Unfair Contract Terms:
Consumer Contracts:
Part 2 Consumer Rights Act 2015 – applies to a contract between a “trader” and a
“consumer”.
s.2(2) Consumer Rights Act 2015:
A trader is a “person acting for purposes relating to that person’s trade,
business, craft or profession, whether acting personally or through another
person acting in the trader’s name or on the trader’s behalf.”
s.2(7) – a “business” for this purpose includes the activities of any
government department or local or public authority.
The definition of trader is therefore wide enough to encompass
charities and other not-for-profit organisations where they are acting
for the purpose of their business in e.g., selling goods to general
public.
s.2(3) Consumer Rights Act 2015:
A consumer is “an individual acting for purposes that are wholly or mainly
outside the individual’s trade, business, craft or profession.”
Are the terms “unfair”?
s.62(4) Consumer Rights Act 2015:
A term will only be regarded as “unfair” if “contrary to the requirement of
good faith, it causes a significant imbalance in the parties’ rights and
obligations under the contract, to the detriment of the consumer.”
Director General of Fair Trading v First National Bank
Lord Bingham: the requirement of significant imbalance “is met if a
term is so weighed in favour of the supplier as to tilt the parties’
rights and obligations under the contract significantly to his favour.”
s.62(5) Consumer Rights Act 2015:
The fairness of a contract term will be assessed taking into account
the nature of the subject matter of the contract and by reference to all
the circumstances existing when the term was agreed and to all of the
other terms of the contract.
Part 1 of Schedule 2 Consumer Rights Act 2015:
Provides an “indicative and non-exhaustive list of terms of consumer
contracts that may be regarded as unfair”.
Exclusion from Assessment of Fairness:
s.64 Consumer Rights Act 2015:
s.64(1) – A term of a consumer contract may not be assessed for fairness
under section 62 to the extent that (a) it specifies the main subject matter of
the contract, or (b) the assessment is of the appropriateness of the price
payable under the contract by comparison with the goods, digital content or
services supplied under it.
s.64(2) – subsection (1) excludes a term from an assessment under s.62 only
if it is “transparent and prominent”.
‘Main subject matter of the contract’:
Kásler v OTP Jelzálogbank Zrt
This exclusion encompassed those terms that “lay down the essential
obligations of the contract and, as such, characterise it” and not terms
that are “ancillary to those that define the very essence of the
contractual relationship.”
The distinction between an “essential” and an “ancillary” term is a
question of interpretation which requires the court to examine the
disputed term in its legal and factual context.
‘Transparent and Prominent’:
Consumer Contracts:
Part 2 Consumer Rights Act 2015 – applies to a contract between a “trader” and a
“consumer”.
s.2(2) Consumer Rights Act 2015:
A trader is a “person acting for purposes relating to that person’s trade,
business, craft or profession, whether acting personally or through another
person acting in the trader’s name or on the trader’s behalf.”
s.2(7) – a “business” for this purpose includes the activities of any
government department or local or public authority.
The definition of trader is therefore wide enough to encompass
charities and other not-for-profit organisations where they are acting
for the purpose of their business in e.g., selling goods to general
public.
s.2(3) Consumer Rights Act 2015:
A consumer is “an individual acting for purposes that are wholly or mainly
outside the individual’s trade, business, craft or profession.”
Are the terms “unfair”?
s.62(4) Consumer Rights Act 2015:
A term will only be regarded as “unfair” if “contrary to the requirement of
good faith, it causes a significant imbalance in the parties’ rights and
obligations under the contract, to the detriment of the consumer.”
Director General of Fair Trading v First National Bank
Lord Bingham: the requirement of significant imbalance “is met if a
term is so weighed in favour of the supplier as to tilt the parties’
rights and obligations under the contract significantly to his favour.”
s.62(5) Consumer Rights Act 2015:
The fairness of a contract term will be assessed taking into account
the nature of the subject matter of the contract and by reference to all
the circumstances existing when the term was agreed and to all of the
other terms of the contract.
Part 1 of Schedule 2 Consumer Rights Act 2015:
Provides an “indicative and non-exhaustive list of terms of consumer
contracts that may be regarded as unfair”.
Exclusion from Assessment of Fairness:
s.64 Consumer Rights Act 2015:
s.64(1) – A term of a consumer contract may not be assessed for fairness
under section 62 to the extent that (a) it specifies the main subject matter of
the contract, or (b) the assessment is of the appropriateness of the price
payable under the contract by comparison with the goods, digital content or
services supplied under it.
s.64(2) – subsection (1) excludes a term from an assessment under s.62 only
if it is “transparent and prominent”.
‘Main subject matter of the contract’:
Kásler v OTP Jelzálogbank Zrt
This exclusion encompassed those terms that “lay down the essential
obligations of the contract and, as such, characterise it” and not terms
that are “ancillary to those that define the very essence of the
contractual relationship.”
The distinction between an “essential” and an “ancillary” term is a
question of interpretation which requires the court to examine the
disputed term in its legal and factual context.
‘Transparent and Prominent’:
