From 1 October 2015, the Consumer Rights Act 2015 replaces law in the Unfair Terms in Consumer Contracts Regulations 1999 and the . Contracts made before this date are still governed by the earlier rules.
The Act is a result of implementing the Unfair Consumer Contract Terms Directive of the EEC (now the European Union). It replaces the Unfair Contract Terms Act 1977.
The Regulations make ineffective contractual terms benefit the interests of sellers or suppliers against those of consumers.
How is a contract deemed to be unfair?
A contractual term is likely to be judged to be unfair if it:
has not been individually negotiated
Most consumer contracts are not negotiated. The customer merely agrees to the terms and conditions of the trader.
creates significant imbalance between the rights and obligations of the retailer and the consumer
A significant imbalance means detrimental to the customer and advantageous to the retailer to a significant degree.
is contrary to the requirement of good faith
Good faith is subjective, taken to mean reasonable to the objectives of a party.
As an example:
It would be unfair to include terms in a contract that give the trader the right to change the goods or services supplied without allowing the customer the right to end the contract if he or she didn’t find the new goods or services to be a satisfactory replacement
Use of language that is not likely to be understood
The Regulations also define a terms that are 'contra proferentem', that is if there is any uncertainty about what a term means, it is to be interpreted against the party that insisted on including it.
In other words, terms in the contract must be written in simple and comprehensible language.
If it is reasonable to assume that the consumer wouldn’t have been able to understand the terms of the contract in advance of entering into it, the contract would be void. This is one reason why use of plain language in contracts is so important in contracts such as website T&C.
Terms that can never be unfair
Some contract terms are deemed never to be unfair, and which cannot be challenged by the customer. The price of the product is one – the price is not unfair if the product can be found for sale elsewhere at a lower price.
What to read next
If you sell to consumers, the Consumer Contracts Regulations oblige you with many rules, particularly if you sell at distance or off-premises. You might want to read how the Regulations affect your business.