Covid-19, consumer protection law, and universities

This material does not constitute legal advice and serves merely to introduce the university manager to legal issues on which the advice of the university solicitors may need to be obtained. Nothing in this material should be taken as representing the views or policies of the OfS by virtue of Palfreyman being a member of … Continued

News and analysis of higher education from our leading team of wonks.

This material does not constitute legal advice and serves merely to introduce the university manager to legal issues on which the advice of the university solicitors may need to be obtained. Nothing in this material should be taken as representing the views or policies of the OfS by virtue of Palfreyman being a member of the OfS Board. The authors assert Copyright over this material. The material is subject to the copy-editing process by OUP and hence is not what might be the final form published in the 2020 third edition of “The Law of Higher Education”. The authors would appreciate any feedback on this material – – in terms of its accuracy, scope, and usefulness. 

i) The Reader should have access to key OfS, OIA, CMA, QAA, and DfE documents in digesting this paragraph, which refers back to the material above: those documents are cited below and are readily accessed at the relevant websites.

ii) The OfS ‘Guidance for providers about student and consumer protection during the Covid-19 pandemic’ (OfS 2020.29, 9/6/20) is temporary guidance but in fact usefully reminds HEIs of the permanent position by way of the application of CRA15 to their student contracts, whether the contract to admit or the contract to educate – not least by citing the CMA guidance note ‘UK higher education providers: advice on consumer protection law’ (CMA 33, 12/3/15); all such consumer protection legislation is as reviewed above in paras 12.092-12.114. There is also OfS Briefing Note No.8 (25/6/20) on HEPs supporting their disabled applicants and students during the Covid disruption. And see the OfS consultation launched 17/7/20 (‘Consultation on student protection directions’, OfS 2020.35) re a possible new Condition C4 designed to achieve better student protection where the HEP is ‘at material risk’ of insolvency/closure (‘market exit’). Clearly the likely continuing financial impact of Covid during 20/21 has triggered this proposed tightening of regulation, but it will have effects post-Covid in that the existing Condition C3 re the HEP’s need for a ‘Student Protection Plan’ was considered potentially inadequate in providing full consumer protection for the student and hence the proposed C4 re ‘Student Protection Directions’ would give the OfS ‘stronger regulatory levers’ to reinforce the SPP with extra ‘Student Protection Measures’ – such SPDs imposing SPMs on top of the SPP could include a MEP (‘Market Exit Plan’). Linked to this is the DfE announcement of 16/7/20 of a Government scheme to help HEIs in financial difficulties (DfE-00121-2020, ‘Establishment of a Higher Education Restructuring Regime in Response to Covid-19’) which will apply where the HEI is ‘at risk of insolvency as a result of coronavirus’ and come ‘with strict conditions’ on the form of restructuring  (funded by way of a repayable loan) which will have to ‘be aligned with the government’s wider priorities’  for HE/FE – and there being no guarantee offered that a HEI will not just be left to fail by way of insolvency (see paras 16.16/17 below). The process of such restructuring will be handled by the ‘DfE Restructuring Unit’ with a new ‘Higher Education Restructuring Board’ of ‘external experts’ and with an ‘independent’ chair advising the DfE and its Ministers. In any such restructuring the protection of the students’ consumer interests will be important and thus the link to the proposed SPDs/SPMs/MEP by the OfS.

iii) The OfS in its 9/6/20 Guidance advises that HEIs should ensure for 20/21 ‘prospective and current students’ are provided with ‘clear and timely information’ and also ‘fair and transparent’ terms & conditions that comply with the CMA 2015 guidance and are ‘compatible with legislation applying to consumer protection, unfair contract terms and unfair trading practices’ – as well as sustaining ‘accessible and fair’ complaints processes. The aim is for HEPs to ‘make all reasonable efforts to provide alternative teaching and support for students [during 20/21] that is broadly equivalent to the provider’s usual imputes’ – and for there to be appropriate information so that prospective students can ‘understand what a provider is committing to deliver in the current [Covid] circumstances and in different scenarios [as Covid advice/rules change]’. In essence, the students (both prospective and returning) should be give all necessary information that is material and significant for their being able to then ‘make an informed decision about whether they are willing to start a course and accept those adjustments or whether they will prefer to defer until the provider is able to deliver the course as originally advertised, or whether they might chose a different course or different provider’ – or even seek to defer returning for their second/third year.

iv) This OS 2020.29 Guidance also makes reference to the key concepts in the U-S legal relationship and to the requirements of consumer law – all as covered in this Chapter 12 with reference to the contractual U-S relationship and also to the detailed application of CRA15 and other consumer protection legislation, as well as to the key consumer legislation concepts such as ‘unfair contract terms’, ‘unfair trading practices’, ‘material information’, ‘repeat performance’, ‘partial refund’. All the consumer law context stressed in OfS 2020.29 applied, of course, prior to the impact of Covid and will continue to apply once the Covid-19 crisis ends.

v) The OfS Guidance refers to a student’s ability to complain to the OIA if the ‘alternative teaching’ is not felt to be ‘broadly equivalent’ to the usual quality of delivery (presumably remote/virtual lectures/seminars as opposed to on-campus/face-to-face teaching): here the obvious issue will be whether the OIA can review such a complaint if it deems it to be a matter of academic judgement on the part of the HEI as to how to deliver teaching and whether the new teaching method/delivery was of an adequate academic standard (the concept of academic judgment and the remit of the OIA are discussed in sections D and H of this Chapter). And indeed on 22/6/20 the OIA (‘Briefing Note 2: ‘Our approach to complaints arising from the effects of Coronavirus (Covid-19)’, OIA 22/6/20) has duly issued its own guidance concerning such complaints: first, HEPs must gain the individual agreement of each student if significant changes are being made to his/her course; second, it is ‘unlikely to be reasonable’ for HEPs to rely on force majeure clauses in relation to proposed changes for 20/21; and, third, a blanket refusal to consider fees refunds or deferral requests ‘is not reasonable’ – but, fourth, it will NOT consider complaints about the QUALITY of online teaching (as opposed perhaps to its quantum?) since that would involve academic judgement. And probably this quantum aspect is most likely to be engaged where a degree course involves laboratory practicals or studio activities that may be reduced or even eliminated since they are difficult or impossible to replicate online as remote/virtual teaching. On force majeure clauses: If the student contract expressly provides for the occurrence of a specific event or of specified events deemed beyond the control of the HEI (usually war, civil commotion, industrial action – and probably not, however, hitherto pandemics!), then this clause operates so as to modify the HEI’s obligations to the student if/when the envisaged change of circumstances arise because the event happens; this is a ‘force majeure’ clause (sometimes referred to as a ‘material adverse change’ clause) and it reallocates contractual risk away from the HEI. The clause also ousts the application of the common law concept of contract frustration and of the Law Reform (Frustrated Contracts) Act 1943 – see para 12.21. But such a clause must be ‘fair’ under CRA15 and it may well not be if hidden in ‘the small print’ of the HEI-student contract (s 68 requires ‘transparency’ and hence the use of ‘plain and intelligible language’ as well as the contract’s terms being ‘legible’)  – and in any event the HEI in seeking to rely on it has to demonstrate that it had taken all reasonable steps to avoid the event arsing and also to mitigate the effects of the event. The clause may well end with ‘or any other causes beyond our control’ and so the HEI might try to assert that its force majeure clause, assuming it is fair and hence valid, does cover pandemics and hence it can justify a shift to the online provision of teaching, which may or may not involve a diminution in quantum and/or quality.

vi) The OIA Note refers in turn to the QAA’s ‘Covid-19 Guidance: Preserving Quality and Standards through a time of rapid change – UK HE in 20/21’ (2/6/20).

vii) Clearly, for HEIs to defend their 20/21 delivery of the ‘teaching experience’ if litigation ensues they will need to at least demonstrate that they have had due regard to this OfS, CMA, OIA, and QAA guidance in restructuring their 20/21 teaching arrangements – assuming that, unlike the OIA as barred from doing so by its founding legislation, the Court will abandon the long-standing policy of judicial deference to the exercise of expert academic judgment and entertain any litigation asserting deficient teaching quality (as opposed to any short-changing in the quantum of teaching supposedly promised under the contract to educate): see Section D on ‘Expert academic judgement’ within this Chapter. There may be an issue as to whether the judicial convention in providing this academic immunity can be applied where statute, as in CRA15, arguably requires the assessment by the Court of whether the teaching ‘service’ has been delivered with ‘reasonable care and skill’ (s 49) or has been performed ‘in conformity with the contract’ (s 55).

viii) In relation to the complete loss of the quantum of teaching during UCU strike action in 18/19 and 19/20 HEIs and the OIA awarded £125-150 pw compensation to undergraduates paying £9250 fees – that is c40-50% of a c£300 pw ‘price’ for a 30-week teaching year. So, if only part of the overall quantum of teaching for lab/studio-based subjects is lost, a partial ‘refund’ (under s 56 CRA15 and assuming ‘repeat performance’ under s 55 is not possible) may not need to be more than a fairly nominal £25 pw – and assuming the HEI does not concede the rest of its online remote/virtual teaching is not after all ‘broadly equivalent’ to the usual method for the delivery of teaching. If, however, there are adjustments made for 20/21 (say, reduced numbers over longer opening hours in labs/studios so that the usual quantum is delivered), then a fees discount may not be appropriate. The above 40-50% refund is presumably on the basis that all other aspects of the U-S contract were still being delivered – assessment/examining, counselling, careers, library access, etc (and, crucially, the timing for the degree course’s completion being unaffected). Any HEI offering up any such fee refunds/discounts in relation to lab/studio-based courses should perhaps be able to offset some of the cost from having furloughed relevant staff during the 2020 Government furlough scheme? Moreover, if the timing for the completion of the degree is unaffected and if any relevant professional body still accepts that the degree remains valid taking into account its altered delivery of teaching, then the student/consumer may have suffered no measurable loss and hence no compensation is due? It may or may not be practical to offer under s 55 CRA15 ‘repeat performance’ so as to head off a consumer’s s 56 ‘right to a price reduction’ if such repeat delivery of missed teaching in the third term of 19/20 can be delivered ‘within a reasonable time and without significant inconvenience to the consumer’ during 20/21 – and if any such repeat performance is ‘in conformity with the contract’ as originally defined. Moreover, in the general law of contract the loss suffered by party X that is too remote and could not reasonably have been contemplated by party Y as a serious possibility at the time X and Y entered into the contract does not have to be compensated for by Y – so, could/should the University have reasonably contemplated a potential breach of contract (a deficiency in the teaching quantum and/or quality arising from having to resort to online provision) arising from a pandemic as a certain kind of loss? Leaving aside force majeure clauses as discussed above, a contract is frustrated where there is such a radical change of circumstances that its performance becomes physically or legally impossible – here the Covid restrictions imposed by Government on travel and group gatherings made on-campus residence and the normal delivery of teaching physically/legally impossible? And note para 8.450 of A Burrows (2013) English Private Law (Oxford, Oxford University Press): ‘Impossibility of a stipulated method [for performing the contract – say, delivery of face-to-face teaching?] that is not intended to be exclusive [the U-S contract is unlikely to have specified exactly how teaching will be delivered?] does not frustrate a contract if performance by another method [online/virtual delivery?] which remains possible would not be fundamentally different from that specified…’. Plus, while performance may well be different in quality/quantum, its deficiency or failure has to be substantial to trigger termination of the contract – even if the student is likely to want the contract to be ended; he/she is far more likely as discussed above to want a part-refund of 19/20 fees and a discount on 20/21 fees via s 56 CRA15 or via the common law of contract (as in Guido van der Garde BV v Force India Formula One Ltd [2010] EWHC 2373 (QB) – failure to provide the claimant with the stipulated number of kilometres driving a Formula One test car meant refunding a very large sum as an easily measured deficiency in quantum under the contract.

ix) Noting the above section re partial refunds/discounts, the NUS launch of a campaign on 24/6/20 should be registered – ‘Join the Complaint Chain’ as an invitation to sign up to ‘mass action to win the chance to REDO, REIMBURSE, WRITE-OFF’. Thus, the NUS will call on Government to offer ‘a systemic solution’ to students re compensation for Covid disruption to their studies. Failing any such co-ordinated national ‘solution’, the NUS will be assisting students to raise complaints directly with their institutions and then if necessary with the OIA. And one assumes that some sort of class-action litigation may yet emerge – as well underway in the USA with many such claims launched against individual universities and against whole State-wide HE systems (such claims assert that remote teaching is inferior to on-campus face-to-face teaching and hence there is breach of contract, unjust enrichment, and conversion; and thus beg the complex question of how to value the components of the service if it is to be unbundled… an issue addressed in the final chapter on ‘The Future(s) of the University’ in Palfreyman & Temple, ‘Universities and Colleges: A Very Short Introduction’ (2017, Oxford University Press). The US claims usually point to the online version of degree courses being charged at a lower price than the on-campus offering, and to the hype within marketing material over what is typically described as the valuable on-campus ‘experience’ by way of stimulating face-to-face teaching and interesting networking/interacting with fellow students. In early-July 2020 Princeton University announced that its tuition fees would be discounted by 10% for 20/21 in anticipation of continued disruption to teaching and life on campus arising from the threat of Covid-19 to staff and student health, and Williams College has offered 15%: at that time no other US, UK, or Australian HEI had made any similar announcement. (And see * below…)

x) Finally, here is a reminder of the application of consumer protection legislation to the Covid special circumstances and focussing on the obligations arising under CRA15 as outlined in this Chapter 12 at paras 12.96-104 and as being highlighted in the OfS, CMA, and OIA guidance discussed in this paragraph (all of which, it has again to be stressed, applied pre-Covid and will apply post-Covid):

a) Under ss 1/2 CRA15 the HEI is ‘a trader’ operating its ‘business’ and the student is ‘a consumer’ acting as ‘an individual’ in a non-business/profession way.

b) Chapter 4 CRA15 covers ‘Services’ (s 48) and so applies to the HEI offering ‘to supply a service’ as the provision of teaching and also of assessment/examining along with appropriate support services such as careers, counselling, library access, IT systems, etc – as well as, arguably, all wider on-campus sports and recreational facilities.

c) That ‘service’ is to be supplied and ‘performed with reasonable care and skill’ (s 49) – and the test for ‘reasonable’ is broadly that of the appropriately competent HEI/academic as discussed in Section F of this Chapter 12 on ‘Educational malpractice’.

d) As already noted, HEIs and their academic staff as professionals enjoy a unique legal privilege of judicial deference to the proper exercise of expert academic judgment – as discussed in Section D of this Chapter 12 on ‘Expert academic judgement’. Thus, just as the OIA is precluded by its founding  Statute from considering complaints relating to academic judgement (Section H of this Chapter on ‘The OIA’), so the Court will not process cases asserting inferior teaching quality or assessment/examining incompetence as opposed to any allegation of a deficiency in the quantum of the former with reference to any specific contractual promises or to any improper procedures in relation to the latter – see Section L of this Chapter 12 on ‘Judicial review’ of HEI failings over the sloppy application of regulations, procedures, and processes for examining, conducting disciplinary proceedings, and processing appeals (and see also Section E re ‘Discipline and complaints’). If there are student complaints about allegedly poor quality online/virtual teaching during the Covid disruption, the OIA as noted above will not process them and nor might the Court be prepared to entertain such.

e) Information supplied by the trader to the consumer about the service is ‘binding’ (s 50) where it is ‘taken into account’ by the consumer and unless any subsequent change has been ‘expressly agreed between the consumer and the trader’ – hence the stress in the OfS/OIA June 2020 guidance on HEIs being clear as to what changes will arise in 20/21 and on the HEI not having a blanket policy of rejecting any requests from students to defer 20/21.

f) And s 50 CRA15 also notes how the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (SI 2013/3134) apply and are incorporated into the protection for the consumer under s 50. The key concept is in Regulations 9/10 (along with the related Schedules 1/2) re the trader providing ‘to the extent appropriate’ information about ‘the main characteristics of the service’ and doing so ‘in a clear and comprehensible manner’ – and this includes, ‘where applicable’ information on ‘the arrangements’ for the ‘delivery’ and the ‘performance’ of ‘the service’.

g) Where there is breach of the B2C U-S contract under the above CRA15 provisions, the consumer has new CRA15 ‘remedies’ – first, the right ‘to require repeat performance’ from the trader (s 55) and ‘to the extent necessary to complete its performance in conformity with the contract’ while also  doing so ‘within a reasonable time and without significant inconvenience to the consumer’ (here arises, say, the issue of students in 19/20 who have missed out on laboratory practicals and studio activities if such were not possible to deliver remotely and whether the non-performance can be corrected for in 20/21…). And, second, ‘the right to require the trader to reduce the price’ (s 56) and to do so ‘by an appropriate amount’ (which may include a ‘refund’ on an amount already paid as opposed to a discount on an amount due) – but only where the s 55 right to repeat performance can’t be delivered by the trader as ‘impossible’ to do so. These are new statutory remedies under CRA15 but they ‘do not prevent the consumer from seeking other remedies’ for breach of contract – although the consumer is not able ‘to recover twice for the same loss’ by using s 56 while also suing for damages for breach of contract (Section C of this Chapter 12 and its sub-sections on ‘Breach of contract’ and on ‘Damages’). Note in A Burrows (2016) A Restatement of the English Law of Contract (Oxford, Oxford University Press) the comment is made that ‘the remedies provisions in the Consumer Rights Act are excessively complex and poorly drafted. They must be read with great care and a head.’! Finally, s 69 CRA15 gives further protection to the student-consumer: ‘If a term in a consumer contract…could have different meanings, the meaning that is most favourable to the consumer is to prevail.’ – which may go a tad beyond the common law ‘contra proferentem’ interpretation of exclusion clauses; and so, as we have stressed throughout this Chapter, the HEI should aim to get its student contract into shape (or, better and as we have again asserted, a comprehensive and fair standardised contract should be brought in to cover the entire HE industry…).

h) Part 2 CRA15 covers ‘Unfair Terms’ and offers ‘general rules about fairness of contract terms and notices’ (ss 61/62) as well as s 68 on the ‘requirement for transparency’ (use of ‘plain and intelligible language’) – and s 63 offers the Schedule 2, Part 1, ‘List of Terms’ which ‘may be regarded as unfair’ (certain of the paragraphs could be especially relevant to the Covid disruption – paras 2 re exclusion/limitation clauses, 3 re the trader (not) having exclusive control, 4 re a no-refunds policy, 10 re the consumer being made properly aware of terms, 11-13 & 16/18 re the trader (not) having a unilateral right to alter the terms). The OIA June 2020 guidance specifically notes that blanket refusals to consider fees refunds/discounts and to consider deferral requests may well be ‘unreasonable’ as arguably unfair.

* Some 350k signatures to an e-petition calling for reimbursement of 19/20 tuition fees because of UCU strike action and Covid-19 disruption to teaching has resulted in a Report from the House of Commons Petition Committee (‘The impact of Covid-19 on university students’, 13/7/20). The Committee conducted a survey which received over 25k responses and revealed that ‘the vast majority of students’ were ‘dissatisfied or very dissatisfied’ with their experience of on-line/virtual teaching – but the Report states that the Committee does not think there should be ‘a universal refund or reimbursement to all students’. It adds that there needs to be new guidance from the OfS/OIA on the criteria for and a new system for handling student requests for refunds, such criteria being ‘based on an independent and objective assessment of the quality of education they have received over the academic year’ – and the cost of making such refunds should be covered by extra Government funding to universities. And the same applies for the potential impact of Covid-19 in disrupting teaching during 20/21.


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