Following the revocation of the CFA Regulations in November 2005 paying parties are becoming increasingly inventive in finding ways to challenge the enforceability of retainers. One such potential challenge arises from an unlikely source – The Cancellation of Contracts Made in a Consumer’s Home or Place of Work etc. Regulations 2008 (SI 2008/1816) which came into force on 1st October 2008. The Statutory Instrument regulates certain agreements between consumers and traders, the definition of which would cover a Solicitor providing legal services.
“Trader means a person who, in making a contract to which these Regulations apply, is acting in his commercial or professional capacity and anyone acting in the name or on behalf of a person.” – Section 2(1)
Section 5 of the Regulations sets out that they cover agreements for goods and services, which would include legal services. Where the agreement is entered into (a) during a visit by the trader to the consumer’s home, place of work or home of another individual; (b) during an excursion organised by the trader away from the business premise; (c) after an offer has been made during such a visit or excursion.
This would therefore include signing a CFA during a visit by a Solicitor, or their agent, to a client’s home or place of work, or a CFA signed subsequent to such a visit.
Regulation 7(2) sets out that any such agreement must give the consumer a written notice of their right to cancel the agreement within 7 days. The notice must be in a particular form, must be dated and must be easily legible and given sufficient prominence in the agreement. Where such a notice is not provided, section 7(6) is very clear,
“A contract to which these Regulations apply shall not be enforceable against the consumer unless the trader has given a notice of the right to cancel and the information required in accordance with this regulation.”
Therefore, any CFA entered into after 1st October 2008 where the CFA has been signed at the client’s home or place of work, or is signed after such a meeting, must contain the written notification of the right to cancel. Although there is no case law to be found on this point as at the date of this news article, there are clearly strong grounds for a paying party arguing that the CFA is unenforceable if written notification of the right to cancel has not been given.
Should you have any queries about this article and what can be done to protect your position, please contact our Mr James Fisher on 01902 892636.