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The supply of goods and services

What is beyond dispute is the distinction between a contract for services and

a contract of service, primarily contracts of employment. Over the years, this

has involved an analysis of the difference between employees and independ-

ent contractors and the various legal tests used in employment law to establish

that difference. In the classic example, a chauffeur is an employee under a con-

tract of service while a taxi driver would be an independent contractor under a

contract for services. In the event of a breach of care and skill, action would be

taken against the chauffeur under his contract of employment, while the taxi

driver would be sued under a contract for services.

The above example also raises a different principle of liability, namely, that

persons providing a service under a contract can also be sued in negligence in

respect of the same incident.4 Thus, for example, if the taxi driver drove neg-

ligently causing an accident in which his paying passenger was injured, the

passenger could sue both in contract and in negligence, though he could not

obtain double compensation. The availability of both causes of action remains

important as the limitation periods for the two differ; while the limitation

period in a contract claim begins to run from the date of the contract, it only

starts to run in tort when the cause of action has accrued.5 A third party who

does not have contractual privity with the service provider but who has been

injured by the defective service will need to sue in negligence unless he can

bring himself within the provisions of the Contracts (Rights of Third Parties)

Act 1999.

Q1 Consider the scope of contracts for the provision of services and analyse

which contracts do and do not constitute contracts for the provision of services.

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3â Provision of Services Regulations 2009

has also been adopted under the EEA Agreement and thus applies to Iceland,

Liechtenstein and Norway in addition to the EU Member States.

The Provision of Services Regulations 2009, SI 2009/2999, which give effect

to the Directive, took effect on 28 December 2009. There are two strands within

the Regulations that seek to promote and facilitate cross-border trade, the first

relating to authorisation schemes and the second to the provision of informa-

tion about available services to prospective recipients.

(a)â Authorisation schemes

Authorisation schemes under Part 3 of the 2009 Regulations deal with the pro-

vision by appropriate authorities of any authorisations and licences needed by a

service provider to offer their particular services legally in the United Kingdom,

whether the service provider is based in the UK or not. Thus, for example,

in the provision of food and alcoholic drink, the service provider will need a

licence for the sale of alcohol, while those people handling the food will need

the appropriate food hygiene qualifications. In practice, there are a plethora of

licences and permissions that may be needed depending on the particular

service provided.

An authorisation scheme is intended to assist service providers in ensuring

that they have the relevant licences, etc., to allow them to get their business up

and running legally. There are three conditions attached to the existence of an

authorisation scheme:

(a)

that the scheme does not discriminate against a provider of a service;

(b)

that the need for a scheme is justified by an overriding reason relating to

the public interest; and

(c)

the objective pursued cannot be attained by a less restrictive measure, in

particular because inspection after commencement of the service activity

would take place too late to be genuinely effective.8

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The supply of goods and services

Q2 Consider the role of authorisation schemes in promoting cross-border

trade in the provision of services.

(b)â Provision of information to service recipients

For the purposes of prospective recipients of services, the more important

strand of the 2009 Regulations is the requirement upon service providers to

provide specified information before the contract is entered into and, further, to

ensure that a suitable mechanism for dealing with complaints exists. It is hoped

that this two-pronged strategy will encourage confidence among prospective

purchasers and thereby encourage them to access cross-border services rather

than relying wholly upon services available in their own country. In practice,

depending on the nature of the service being provided, the manner of its pro-

vision and the intended service recipient, it is possible that more than one set

of regulations will be relevant to the transaction with an obligation on the ser-

vice provider to attempt to comply with all of the relevant regulations. Other

applicable legislation might include11 the Companies Act 2006, Consumer

Protection (Distance Selling) Regulations 2000,12 Electronic Commerce (EC

Directive) Regulations 200213 and the Consumer Protection from Unfair

Trading Regulations 2008.14 Should it prove impossible for a service provider to

comply with both the Provision of Services Regulations 2009 and another set of

regulations, priority must be given to the other regulations.15

(c)â Definition of ‘service’

In analysing the 2009 Regulations and their impact, it is essential to understand

which contracts for services are covered by the Regulations. Not all services fall

within their provisions and it is as important to recognise which services are not

covered as to identify those that are. The basic definition included in regulation

2(1) is that service means ‘any self-employed economic activity normally pro-

vided for remuneration’. Thus, it follows that the person providing the service

must not be doing so as an employee, So, for example, a chauffeur is employed

while a taxi driver would be providing a service. Further, to fall within the

ambit of the 2009 Regulations, the service must be performed for remuneration

and thus cannot be provided gratis with no contractual consideration changing

hands. As such, it impacts on businesses providing paid services rather than on

individuals providing a service on an unpaid basis. Thus, for example, persons

providing unremunerated services for a charity are not covered.16

11

See DBIS Guidance, above n. 7, para. 116.

12

SI 2000/2334. See also Part 2 Chapter 5.

13

SI 2002/2013. See also Part 2 Chapter 5.

14

SI 2008/1277. See also Part 5 Chapter 2.

15

See DBIS Guidance, above n. 7, para. 120.

16

Ibid. para. 11.

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3â Provision of Services Regulations 2009

The definition of service for the purposes of the 2009 Regulations is nar-

rowed significantly by regulation 2(2), which details all those services to which

the Regulations do not apply. The list of excluded services is lengthy and far-

ranging, including some financial services; electronic communications ser-

vices and networks to the extent that they are already subject to other specified

EU Directives; some transport services; services of temporary work agencies;

some healthcare services; audiovisual services; gambling activities; activities

connected with the exercise of official authority; some social services; private

security services; and some services provided by notaries and bailiffs.17

(d)â Definitions of ‘provider’ and ‘recipient’

The 2009 Regulations talk in terms of a service ‘provider,’ i.e., the supplier of the

services, and the service ‘recipient,’ i.e., the person using the service. Both terms

are defined in regulation 4, the interpretation regulation. The service ‘pro-

vider’ is the person who ‘provides, or offers to provide, the service’. There is no

requirement that the provision is in the course of a business and it is clear that

the provider can be a body or an individual,18 although Parts 3–9 of the 2009

Regulations only apply where that body or individual is established in or is a

national of an EEA state.19 The 2009 Regulations apply to all service providers

offering services in the United Kingdom irrespective of whether they are based

in the UK or are based in another EEA state. Equally, there is no requirement

that the provider has any premises in the UK. However, in respect of Part 2 of

the 2009 Regulations (duties of service providers), the Part with which this sec-

tion is primarily concerned, the Regulations have an even wider impact for they

apply to all service providers offering relevant services in the United Kingdom

irrespective of where they are based. As such, they apply to providers from

around the world to the extent that their services are offered to recipients in the

UK, an important protection given the impact of the Internet.20

The ‘recipient’ of a service includes a person, being an individual or a legal

person, who ‘for professional or non-professional purposes, uses, or wishes to

use, the service’. It follows that this includes both businesses and consumers

who wish to use the services proffered. However, the recipient must be either

an individual who is a national of an EEA state or who otherwise benefits from

rights conferred by EU acts, or must be a legal person established in an EEA

state.21 Thus, the service can be either business-to-business or business-to-

consumer.

17

For full details of the various exemptions see SI 2009/2999, reg. 2(2)(a)–(k).

18

See DBIS Guidance, above n. 7, Annex A.

19

See SI 2009/2999, reg. 5(4).

20

While Part 2 of the 2009 Regulations applies to providers around the world, enforcement may

prove to be very difficult if the provider is based outside the EEA without any base in the United

Kingdom and hence, potentially, beyond the jurisdiction of the courts.

21

See SI 2009/2999, reg. 5(3).

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The supply of goods and services

Q3 Analyse how the definitions of ‘service’, ‘provider’ and ‘recipient’ set the

parameters for the scope of the Provision of Services Regulations 2009.

(e)â Part 2 of the 2009 Regulations

Part 2 of the 2009 Regulations (regulations 7–12) detail the information that

must be provided to all recipients of the service, as regards both contact details

and other information that must be made available, and also information about

dispute resolution and complaints.

Regulation 11 specifies that all of the information provided by a service pro-

vider to comply with this Part of the 2009 Regulations must be made available

or supplied in a clear and unambiguous manner, which includes the format and

style in which it is presented and the clarity of the wording used. Further, it must

be provided in good time before the conclusion of the contract. Alternatively,

where there is no written contract, the information must be provided before the

service is provided. The underlying purpose of these requirements is to allow

the recipient to have sufficient time to read and understand the information

before committing himself to the service contract. The only exception to this

requirement to provide the information before the contract is completed occurs

when the service recipient has requested information under regulation 9 after

the service has been provided.

Regulation 7 stipulates that the service provider must provide contact details

to all users of the service so that they can seek further information about the

service or send a complaint about it. The contact details for this purpose must

include a postal address, fax number or email address, a telephone number and

any official address that the service provider may have. Regulation 7(3) states

that an official address is one that the service provider ‘is required by law to

register, notify or maintain for the purpose of receiving notices or other com-

munications’. The most obvious example of an official address would be the

registeredÂ

office of a limited company.