CONSUMER CREDIT AND YOUR BUSINESS PURCHASES
Most of us know that if we are buying an item with the aid of credit (card or agreement) as a consumer that there is a lot of protection offered by the consumer credit legislation, but did you know that if you buy something for your business you may also get the same protection?
The Consumer Credit Act 2006 redefined what an “individual” is for the purpose of the legislation so that consumer credit legislation applies not only to a consumer but also to
– a partnership of less than 4 people (i.e. 3 or fewer partners) and
– any unincorporated group of people (i.e. not a company) which does not consist only of companies – So a company is excluded unless it is part of a group of people/organisations where some but not all of that group are companies. Think of trade associations taking action on behalf of its members.
If consumer credit legislation does apply then certain rights may apply including:
– the right to certain “key” financial information
– the right to settle early
– a cooling off period or time in which to change your mind if you signed an agreement anywhere other than at the “seller’s” trading premises. The length of the period depends on the transaction but varies between 5 days (cooling off) and 14 days (changing your mind but you have to repay anything borrowed together with accrued interest) but can be extended if you were not provided with the correct information. (No cooling off period for agreements which are secured on land but you must have the agreement at least 7 days before signing it)
If the rules have not been complied with then the agreement is only enforceable with a court order.
Previous legislation imposed financial limits on agreements which attract consumer protection but, whilst these have been removed for most agreements, there is a limit of £25,000 on agreements which relate wholly or predominantly to business purposes.
When you buy something using a credit (not debit or charge) card (between £100 and £30,000) and it turns out to be faulty, or services are not carried out properly, then you may also have added protection. Using a credit card means that the credit card becomes equally responsible with the seller for breaches of contract etc.