Law Commission of England and Wales launches consultation

on transfer of ownership

The Law Commission in London recently launched a consultation which relates to consumer law and insolvency and wish to get views from lawyers in Northern Ireland.

The consultation concerns a draft Bill which would reform the rules governing the transfer of ownership of goods to consumers in England and Wales. More information, including the draft Bill, consultation paper and a summary, is available at https://www.lawcom.gov.uk/project/consumer-sales-contracts-transfer-of-ownership/.

While the Law Commission can make recommendations only for England and Wales, the Consumer Rights Act 2015, which the draft Bill seeks to amend, applies throughout the United Kingdom. The Commission would like the Government to consider implementing our recommendations throughout the United Kingdom, after appropriate engagement with the devolved administrations.

Background to the consultation

In July 2016, the Commission published a report in which they made a range of recommendations to enhance the protection of consumers on retailer insolvency, one of which was reform of the transfer of ownership rules. The government has asked the Commission to implement this recommendation, leading to the present consultation.

Consumers often pay for goods in advance of receiving them. This happens whenever consumers pay for goods online. It also happens when consumers pay for goods in a physical store, but the goods have to be made to the consumer’s order, left with the retailer for alteration, or are not available to be taken away there and then. If the retailer goes insolvent after the consumer has paid, but before the goods are delivered, who owns the goods?

Currently, this is determined by the transfer of ownership rules in the Sale of Goods Act 1979. These rules have remained largely unchanged since the late 19th century, and were not drafted with consumer sales contracts in mind. As a result, they have been criticised for being overly complex and inconsistent with consumers’ reasonable expectations of when they will acquire ownership of goods.

The consultation

The draft Bill aims to provide a clear, modern statement of the law about when consumers will own goods, including in an insolvency situation. The proposed rules will apply to consumer sales contracts and will be contained in the Consumer Rights Act 2015. The Consumer Rights Act 2015 applies to the whole of the UK, but the draft Bill only extends to England and Wales as the Law Commission is only able to make recommendations for England and Wales.

The consultation paper:

•                     asks whether the draft Bill successfully implements the recommendations made in the July 2016 report, and whether the proposed rules are accessible and appropriately structured;

•                     calls for evidence and views about the timing of sales contract formation between consumers and retailers and the impact this may have on consumers; and

•                     asks about the impact of our draft legislation on consumers, businesses, suppliers and insolvency practitioners.

Responding to the consultation

Responses to the consultation can be submitted using an online form at: https://consult.justice.gov.uk/law-commission/consumer-sales-contracts-transfer-of-ownership.

Alternatively, responses can be submitted:

•                     by email to: ownership@lawcommission.gov.uk

•                     by post to: Commercial and Common Law Team, Law Commission, 1st Floor, Tower, 52 Queen Anne’s Gate, London, SW1H 9AG.

•                     Members can also submit responses through the Law Society via Andrew Kirkpatrick, Head of Policy to: andrew.kirkpatrick@lawsoc-ni.org.

The closing date for the consultation is 31 October 2020.