Pricing law and guidance

In the guide

This guidance is for England, Scotland and Wales

The price of goods, services or digital content is a key part of a contract (a legally binding agreement) between you and a trader. If there is a dispute over a price and a contract has not yet been formed the trader can decline your offer to buy the goods.

In some circumstances, a trader may be in breach of the Consumer Protection from Unfair Trading Regulations 2008 if they misleadyou over a price or the way in which a price is calculated. There are certain trading practices relating to price that are considered unfair in all circumstances.

Goods, services and digital content must be clearly and accurately priced.

Consumer contracts and price

A contract is a legally binding agreement between you and a trader and is made when certain elements come together:

  • there must be an 'offer' to buy - for example, you remove goods from the shelf and take them to a checkout
  • there must be 'acceptance' of the offer - for example, a trader put the goods through the till
  • there must be a transfer of 'consideration'. This is the payment you make for the goods, service or digital content
  • there must be an 'intention to make a contract'. You and a trader must intend to be legally bound by the contract and both understand what the contract actuallymeans
  • you must have 'legal capacity'. In other words you must be legally capable of making a contract

The price of goods, services or digital content is a key part of a contract (a legally binding agreement) between you and a trader. When a trader displays goods, services or digital content (as part of a window display, instore, online or in a brochure, for example) they areinviting you to make an offer to buy, known as an 'invitation to treat'. This offer may include a price. If there is a dispute over a price and a contract has not yet been formed (perhaps a trader will not consider a price reduction or they madea mistake and the price on display is too low) they arelegally entitled to decline your offer to buy. What this means is that you cannot insist a trader sells the goods, service or digital content at the advertised price. In certain circumstances, however, youmay be misled by a trader's unfair trading practices in relation to price. See the 'Misleading prices' section belowfor more information.

If all the elements of the contract, including the price, come together you and a trader are legally bound by the price you offerto pay and the price a trader agreesto charge. This means that in most cases a trader cannot change the price at a later stage. There may be some exceptions to this - for example, a surcharge on the cost of a holiday.

The Consumer Rights Act 2015 sets out rules to protect you if a trader tries to use terms in a consumer contract or notice that are unfair. Some terms are automatically unfair in all circumstances, while others are not automatically unfair but may be considered unfair depending on how they are used. For example, if a trader relieson a term to allow themto get out of a contract at theirdiscretion (perhaps they decidethe agreed price is too low) but the term does not allow you the same discretion, it may be considered unfair. Take note that terms that actually set the price are exempt from the assessment of fairness only if they are transparent and prominent. The 'Unfair terms in consumer contracts and notices' guide gives more information.

The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 give you rights against a trader when you buy goods, services or digital content. The Regulations split contracts into three types:

  • on-premises contracts. Buying from their business premises
  • distance contracts. Buying without face-to-face contact, such as via the internet or telephone
  • off-premises contracts. Buying away from their business premises such as on your doorstep

For on-premises contracts (which includes regular market stalls) you are entitled to expect that a trader gives you the total price of the goods, services or digital content, including taxes, in a clear and understandable way before you enter into the contract (if the price cannot be worked out you must be given the method of calculation). A trader must also give you details of any additional delivery charges.

The same information must be given before you enter into a distance or off-premises contract but, in addition, you must also be given the total costs per billing period / monthly costs for open-ended or subscription contracts as well as any costs involved in using distance communication to finalise the contract. If a trader does not give you this information you do not have to pay those charges.

If a trader provides a telephone helpline for you to contact them about the goods, services or digital content that you have bought, theycan only charge you the 'basic rate'. Numbers beginning with the prefixes 01, 02, 03 or 07 (except those starting 070) and Freephone numbers beginning 0800 and 0808 meet the requirements of the Regulations. If a trader charges you more than the basic rate, you are entitled to reclaim the extra from them.

The 'Buying from business premises: on-premises contracts explained', 'Buying by internet, phone and mail order: distance contracts explained' and 'Buying at home: off-premises contracts explained' guides give more information on these Regulations.

Misleading prices

The Consumer Protection from Unfair Trading Regulations 2008 prohibit commercial practices that are unfair to you. If a trader misleads you or engages in an aggressive commercial practice and you make a decision to purchase a product that you would not otherwise have done, the trader may be in breach of the Regulations. There are 31 specific commercial practices set out in the Regulations that are banned outright.

The Regulations deal with a range of practices that are considered unfair, but there are specific requirements for pricing.

The following practices are considered unfair in all circumstances:

  • inviting you to purchase a product at a special offer price without making you aware that there is limited stock / availability and where the trader knows that demand for the product generated by advertising will outstrip supply (bait advertising)
  • inviting you to purchase a product at a special offer price but then refusing to show that product to you, refusing to take orders or deliver the product within a reasonable time or showing a defective sample of the product with the deliberate intention of promoting a different product (bait and switch)
  • falsely stating that the product will only be available for a limited time or that special terms for that product will only be available for a certain time with a view to persuading you to make an immediate decision about the purchase
  • describing a product as 'free' (or similar wording) if you have to pay something (other than unavoidable costs of carrying out the transaction and collection / delivery charges)

The Regulations also state that a tradermust not mislead you by giving false information or leaving out information as to the price of a product or the way the price is calculated.

The definition of 'product' in the Regulations covers goods, services, digital content, immovable property and rights or obligations.

If you enter into a contract because a trader misled you (for example, over the price of a product) or because a trader used an aggressive commercial practice, the Consumer Protection from Unfair Trading Regulations 2008 give you rights to redress: the right to unwind the contract, the right to a discount and the right to damages. See the guide 'Misleading and aggressive practices: rights to redress' for more information.

Pricing practices guidance is available for traders on what is considered to be good practice when giving information to consumers about prices. There is no legal requirement for traders to comply with the guide, but it takes their legal obligations into account. Whilst the guide is aimed at traders, you may wish to check out how a trader ought to price goods and services for you. The guide does not specifically refer to the pricing of digital content but the general recommendations willapply. Guidance for Traders on Pricing Practicesis available via the 'Providing price information' guide on the Business Companion website.

Price marking of goods

The Price Marking Order 2004 requires traders to display the selling price of goods to you and includes sales by electronic means, except:

  • goods that are supplied as part of a service (take note that the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 may require the trader to show the manner in which a price is calculated if it cannot be worked out in advance)
  • sales by auction or sales of art and antiques
  • products sold from bulk
  • advertisements for goods

The selling price should be:

  • inclusive of VAT
  • unambiguous, easily identifiable and clearly legible
  • close to the goods or, in the case of distance contracts or advertisements, close to a visual or written description
  • available to you without them having to ask for it

The indication of any charges for postage, packing or delivery of a product must be unambiguous, easily identifiable and clearly legible.

For goods sold in bulk, a trader must show the unit price. In general, a trader must show the unit price in sterling (the price for a kilogram, a litre, a metre, a square metre or a cubic metre) of goods sold from bulk. This is where the goods are weighed and measured at your request, such as fruit and vegetables or cooked meats.

Also, in large stores (having a shop floor area greater than 280 square metres), the unit price must be displayed for prepacked goods marked with a quantity or made up in a prescribed quantity. The unit price is usually shown as the price per kilogram (or litre) or 100 gram (or millilitres).

In the event of a VAT rate change, a retailer may display a notice or fix a label to a catalogue to inform you about the new rate for 28 days after the change of rate.

Comparing the unit price can give an indication of which product or sized container gives the best value for money. When comparing unit prices, the price per 100 grams or millilitres has to be multiplied by ten in order to compare it with the unit price per kilogram or litre. Sometimes a larger pack has a higher unit price and so is not the best value for money.

Buying or selling foreign currency

The Price Indications (Bureaux de Change) (No 2) Regulations 1992 apply to traders who buy or sell foreign currency to consumers in any manner.

You are entitled to expect that, where exchange rates are given, the information available is accurate, clear, unambiguous, easily identifiable and, where applicable, legible and audible. If an exchange rate is displayed on-premises it should be prominent, either just outside or just within the premises. The display must include all relevant information, such as buying and selling rates and fees or commission rates.

You must also be given a receipt showing the full details of the transaction, including the name and address of the trader or a suitable method of identifying the trader.

Pricing of holidays

The Package Travel and Linked Travel Arrangements Regulations 2018 state that the organiser or retailer must give you specific information before the package travel contract is finalised. This includes information on the total price of the package as well as taxes and any additional fees that may apply.

If the organiser fails toprovide the travel servicesyou paid for as part of your travel contract or does not carry them out as expected, they must offer you an appropriate reduction in price. However, if the organiser proves that you caused the problem, they do not have to reduce the price.

The organiser can increase the package travel contract priceif the contract states clearly that an increase can be made and only for the following reasons:

  • the price rise is due to an increase in the cost of fuel or other power sources
  • there has been an increase in fees or taxes- for example, landing taxes or embarkation / disembarkation fees at airports and ports
  • exchange rates relevant to the package have increased

You have the right to a price reduction that matches any decrease in the costs described above if it occurs once the contract is finalized and before the start of the package.

You must be given notification of any price increase at least 20 days before the start of the holiday. If the increase is more than 8% of the total price of the holiday, one of the options you have is to terminate the contract.

The'Holidays' guide gives more information.

Payment surcharges

Under the Consumer Rights (Payment Surcharges) Regulations 2012, which were amended by the Payment Services Regulations 2017, traders are banned from imposing surcharges on consumers for using the following payment methods:

  • credit, debit or charge cards
  • e-payment services, such as PayPal
  • Apple Pay, Android Pay or other similar payment methods

Traders can impose a surcharge for other methods of payment (for example, cash or cheques) but the amount must not be excessive; it must reflect the actual cost to the trader of processing the payment. The Regulations apply to most sales and service contracts.

The Regulations give you rights to redress. Any requirement to pay a banned surcharge, or the part of a surcharge that is excessive, is unenforceable by the trader. This means you do not have to pay. If you have already paid the surchargeor the excess, you are entitled to a refund.

If you have a complaint about surcharges, report it to the Citizens Advice consumer service.

Letting agents' fees

Under the Consumer Rights Act 2015, letting agents are under a duty to publicise fees that relate to letting agency or property management work. A list of the fees must be prominently displayed at each of the letting agent's business premises and on their website, if they haveone. There is also a duty to publicise fees on a third party website, which means a website that is not the letting agent's website. The list of fees must include:

  • a clear and understandable description of each fee
  • in the case that a tenant is liable to pay a fee, an indication of whether the fee relates to each property or to each tenant under a tenancy within a property
  • the amount of each fee, including any taxes. If the fee cannot be worked out in advance, there should be a description of how the fee is calculated

Under the Tenant Fees Act 2019, landlords and letting agents must not demand that you, a third party acting on your behalf or someone guaranteeing your rent,must pay certain prohibited payments in connection with the tenancy. In addition, they must not demand that you enter into an insurance contract or a service contract (unless it is for utilities or a communication service) connected to the tenancy. Payments that you can be asked to make are:

  • rent
  • refundable holding deposit
  • payments to change the tenancy
  • refundable tenancy deposit
  • payment for early termination of the tenancy
  • fee for late payment of rent
  • fee for lost key / security device
  • payment for utilities, communications services, TV licence and council tax

You can find guidance on tenant fees on theGOV.UK website

The 'Look before you rent' guide gives more information on renting a property.

Key legislation

Last reviewed / updated: October 2020

Please note

This information is intended for guidance; only the courts can give an authoritative interpretation of the law.

The guide's 'Key legislation' links may only show the original version of the legislation, although some amending legislation is linked to separately where it is directly related to the content of a guide. Information on amendments to legislation can be found on each link's 'More Resources' tab.

For further information in England and Wales contact the Citizens Advice consumer service on 0808 2231133. In Scotland contact Advice Direct Scotland on 0808 164 6000. Both provide free, confidential and impartial advice on consumer issues.

© 2021 itsa Ltd.

TSI: 122505, ID: 528, updated 23/10/2020