you have responsibilities for up to six years from purchase even if no guarantee is provided, or the guarantee has expired (the seller is not responsible for ordinary 'wear and tear' however)
• Even if there is a manufacturer's guarantee, the seller is still responsible to the buyer in law
• If a business changes its name, or stops trading, the proprietor may still be responsible for the goods they have sold, or the work they have supplied (this does not apply to limited companies which have been wound up, however).

Isle of Wight Trader Approval Scheme members can seek advice and assistance from the Trading Standards Service in the event of a consumer dispute or on any of the issues referred to above.

​View the list of members.