Unfair Terms in Consumer Contracts Regulations 1999
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The Unfair Terms in Consumer Contracts Regulations 1999 (Europe), SI 1999/2083, incorporates[1] Directive 93/13/EC[2] into law of the United Kingdom. Repeals The Unfair Terms in Consumer Contracts Regulations 1994.
Contents |
[edit] Overview
These Regulations overlap somewhat with the Unfair Contract Terms Act 1977 which deals specifically with exemption clauses. The Directive set out requirements that in many ways are narrower than rules already in place in English law. It does, however, extend the scope of terms which can be rendered ineffective; especially when dealing with unfair terms that do not constitute exemption clauses. It also has provisions specifically for standard form contract.
The regulations only work to render ineffective terms that benefit seller or suppliers against the interests of consumers.
[edit] Definition of Unfair
Regulation 5(1)[3] defines the principle of unfair:
- If a contractual term has not been individually negotiated[4] and
- the term causes significant imbalance in the parties rights and obligations, then
- the term is contrary to the requirement of good faith.
"Has not been individually negotiated" encompasses terms of which the consumer has not had the opportunity to mould. Terms that have been individually negotiated are outside this regulation, while other contract terms may be within the regulation.[5]
"Causes significant imbalance". For a term to be deemed unfair, this requires the term to be to the detriment of the consumer and benefit the seller or supplier to an excessive degree.
"Contrary to good faith". In the complex case of Director General of Fair Trading v First National Bank[6], the bank's seemingly unfair interest term was found to be in good faith as the term guarded the bank from a possible situation of receiving no interest defeating their business objective.
Schedule 2 sets out an indicative, non-exhaustive list of terms that would be unfair.
[edit] Effect of Unfair Term
Regulation 8 provides that an unfair term "shall not be binding upon the consumer".
[edit] The law in action
[edit] See also
- Unfair Contract Terms Act 1977
- European Directives
- Statutory Instruments
- Office of Fair Trading v Abbey National and Others (2008)
- Director General of Fair Trading v First National Bank plc [2001] UKHL 52
[edit] External links
[edit] References
- ^ Enacted persuant to European Communities Act 1972
- ^ (1993) L95 OJ 29
- ^ "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"
- ^ Regulation 5(2)
- ^ Regulation 8(2)
- ^ [2001] 3 WLR 1297
