What is it about?

 “Transfer of ownership” – the rules which determine when ownership of goods is transferred from a trader to a consumer under a sales contract.

What are the Law Commission doing?

They are conducting a public consultation on a draft Bill to reform the rules on the transfer of ownership of goods as they apply to consumers. The draft Bill seeks to implement recommendations the commission made in their 2016 report, Consumer prepayments on retailer insolvency.

In September 2015, R3 provided comments in response to the consultation paper issued by the Law Commission in June 2015 titled ‘Consumer prepayments on retail insolvency’. In our response we advised that we saw some merit in providing an enhanced degree of protection for consumers in the event of insolvency, but not at the cost of further complicating statutory insolvency procedures or burdening other creditors of the insolvent estate with the costs of administering those protections.

The Draft Bill fails to address the probable cost implications for IPs. Additional costs to an insolvency estate will arise when upon appointment the company has no money to continue to trade or keep staff on the payroll and therefore need to close down operations immediately. When a situation like this occurs, under these new proposals, the consumers will own goods made to order when they are manufactured or otherwise when the rules provide (e.g. they have been labelled, sent for dispatch or otherwise identified). These goods could be anywhere in the country or even abroad, which places a huge burden on the IP as costs will need to be incurred to (1) locate the items (2) determine ownership (3) make contact with the owner (4) arrange delivery or wait for the consumer to collect, whilst incurring storage costs on an item the company or its creditors would not receive any benefit for.