Consumer sales contracts: transfer of ownership

Current project status

  • Initiation: Could include discussing scope and terms of reference with lead Government Department
  • Pre-consultation: Could include approaching interest groups and specialists, producing scoping and issues papers, finalising terms of project
  • Consultation: Likely to include consultation events and paper, making provisional proposals for comment
  • Policy development: Will include analysis of consultation responses. Could include further issues papers and consultation on draft Bill
  • Reported: Usually recommendations for law reform but can be advice to government, scoping report or other recommendations

Transfer of ownership rules for 21st century consumers. The Law Commission is consulting on draft legislation which would implement recommendations it made in July 2016 to modernise the rules on when consumers acquire ownership of goods under sales contracts.

Download the consultation paper here

Download the draft Bill here

Download the designed summary of the consultation paper here

The problem

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

Currently, the answer depends on complex and technical transfer of ownership rules which have remained largely unchanged since the late 19th century.  Some of the terminology is old-fashioned and unclear and these rules were not designed with consumer transactions in mind, let alone internet shopping. As a result, the rules can be a source of confusion for consumers. On retailer insolvency, consumers can have difficulty understanding why they cannot claim goods they have paid for.

The project

This project follows on from our July 2016 Report, Consumer Prepayments on Retailer Insolvency. In that report, we made recommendations for reform of the transfer of ownership rules as they apply to consumers. The Department for Business, Energy and Industrial Strategy (BEIS) has asked us to draft legislation which could implement those recommendations and we are now holding a public consultation on the draft legislation and its impact.

Consultation

On 27th July we published our draft Bill and consultation paper. The draft Bill would amend the Consumer Rights Act 2015 to create transfer of ownership rules that apply specifically to contracts of sale between consumers and retailers.

The consultation paper:

  • asks whether the draft Bill successfully implements the recommendations we made in our 2016 report (Consumer prepayments on retailer insolvency), and whether they are accessible and appropriately structured.
  • calls for evidence and views about the timing of sales contract formation between consumers and retailers and whether this can have a detrimental impact on consumers.
  • asks about the impact of our draft legislation on consumers, businesses, suppliers and insolvency practitioners.

Other than in relation to these discrete areas, we do not ask questions on the policy underlying the draft Bill, which has already been the subject of consultation and recommendations in our July 2016 Report.

The consultation closes on 31st October 2020.

Contact us

Responses to the consultation may be submitted using an online form at:

https://consult.justice.gov.uk/law-commission/consumer-sales-contracts-transfer-of-ownership

Where possible, it would be helpful if this form was used. Alternatively, responses can be sent:

By email to: Ownership@lawcommission.gov.uk

OR

By post to: Transfer of ownership project, Commercial and Common Law Team, Law Commission, 1st Floor, Tower, 52 Queen Anne’s Gate, London, SW1H 9AG. If you send your comments by post, it would be helpful if, whenever possible, you could also send them by email.

To contact us, or to receive updates about this project, please email ownership@lawcommission.gov.uk.

Documents and downloads

Project details

Area of law

Commercial and common law

Team

Commercial and Common Law team

Commissioner

Professor Sarah Green