Terms & Conditions and the Consumer Rights Act: what your business needs to know

Most business owners treat their Terms and Conditions like a formality - something to copy from a competitor's website, tweak slightly, and forget about. That approach has a real cost. The Consumer Rights Act 2015 places strict limits on what your terms can actually say, and a clause that seems protective on paper might be completely unenforceable in practice. Worse, certain clauses can expose you to regulatory action from Trading Standards or the Competition and Markets Authority.

This guide covers the parts of the Consumer Rights Act that most directly affect website Terms and Conditions: unfair terms, the rules on digital content, cancellation rights under the Consumer Contracts Regulations 2013 (which work alongside the Act), and what happens when you get it wrong.

The unfair terms problem

Part 2 of the Consumer Rights Act deals with unfair terms in consumer contracts. A term is unfair if, "contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations under the contract to the detriment of the consumer." That is the statutory test, and it sounds abstract, but in practice it catches a lot of common T&C clauses.

The Act includes a "grey list" in Schedule 2 - terms that are presumed to be unfair unless the business can show otherwise. These include clauses that allow you to change the price after the customer has committed to buy, terms that let you cancel the contract but do not give the consumer the same right, and clauses that limit your liability for death or personal injury. That last one is not just unfair - it is void regardless of any other consideration.

One area that trips up a lot of smaller businesses is refund and return clauses. You cannot use your T&Cs to override consumers' statutory rights. Saying "no refunds under any circumstances" is not enforceable against a consumer who has a legal right to a refund under the Act. It does not matter how prominently you display it or whether the customer clicked "I agree." The statutory right exists independently of the contract.

Physical goods, services, and digital content - three different regimes

One thing the Consumer Rights Act did that genuinely matters is create a separate statutory framework for digital content. Before 2015, digital downloads, streaming, and software licences sat awkwardly in a legal grey area - were they goods? Services? Something else? The Act resolved that by treating digital content as a distinct category with its own implied terms.

For digital content sold to consumers, the Act implies three key terms: that the content is of satisfactory quality, that it is fit for a particular purpose (if the consumer specified one before buying), and that it matches its description. These are not optional. You cannot contract out of them.

What does "satisfactory quality" mean for a digital product? The Act says it should be what a reasonable person would regard as satisfactory, taking account of price, description, and any other relevant circumstances. A premium software tool that crashes on startup almost certainly fails this test. A free tier with limited features probably does not. The price you charge matters.

For services, including SaaS products where the service is the main thing you are selling, the implied term is that the service will be performed with reasonable care and skill. If you are a web developer, a marketing agency, or a consultant, this applies to your contracts. A clause saying "we accept no responsibility for the quality of the work" would be unfair and unenforceable in a consumer context (though it might stand up better in B2B contracts, which are outside the Consumer Rights Act's consumer provisions).

Cancellation rights under the Consumer Contracts Regulations 2013

These Regulations sit alongside the Consumer Rights Act but come from a different piece of legislation (they implemented the EU Consumer Rights Directive). They are important enough to cover here because they directly affect what your T&Cs need to say about cancellation.

For any sale made at a distance - which means online sales, phone sales, anything where buyer and seller are not face to face at the point of sale - consumers have a 14-day cancellation right. This is sometimes called the "cooling off period." They can cancel for any reason within 14 days of receiving the goods (for physical products) or within 14 days of the contract being concluded (for services and digital content).

For digital content, there is an exception worth knowing. If the consumer expressly consents to delivery starting before the 14-day period ends, and acknowledges they thereby lose their cancellation right, you can start delivering immediately and the right is waived. This is how streaming services and instant download platforms operate. But the consent has to be explicit and informed - a buried checkbox in your checkout flow that most customers will not read is unlikely to satisfy the requirement.

For services, a similar exception applies: if you start performing the service within the 14-day period at the consumer's express request, they can cancel but must pay for the proportion of the service already delivered. Your T&Cs should clearly explain this and include the required consent mechanism at checkout.

Pre-contract information requirements

Schedule 2 of the Consumer Contracts Regulations 2013 lists the information you must give consumers before they are bound by the contract. This is a long list - 24 items - but the key ones for most businesses are: the main characteristics of the goods or services, your identity and address, the total price (including taxes), delivery costs, the cancellation right and how to exercise it, and the duration of the contract if it is ongoing.

The way this usually works in practice is through a combination of your Terms and Conditions and your checkout page. The T&Cs do the heavy lifting on cancellation rights and contract terms; the checkout page shows the final price with all charges. Both need to be in place for you to have properly complied.

The plain language requirement

The Consumer Rights Act requires that written terms in consumer contracts be transparent - meaning they must be in plain and intelligible language. This is not a soft aspiration. An unfair terms assessment under Part 2 of the Act excludes the "core terms" of a contract (price and main subject matter) from the fairness test, but only if those terms are transparent and prominent. If they are buried in jargon, that exemption may not apply.

This is why copying T&Cs from a larger company is risky even beyond the obvious issues with different trading practices. Large businesses often have legal terms drafted with specific exemptions in mind that only make sense given their particular operations. Dropped into a different context, those same clauses may not achieve what you think they do - and the plain language test may trip them up entirely.

Distance selling and returns policies

A lot of smaller e-commerce businesses get their returns policies wrong not because they are trying to deceive anyone, but because they genuinely do not know what the law requires. Some believe that "sale items cannot be returned" is a universal rule. It is not. The 14-day cancellation right applies regardless of whether an item was discounted. Some believe that personalised or custom-made goods cannot be returned at all. That one is true - there is a specific exemption for goods made to the consumer's specification - but it has to be communicated correctly before the sale.

Your T&Cs should set out your returns policy clearly, explain which goods fall within the statutory exemptions and why, and give consumers a clear process for exercising their cancellation right. Providing a model cancellation form (as set out in the Regulations) is good practice even if consumers rarely use it.

For more on how these rules interact with running an online shop, see our full guide to e-commerce and UK consumer law. And if you are thinking about what your T&Cs need to do to actually protect your business - rather than just tick a legal box - take a look at how Terms and Conditions protect your business (and when they do not).

What this means practically

You cannot use your T&Cs to take away rights that consumers have by law. You can use them to add clarity, to explain your processes, and to set the terms of B2B relationships where the Consumer Rights Act does not apply. But for consumer-facing businesses, the Act sets a floor below which you cannot go.

Get the basics right: be honest about what you are selling, provide the required pre-contract information, make the cancellation right clear, and do not include clauses that try to exclude liability for your own negligence or override statutory rights. A solicitor reviewing your T&Cs once a year is far cheaper than a CMA investigation or a County Court claim for breach of implied terms.