Guidance on cancellation rights for consumers ordering bespoke goods from SMEs

Many SME business owners will have encountered times when their customers decide to cancel an order for their bespoke goods at the last minute and then request a full refund for customised products.

Receiving this news from customers can be extremely frustrating, as many SMEs may have had to spend a lot of time, money and effort in customising and creating their products ready for delivery. If you are an SME, don’t worry, we’ve put together some useful information as to what you should be doing if this happens to you.  

When do the customers’ cancellation rights start? 

To understand how the law on cancellation rights for consumers ordering bespoke goods works for distance sales, the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (“CCR”) give customers the right to cancel goods without having to give any reason for doing so.

This is known as the ‘cooling off’ or cancellation period, where a trader must give their consumers at least 14 days to cancel their orders after delivery. The notice should be clearly set out in the terms and conditions on your website and shared with customers at the time they make an order.

This regulation is only relevant to purchases made at a distance, such as by telephone or online, so if a customer has purchased products from your stores or other business premises, you should direct them to check your company’s on-premises terms and conditions. It is also worth noting here that certain sales practices, for example, a visit to a customer’s home to measure up may be considered (with the right processes), an “on-business” rather than a “distance” sale, to which the “cooling off” period does not apply.

For those products purchased at a distance, the “cooling off” period begins upon successful delivery of the product. There are specific rules on what constitutes delivery, depending on whether a customer makes a single order or purchases multiple products in one order with different delivery dates. For example, if a customer orders a chair which is delivered on 1st February, the right to cancel will end on 15th February (i.e. 14 days, excluding the day of delivery). If a customer orders two chairs in a single order which are delivered on 3rd and 6th February, respectively, the customer’s cancellation rights for both chairs will end on 20th February. 

Customers can only exercise their rights under the CCR if the contract is entered into between the trader and a consumer and doesn’t fall under some key exceptions, which include, but are not limited to bespoke or personalised goods, goods that are likely to deteriorate or expire quickly and off-premises contracts under which the payment to be made is less than £42. 

Can customers exercise their cancellation rights in accordance with the CCR for bespoke goods? 

As noted above, where customers purchase bespoke or personalised goods, they will be exempt from the cooling off period under the CCR and will no longer have the right to cancel. If the products are bespoke or personalised, the trader is not required by law to provide information to customers about any cancellation rights since they do not apply. However, you should always err on the side of caution (especially if you sell products in their standard form as well as customised forms) and include this information in your terms and conditions for online or telephone purchases. 

The reason for this is because the law on whether an item is bespoke or not remains a grey area determined on a case-by-case basis. The UK government’s guidance on bespoke products provides an example of the purchase of a customisable football shirt. The guidance states that a football shirt bearing a player’s name would not be considered as bespoke, as it is possible for another customer to wear the shirt and the trader to resell it with minimal loss. On the other hand, if the shirt contains the customer’s own name, there is less chance that any other customer would be able to wear it and the trader would incur a greater loss as they would not be able to resell it. The cancellation rights would apply to the former situation, but not the latter. 

Whether an item is of bespoke nature was also considered in the case of Möbel Kraft GmbH & Co. KG v ML. Here, the European Court of Justice (ECJ) determined whether a consumer should be able to withdraw from a contract for a bespoke fitted kitchen, which was held off-premises, up until the time at which the supplier (or its subcontractor) started to produce the kitchen parts. With reference to the provision in Article 16 (c) of the Consumer Rights Directive (2011/83/EU), the ECJ concluded that even if the trader has not started to work on the bespoke products, the customer will lose their cancellation rights, by virtue of the fact the goods are bespoke. 

In this case, ML (the customer) entered into a sales contract with Möbel Kraft (furniture company) for a bespoke fitted kitchen. ML subsequently claimed a right of withdrawal and on that ground, refused to accept delivery of the kitchen. Möbel Kraft then sought damages. Although the furniture company had not commenced the fitting of the kitchen when ML withdrew from the contract, ML had lost its cancellation rights as the parts of the kitchen covered by the contract were specifically made to fit ML’s premises. It was impossible to recover the cost of this work by trying to install the kitchen into other premises and the kitchen was therefore considered bespoke. 

The examples above demonstrate that in order for the products to be of bespoke nature, they need to be sufficiently customised to the customer’s specifications that it cannot be sold to other customers once the contract has been cancelled. Even if you believe that the goods you sell qualify as bespoke, that may not be the case. 

The key is to ensure that your terms and conditions cover the whole range of goods you might provide whether standard and off-the-shelf or specific to a customer’s particular requirements. Many SMEs will ignore or be unaware of the requirements set out by the CCR for what they must have in their terms of sale. There are some savvy customers out there and making sure that you are complying with the law and have provisions in place to protect yourself is key to ensuring your sale does not result in a loss.

Thank you Kaoruko Shirasaki for this article.