Chapter 12Criminal liability in businessWe will also consider other criminal offences which
may be relevant to business, such as theft, fraud and
stock market fraud such as insider dealing.
Unfair commercial practices
Prior to May 2008, the main pieces of UK legislation
dealing with unfair trading practices were the Trade
Descriptions Act 1968, which prohibited the use of
certain false trade descriptions by a person acting in
the course of a trade or business, and Part III of the
Consumer Protection Act 1987, which contained con-
trols over false and misleading statements as to prices.
The majority of the provisions of the Trade Descriptions
Act and all of Part III of the Consumers Protection Act
have been repealed by the Consumer Protection from
Unfair Trading Regulations 2008 (SI 2008/1277), which
implement the EC Directive on Unfair Commercial
Practices (UCP).
The UCP Directive is designed to harmonise the unfair
trading laws of member states and its scope is very broad.
The government decided to use the opportunity, when
implementing the Directive, to rationalise the UK’s con-
sumer protection legislation. The new Consumer Pro-
tection from Unfair Trading Regulations 2008 (CPRs)
which came into force on 26 May 2008, repeal in whole
or in part 23 legislative provisions, including all of Part
III of the Consumer Protection Act 1987 covering mis-
leading price indications, and most of the Trade Descrip-
tions Act 1968.
The CPRs consist of three main elements:
■a general prohibition of unfair commercial practices,
■prohibition of misleading and aggressive practices,
and
■banned practices, which are prohibited in all
circumstances.
Definitions
The CPRs introduce a number of new concepts, which
include the following:
■The average consumer. A consumer is defined as ‘any
individual who in relation to a commercial practice is
acting for purposes which are outside his business’.
The CPRs recognise three kinds of average consu-
mer: (a) the ‘average’ consumer, whose characteristics
include being reasonably well informed, reasonably
observant and circumspect; (b) the ‘average member’
of a targeted group of consumers; and (c) ‘average
member’ of a vulnerable group of consumers. The
concept of the average consumer does not refer to
actual consumers and therefore it is not necessary
to show how actual consumers have been affected by
the unfair practice.
■Commercial practices, defined as ‘any act, omis-
sion, course of conduct, representation or commercial
communication (including advertising and market-
ing) by a trader, which is directly connected with the
promotion, sale or supply of a product to or from
consumers, whether occurring before, during or after
a commercial transaction (if any) in relation to a
product’.
■Materially distorting the economic behaviourof
the average consumer means ‘appreciably to impair
the average consumer’s ability to make an informed
decision thereby causing him to take a transactional
decision that he would not have taken otherwise’.
■Products. This word is given a wide meaning so as
to include products and services, and immovable
property, rights and obligations.
■Professional diligenceis defined as ‘the standard of
special skill and care which a trader may reasonably
be expected to exercise towards consumers which is
commensurate with either (a) honest market practice
in the trader’s field of activity, or (b) the general prin-
ciple of good faith in the trader’s field of activity’.
■Transactional decisionis ‘any decision taken by a
consumer whether it is to act or refrain from acting
concerning (a) whether, how or on what terms to
purchase, make payment in whole or in part for,
retain or dispose of a product, or (b) whether, how
or on what terms to exercise a contractual right in
relation to a product.Scope of the CPRs
In general terms the CPRs apply to ‘business to con-
sumer’ transactions and ‘business to business’ transac-
tions with the potential to affect consumers. The CPRs
do not apply to ‘consumer to consumer’ transactions
and ‘business to business’ transactions which do not
have the potential to affect consumers. So if a trader sells
only to business customers, he is not required to comply
with the CPRs, but if his customers include both busi-
nesses and consumers he must comply with the CPRs.359