A previous e-update outlined key changes made by the Consumer Rights Act 2015 which came into force in October 2015. The most significant change is the specific recognition of digital content as a category of product. This e-update will focus on the impact the new Act will have on suppliers of digital content.
What is digital content and why does it necessitate a new category of product?
Under the 2015 Act, "digital content" is referred to as data produced and supplied in digital form. For example, a DVD, CD, e-book, music or video downloads, or apps.
The old regime applied specifically to the supply of goods or services and was also applied to tangible digital content e.g. a CD or DVD. However, the proper treatment of digital content provided by the likes of downloading or streaming was not as clear. With advances in technology, the intangible provision of digital content has grown significantly; so much so that rarely is there a transfer of ownership and rights are licensed instead. Therefore, treating such digital content as goods was less than ideal. The services category was also an imperfect fit for digital content since under the old regime treating such content as a supply of services would have resulted in the content not enjoying the same protection as goods. The 2015 Act therefore embraces the unique nature of digital content by creating a new category of product.
When do the new provisions apply?
The new rules apply to business to consumer contracts only. The provisions extend to digital content for which the consumer has paid money, digital content provided for free with goods or services for which the consumer has paid a price and digital content for which the consumer has paid for by way of a "facility" that was originally purchased with money (e.g. where in game purchases are made with gaming credits).
Implied terms
In many respects, digital content is treated in a similar way to goods: it must be of satisfactory quality, fit for purpose and be as described in any pre-contractual statements from the supplier. However, unlike goods, there is no requirement that digital content match any model or trial version. The 2015 Act acknowledges that updates play an essential role for digital content and it takes account of the fact that it would be impractical to require the consumer's consent every time an update is available. To comply with the 2015 Act the contract for digital content must state that updates will be supplied and the quality requirements must continue to be met post update.
Liabilities
Where digital content falls short of the standards required by the implied terms, the consumer may have a right to repair or replacement of the digital content and, failing which, a price reduction. Unlike goods, the consumer will not have the right to reject digital content. In addition, whilst consumers who purchase goods are restricted to one repair, this limitation does not apply to digital content. The thinking being that if repairs were limited it might encourage consumers to seek repeated repairs until they get a reduction in the price. In reality most repairs for digital content are fixed with updates.
Suppliers may also be liable for damage caused by digital content to consumer devices where they have failed to take reasonable skill and care even if the digital content is provided for free. For example, a free app created to promote business will not escape this obligation to compensate the consumer.
Prior to the 2015 Act the law for digital content was unclear at best and so this clarification is to be welcomed. Where appropriate, suppliers should ensure that their customer terms and conditions are updated to take account of this new category of product.
MacRoberts advises on various aspects of consumer law, including business to consumer contracts and the supply of digital content. For further information, please contact David Gourlay or David Flint.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
