In English law, parties are generally free to negotiate the terms of any agreement between them but, in practice, it is often the strong bargaining power of one of the parties that allow that party to dictate the terms that they contract upon. Consumers tend to be in a weak bargaining position and consequently find themselves on the receiving end of quite onerous provisions in contracts.
Since the implementation of the Unfair Terms in Consumer Contracts Regulations 1999 (“UTCCR”), it is fair to say that consumers are better protected and are in a stronger position than they were prior to this legislation. However, even though these Regulations have been in force for well over ten years, it is surprising how many consumers and businesses are unaware of their effect.
Reg 5(1) of the UTCCR states that “A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer”. Reg 8 provides that an unfair term in a contract between a consumer and a supplier shall not be binding on the consumer.
Businesses that supply consumers and other businesses often use the same set of terms and conditions for both, not realising that, whilst the conditions may be acceptable for its customers who are businesses, they may not be acceptable (and therefore unenforceable) for customers who are consumers.
Clauses covering such issues as cancellation/termination, exclusion of liability, price variation, sanctions for breach of contract, amongst others may be enforceable in a business contract but not necessarily in a consumer contract.
Reg 7 of the UTCCR also provides that a seller or supplier shall ensure that any written term of a contract is expressed in plain, intelligible language and, if there is doubt about the meaning of a term, the interpretation which is most favourable to the consumer shall prevail (subject to certain exceptions).
If you think that any of the standard terms in a consumer contract are unfair (whether you are the supplier or a consumer), the Office of Fair Trading has guidance on its website at www.oft.gov.uk and there is also information on www.direct.gov.uk.
This should not be relied upon for legal advice. If you would like any further information or advice please email richard@clariclegal.co.uk.
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