Digital Music Downloads

Digital music downloads have new regulation. Those parts of the Consumer Rights Act 2015 (the “Act”) that relate to digital music retail streaming and downloading and eCommerce websites will come into force 01st October 2015.

For those eCommerce businesses (retailers including those on Amazon, eBay and other third-party websites) that comply with The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (the “2013 Regulations”) governing cancellations of purchases via websites and the Consumer Protection (Amendment) Regulation 2011 (amends the 2008 Unfair Trading Regulations) (the “2011 Regulations), the Act is to be read in conjunction with the 2013 and 2011 Regulations.

1. Overview – The Act is in 3 parts. Part 1 applies to contracts between Traders and Consumers for the supply of goods, digital music downloads or services. The contracts are formed by the normal operation of English law (i.e. oral, written or implied by conduct). Part 1 contains five chapters. Chapter 2, 3, and 4 are most notable to our area of specialisation. Chapter 2 applies to the supply of goods. Chapter 3 to the supply of digital music downloads. Chapter 4 to the supply of services. The Act also covers mixed contracts that contain a mixture of goods and services, such as a content management service providing hosting and technical support (s15 and 16). Part 2 applies to Unfair Terms. Part 3 to miscellaneous and general matters such as public enforcement powers to local authority departments like Trading Standards.

2. Definitions – The Act defines a Consumer as a person “acting for the purposes that are wholly or mainly outside that individual’s trade business, craft or profession”. So long as you are not engaging in your normal area of expertise, you are still a consumer even if you are engaging in a business transaction. A Trader is “a person acting for purposes relating to that person’s trade, business, craft or profession, whether acting personally or through another person acting in the Trader’s name or on the Trader’s behalf”.

3. Jurisdiction – The Act extends to England, Wales, Scotland and Northern Ireland.

4. Types of contracts – Contracts covered by the Act include sales contracts (including hire purchase and lease agreements), and contracts for the transfer of goods.

SUPPLY OF GOODS

5. Satisfactory quality – The Act has now codified the implied term of satisfactory quality of goods. Goods must be of appropriate quality and standard, be safe, durable and free from minor defects. Defects will not always trigger a satisfactory quality obligation. The reasonableness test is applicable taking account of description, price and other “relevant circumstances”. Other relevant circumstances include any public statement about the specific characteristics of the goods made by the trader or their representatives. There are exemptions where such public statements are not considered as relevant circumstances in the Act. Any term about the quality of goods may be treated as included in the contract for the supply of goods (s9).

6. Fitness for purpose – Goods must be reasonably fit for a particular purpose, where the consumer makes it known to the trader that they require the goods for specific use (s10). This term can be express or implied. This term also applies to products payable by instalments and goods previously supplied to the trader by a credit broker. There are exceptions (s10).

7. Goods to be described – Every contract is to be treated as including a term that products are to be sold as described. This stipulation as to the description of goods is to be read in conjunction with the 2013 Regulations. Any change to that information is not valid unless expressly agreed between consumer and trader (s11).

8. Remedies – If the trader is in breach of these terms the consumer has a short window to reject the goods; can request repair or replacement; or price reduction; or final rejection of the products. These remedies do not affect the right to damages or specific performance (s9).

9. Right to reject – The trader must bear any reasonable costs of returning the goods. Refunds must be given within 14 days beginning with the day on which the trader agreed that the consumer is entitled to a refund. The trader must not impose any fee on the consumer in respect of the return. The consumer may claim damages where there is no entitlement to receive a refund, or because of the limits of the benefit, or instead of a refund (s20). The consumer can partially reject goods (s21). The time limit for a short time right to refuse is 30 days (s22). If the consumer requires the trader to repair or replace the goods, the trader must do so within a reasonable time and without significant inconvenience to the consumer and bear any necessary costs incurred in doing so (s23). The consumer can get a price reduction (partial or full, i.e. 100% of the price)(s24).

DIGITAL MUSIC DOWNLOADS

10. Digital music downloads and streaming – Chapter 3 deals with digital content, and it is the first time rights, and remedies concerning consumer contracts for the supply of digital music downloads and streaming has been set down in statute.

11. Digital music contracts – All contracts between a trader supplying digital content to a consumer, if it is provided or to be supplied for a price paid by the consumer are covered (free promotions or giveaways are not covered). It also includes a contract to provide digital content to a consumer if “(a) It is supplied free with goods and services or other digital content for which the consumer pays a price, and (b) It is not generally available to consumers unless they have paid the price for it for goods or services or other digital content”. A promotional video downloaded with a paid for digital track for example. Mere conduits are not caught by the Act as long as they are not supplying digital content (s33). s34 mirrors s9 concerning goods. s35 mirrors s10 concerning good, likewise. s36 matches s11. Sections 34 to 38 are analogous to the provisions relating to goods dealing with codifying implied terms that digital content is of satisfactory quality and fit for purpose.

12. Digital Music Transmissions – Section 39 is specific to digital content. s39 deals with the supply by transmission and facilitation for consumer transmission. Digital content is supplied “(a) when the content reaches the devices, or (b) if earlier, when the content reaches another trader chosen by the consumer to supply under a contract with the consumer, a service by which digital content reaches the device. In this situation, the trader is providing access to the content through a transmission initiated by the trader. The trader may also be providing the processing facility from which the consumer received the content. The content is to be treated as including (where necessary) an implied term that the processing facility must be available to the consumer for a reasonable time (subject to express terms of the contract)”. Given the unpredictable nature of the Internet, s39 is a crucial issue to deal with in terms and conditions and other contracts.

13. Modifications – Where the trader supplies digital content subject to the right to modify the content, the promise as to the quality, fitness for purpose and description apply to the modification. The section does not prevent the trader from importing features of or adding new features to the digital content provided the new features continue to match the description of the product and the content continues to match the information provided by the trader.

14. Remedies – As with the sale of goods, the consumer has the right to reject the content (s45); get it repaired or replaced (s43), or get a partial or 100% price reduction (s44). The consumer may also claim damages where the digital content causes damage or loss to a consumer. Where there is a mixture of supply of tangible goods with digital content, and the digital content is defective, then these remedies are still available for the digital content even if there is no complaint about the tangible goods.

SUPPLY OF SERVICES

15. Reasonable care and skill – Lastly, chapter 4 of part 1 deals with the supply of services and effectively makes such contracts subject to implied terms that services will be performed with reasonable care and skill (s49) and within a reasonable time (s52). Where there is no agreement or price, a fair price will be payable for the services (s51).

16. Remedies – The remedies for the breach by the trader are that the consumer can request a repeat of performance of the services or seek a partial or 100% reduction of the payment price. The usual English law contractual remedies are also available to the consumer.

It is advisable that terms and conditions for these websites are reviewed to ensure compliance with the Act, and that start-ups take account of the new law.

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