Trading Law Overview

Trading Law Overview

  • Legislation governing the supply of goods and services to consumers is wide ranging and includes legislation relating to;
  • Civil law
  • Fair trading
  • Pricing
  • Trade descriptions
  • Licensing and age restricted sales
  • Weights and Measures
  • Copyright
  • Provision of credit and hire facilities
  • Advertising
  • This section will continue to be updated to give information on areas of trading law that apply to most products and businesses. Sections are available below which cover:
  • due diligence
  • misleading prices (advice pages coming soon)
  • trade descriptions (advice pages coming soon)
  • Due Diligence
  • An important aspect of most trading law legislation is ‘due diligence’. Your business will require a due diligence system – details are given below to indicate how this requirement affects your business.
  • Due diligence is a system put in place by a business which will allow them to have a defence in the event an offence is committed against most trading law legislation.
  • Under most criminal law, an offender must have intended to have committed the offence – this is known as ‘mens rea’ or guilty knowledge. However, the majority of UK consumer protection legislation, although it is criminal law, differs from this. The fact that the legislation has been contravened is sufficient – whether the breach was deliberate or unintentional is immaterial. This is known as ‘strict liability’.
  • Strict liability legislation does provide a defence – this is where your due diligence system will be used. It is a defence to prove that you took ‘all reasonable precautions and exercised all due diligence to avoid commission of the offence’. A system of checks put in place and operated correctly to avoid breaches of trading legislation will allow you to have a defence against prosecution should a problem occur.
  • Unfortunately, the legislation does not give any detail as to what is required to be covered in a due diligence system, but previous cases have shown that the following elements will be needed:
  • businesses must take positive action (possibly including obtaining warranties from suppliers)
  • the system must be appropriate to the size of the business
  • quality control, risk assessment and/or hazard analysis are fundamental principles
  • the system must cover all steps that are ‘reasonable’
  • the system must be operated and recorded
  • the system must include appropriate monitoring and review
  • Clearly, not knowing what the law requires will leave a business open to prosecution but failing to set up an adequate due diligence system can be as dangerous to your business.

Please note: The information given is based on interpretation of current applicable legislation. Please note that only the courts can interpret statutory legislation with any authority.