Posted: Wednesday 8 February 2012
Unfair terms in consumer contracts – it's all gobbledygook to me!
By John Lunn
As consumers we expect standard form contracts to be full of legalese and gobbledygook. If you are entering into a contract or taking out a loan, you almost expect to be blinded by the small print, assuming your eyesight is good enough to read it in the first place!
But did you know that there are regulations which are there to protect consumers from unfair contract terms that seek to blind them from the true meaning of the contract by the use of legal or technical jargon? We’re talking here about words like “indemnify” or “consequential loss”: words which have a specific legal or technical meaning which may be lost on the average consumer.
The Unfair Terms in Consumer Contracts Regulations have been with us since 1999 following on an EU Directive addressing this very issue. Under the Regulations, contract terms should be expressed in plain and intelligible language. Where there is any ambiguity about the interpretation of a particular term, then a court should construe the term in favour of the consumer. If the terms are so unclear that they cause a significant imbalance between the contracting parties, to the consumer’s detriment, then it is likely that these terms would be considered “unfair” under the Regulations and therefore unenforceable.
The Regulations are enforced by both the Office of Fair Trading and the Financial Services Authority, and both have produced copious amounts of information and guidance on how they work and how they are enforced. The latest guidance from the FSA is discussed here.
If you are a consumer who believes that a contract they have entered into contains unfair standard terms, or you are a business who would like the peace of mind that their standard contract terms are “fair” under the Regulations, please contact John Lunn.
