It has to be stated that there was
some criticism that the previous Regulationsmerely introduced the Directive,
without engaging in a comprehensive review of this area. Concern was expressed
as to the precise way in which UCTA 1977 and the 1994 Regulations impacted on
one another and how their interaction would affect consumer law generally.
Unfortunately, the 1999 Regulations have done nothing to improve this general
problem and, in this particular respect, the criticisms of the 1994 Regulations
are still relevant.
The 1999 Regulations apply to any
term in a contract concluded between a seller or supplier and a consumer which
has not been individually negotiated. The Regulations are, therefore, wider in
scope than UCTA 1977, in that they cover all terms, not just exclusion clauses.
However, reg 6 states that, apart from the requirement in respect of plain
language, neither the core provisions of a consumer contract, which set out its
main subject matter, nor the adequacy of the price paid are open to assessment
in terms of fairness. The Regulations would, therefore, still appear to focus
on the formal procedure through which contracts are made, rather than the
substantive content of the contract in question.
By virtue of reg 5, a term is unfair
if, contrary to the requirements of good faith, itcauses a significant
imbalance in the parties’ rights and obligations arising under the contract, to
the detriment of the consumer. Schedule 2 sets out a long, indicative, but non-exhaustive,
list of terms which may be regarded as unfair. Examples of terms included in
this list are: a term which excludes or limits liability in the event of the supplier
or seller causing the death or injury of the consumer; inappropriately excluding
or limiting the legal rights of the consumer in the event of total or partial non-performance
or inadequate performance; a term requiring any consumer who fails to fulfil
his obligations to pay a disproportionately high sum in compensation; and a
term enabling the seller or supplier to alter the terms of the contract
unilaterally without a valid reason which is specified in the contract.
Any such term as outlined above will
be assumed to be unfair and, under reg 8, if a term is found to be unfair, it
will not be binding on the consumer, although the remainder of the contract
will continue to operate if it can do so after the excision of the unfair term.
Two further provisions of the
Regulations which are worthy of mention have been taken from the previous
Regulations. First, there is the requirement that all contractual terms be in
plain, intelligible language and that, when there is any doubt as to the meaning
of any term, it will be construed in favour of the consumer This is somewhat
similar to the contra proferentemrule in English common law.
Secondly, although the Regulations will be most used by
consumers to defeat particular unfair terms, regs 10–12 give the Director
General of Fair Trading the power to take action against the use of unfair
terms by obtaining an injunction to prohibit the use of such terms. However,
the power of the Director General to seek injunctions to control unfair
contract terms has been extended to other qualifying bodies. These qualifying
bodies are listed in Sched 1 to the Regulations and include the various regulatory
bodies controlling the previous public utilities sector of the economy, the Data
Protection Registrar and every weights and measures authority in Great Britain.
Various aspects of the original
Regulations, which have implications for the current Regulations, were examined
by the House of Lords in Director General of Fair Trading v First National Bank
(2001).
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