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... Unfair Contract Terms 4
3.1 The Insurance Contract 4
3. ... 3 What is an Unfair Contract Term? ... 4 How to recognise an Unfair Contract Term 15
3. ... 1 Indicative and illustrative list of terms that may be regarded as unfair 15
3.5 What to do with an Unfair Contract Term? ... 1 Appendix 1 30
1 Executive Summary
This is a report on consumer protection, concentrating mainly on unfair contract terms in consumer contracts, insurance companies and intermediaries. In chapter 3 of this research we introduce our main topic, Unfair contract terms. ... The definition of an insurance contract is in chapter 3. ... 3 starts to explain more about unfair contract terms. The backgrounds for regulating contract terms in consumer contracts are introduced in chapter 3. ... 2 deals with the directives and regulations related to defining and permitting unfair contract terms. ... 3 summarises the Opinion of the economic and Social Committee on the ‘Report from the Commission on the implementation of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts’.
How to recognise an unfair contract term is discussed in chapter 3.4 through an indicative and illustrative list of terms that may be regarded as unfair in chapter 3. ... 5 introduces solutions for the actions to take in case there is an unfair contract term in the consumer’s contract. ... Ten hours of theory in class and a lot of additional research made it possible for us to write this report on Unfair Contract Terms. ... We will place special focus on the aspect of Unfair Contract Terms and the directives concerning this subject. The various examples of Unfair Contract Terms will be explained by us using a simplified case analysis. ... Unfair Contract Terms
3.1 The Insurance Contract
3. ... Basically there are three elements that are essential for a valid contract of insurance:
1. ... Insurance is a contract whereby the insurer, on the payment of a premium (2952), binds himself to compensate the insured, within the limits agreed upon, for damage caused to the insured by an accident, or to pay a principal sum or an annuity (1872 ff. ...
Lately, the insurance contract has become very popular and almost vital. ... 3 What is an Unfair Contract Term? ... 1 Background
It was 1977 when the Unfair Contract Terms Act was implemented, this topic was finally seen as taken seriously. Now Civil courts had been given the opportunity to review contractual clauses or terms in order to judge whether they were reasonable or not. This is the most easy definition of an Unfair Contract Term: A term that is not reasonable. ... The Director General of Fair Trading (DGOFT) was assigned by the new act of 1994 and given the power to consider every complaint made by consumers on terms in their contracts that they saw as being unfair. This person had the power to make the noted unfair terms public to prevent them of being used again. ...
This Act of 1994 was replaced by the following: Unfair Contract Terms in Consumer Contracts Regulations 1999. ...
Unfair Terms in Consumer Contract Regulations 1999 (summary)
· The UTCC Regs 1999 replace the UTCC Regs 1994.
· The Regulations apply to unfair terms in contracts:-
o concluded between a consumer and a seller or supplier (regulation 4).
o which has not been individually negotiated and,
o contrary to the requirement of good faith, causes a significant imbalance in the parties rights and obligations under the contract to the detriment of the consumer (regulation 5).
· Schedule 2 contains an indicative list of terms which may be regarded as unfair.
· The assessment of unfairness will take into account all the circumstances attending the conclusion of the contract.
· However, the assessment is not to relate to the definition of the main subject matter of the contract or the adequacy of the price or remuneration as against the goods or services supplied in exchange as long as the terms concerned are in plain, intelligible language (regulation 6).
· Unfair contract terms are not binding on the consumer (regulation 8).
· Complaints may be made to the Director General of Fair Trading to consider any complaint made to him about the fairness of any contract term drawn up for general use. ...
· The Regulations provide for the first time that a qualifying body named in Schedule 1 (statutory regulators, trading standards departments and Consumers Association) may also apply for an injunction to prevent the continued use of an unfair contract term provided it has notified the Director General of its intention at least 14 days before the application is made. ... 2 The Directive
Article 3 of the Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts provides:
"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". ... Consumer means a natural person, who, in making a contract to which the Regulations apply, is acting for purposes which are outside his business. Seller means a person who sells goods and who, in making a contract to which the Regulations apply, is acting for purposes relating to his business. ... If a company claims that the contract was individually negotiated, the burden of proof lies on the company.
A contract term is 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 consumers. Basically, a term is unfair if it puts the consumer at an unreasonable disadvantage and there is no justification for it. Often contracts have "standard terms", this means a company or business uses the same contract for all it’s customers or clients. These standard terms must be fair. ... An unfair contract term concluded by the seller is not binding on the consumer.
If part of a contract is found to be unfair the court will not allow the company / business to enforce that part of the contract. The law also says that if a company or business tries to exclude liability or responsibility under the contract this may be unfair and in some cases could make the whole contract nullified. This means the contract is treated as if it never existed. ... )
The Regulations contain an illustrative list of terms which may be regarded as unfair. Terms authorising the seller or supplier to dissolve the contract on a discretionary basis where the same facility is not granted to the consumer, or permitting the seller or supplier to retain the sums paid for services not yet supplied by him where it is the seller or supplier himself who dissolves the contract. A term enabling the seller or supplier to terminate the contract of indeterminate duration without reasonable notice except where there are serious grounds for doing so. A term excluding or hindering the consumers right to take legal action or exercise any other legal remedy, particularly by requiring the consumer to take disputes exclusively to arbitration not covered by legal provisions, unduly restricting the evidence available to him or imposing on him a burden of proof which, according to the applicable law, should lie with another party to the contract. However, these terms are discussed and illustrated with examples more specifically in chapter 3. ...
The Regulations maintain the obligation of the Director General of Fair Trading (contained in the 1994 Regulations) to consider any complaint made to him about the fairness of any contract term drawn up for general use. He may seek assurances and, if necessary, injunctions against those using terms which he considers to be unfair. ... 3 The Opinion
Opinion of the economic and Social Committee on the ‘Report from the Commission on the implementation of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts’
This directive-opinion first states the importance of transparency. Although there is no clear definition of transparency in contract negotiations, it should be obvious that these negotiations should be conducted as clearly as possible, having the principle of good faith in mind. If the terms are not discussed between the two parties, the consumer must have had the opportunity to read the terms before making the decision to sign. If the terms are not written in plain and understandable English, this term can be considered void.
The directive mentions a so-called black-list and grey-list to consider contract terms that are considered absolutely prohibited and probably-prohibited, or as we will call them in our report: Unfair. This distinction is to make judgements on whether the contract term is unfair or not a bit easier. ...
The consequences of Unfair Contract Terms are not ‘globalised’. ... It is however pointed out that it is the consumers’ task to proof that the Unfair Contract Term causes damages before consequences can be considered.
Prevention of the use of Unfair Contract Terms in consumer contracts is a task of the courts. ... The main problems are the endless time it takes for legal proceedings, the need to carefully pay attention to every single contract as a whole and the possibility for contract proposers to change the content of the contract during the procedures. Thus, it is of major importance to make clear and efficient laws to prevent Unfair Contract Terms. For example, to make legal decisions on a certain contract term binding in case it reappears and the surroundings are equal, or make the parties publicise the terms that were ruled unfair in the media, so everybody will know it. ... The use of standard contracts is one of the many possibilities to reduce the use of Unfair Contract Terms. ...
The conclusion of this opinion is the need to harmonise the legislation on Unfair Contract Terms across the various member states. ... Ensuring transparency in contract negotiations is a topic of main importance. Unfair should be described properly, in such a way that no differences in opinion is possible. Legal mechanisms and independent authorities to ensure proper use should be set up to decrease the risk of having to cope with Unfair Contract Terms. ... 4 How to recognise an Unfair Contract Term
Now that have straightened out what consumer protection is and specifically mentioned the existence of Unfair Contract Terms, let us have a look at how you should recognise one. Here we are listing definitions of contract terms that may be regarded as being unfair. ... 1 Indicative and illustrative list of terms that may be regarded as unfair
(Unfair Terms in Consumer Contracts Regulations 1994)
TERMS WHICH HAVE THE OBJECTIVE OR EFFECT OF:
ü (a)Excluding or limiting the legal liability of a seller or supplier in the event of the death of a consumer or personal injury to the latter resulting from an act or omission of that seller or supplier.
Approximate Word count = 8746
Approximate Pages = 35
(250 words per page double spaced)
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