Unfair Terms Definition
Meaning of “unfair”
A term in a consumer contract is unfair if it causes a significant imbalance in the parties’ rights and obligations to the detriment of the consumer. The assessment of the transparency of a consumer contract term will take account of specific requirements. In assessing if a term complies with the requirements of good faith, regard will be given to the strength of the bargaining positions, whether there was consumer inducement to agree a term, whether the subject matter of the contract was sold/supplied to the special order of the consumer, whether the trader has dealt fairly with the consumer.
A term of a consumer contract 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 the consumer
Assessment of Unfairness
In assessing whether a term of a consumer contract is unfair, the following matters shall in particular be taken into account—
- the nature of the subject matter of the consumer contract,
- whether the term of the consumer contract complies with the below transparency requirements ,
- all of the circumstances relating to the conclusion of the consumer contract, and
- the other terms of the consumer contract or of any other contract (including a consumer contract) on which it is dependent.
In assessing whether a term of a consumer contract complies with the requirement of good faith, regard shall be had in particular to—
- the strength of the bargaining positions of the parties,
- whether the consumer had an inducement to agree to the term,
- whether the goods were, or the digital content, digital service, service or other subject matter of the contract was, sold or supplied to the special order of the consumer, and
- the extent to which the trader has) dealt fairly and equitably with the consumer, and) taken the consumer’s legitimate interests into account.
Exclusion from assessment for unfairness
A consumer contract term will not be assessed for unfairness when it relates to the main subject matter of the contract and lays down the essential obligations under it or relates to adequacy of price or remuneration payable in exchange for supply of the subject matter of the contract in exchange for such price or remuneration.
A term is excluded from assessment only if it complies with the transparency requirements. Price or remuneration payable does not include payment that is incidental or ancillary to the price or remuneration payable under the contract in exchange for such price or remuneration or dependent on the occurrence/non-occurrence of a particular event. This provision does not apply to a term of a consumer contract that is presumed unfair below).
Consumer contract terms that are always unfair
A contract term will always be unfair where it has specific negative effects. This does not apply to any consumer contract of insurance; transfer of an interest in land; liability of occupier of premises for recreational purposes; affect the validity of any discharge of indemnity. In this regard, a consumer will not be deemed to have voluntarily accepted any risk due to agreeing or knowing about a term that sought to exclude the trader’s liability for death or personal injury. “Personal injury” is defined.
Consumer Contract terms that are always Unfair
Subject to the below limitations , a term of a consumer contract shall always be unfair if its object or effect is—
- to exclude or limit the liability of a trader for the death of or personal injury to a consumer arising from an act or omission of the trader,
- to require a consumer to pay for goods that have not been delivered or digital content, a digital service or a service that has not been supplied,
- to impose on a consumer a burden of proof that, according to the applicable law, would otherwise be on a trader,
- to exclude or hinder a consumer’s right to take legal action or exercise a legal remedy, including by requiring the consumer to take a dispute to an arbitration procedure that is not governed by law,
- to require a consumer to bear his or her own costs in respect of any arbitration,
- to give a trader the exclusive right to determine whether goods are, or digital content, a digital service or a service is, in conformity with the contract,
- to give a trader the exclusive right to interpret any term of the contract,
- to grant the trader a shorter notice period to terminate the contract than the notice period required of the consumer, or
- to confer exclusive jurisdiction for disputes arising under the contract on a court in the place where a trader is domiciled unless the consumer is also domiciled in that place.
For the above purposes a consumer shall not be deemed to have voluntarily accepted any risk merely because he or she agreed to or knew about a term of a consumer contract that purported to exclude the trader’s liability for death or personal injury.
Deemed Validity Exceptions
The deemed invalidity does not apply—
- to a consumer contract in so far as it is a contract of insurance, including a contract to pay an annuity on human life, or
- to a consumer contract so far as it relates to the creation or transfer of an interest in land.
The deemed invalidity does not apply to the liability of an occupier of premises to a person who obtains access to the premises for recreational purposes if—
- the person suffers loss or damage because of the dangerous state of the premises, and
- allowing the person access for recreational purposes does not relate to the occupier’s trade, business, craft or profession.
The deemed invalidity does not affect the validity of any discharge or indemnity given by a person in consideration of the receipt by that person of compensation in settlement of any claim that the person has.
Consumer Contract Terms Presumed to be Unfair
Part 1 of Schedule 5 of the Consumer Rights Act (which is subject to Part 2 of the same Schedule) contains an indicative non-exhaustive list of consumer contract terms presumed to be unfair under this Part. Such a consumer contract term may be assessed for unfairness. The Minister, having consulted as appropriate, may make regulations where he is satisfied that it is necessary in the interests of consumer protection and fair competition.
- a term which has the object or effect of inappropriately excluding or limiting the legal rights of the consumer in relation to the trader or another party in the event of total or partial non-performance or inadequate performance by the trader of any contractual obligations, including the option of offsetting a debt owed to the trader against any claim which the consumer may have against the trader.
- A term which has the object or effect of making an agreement binding on the consumer whereas the supply of a service by the trader is subject to a condition whose realisation depends on the trader’s will alone.
- A term which has the object or effect of permitting the trader to retain sums paid by the consumer where the consumer decides not to conclude or perform the contract, without providing for the consumer to receive compensation of an equivalent amount from the trader where the trader is the party cancelling the contract.
- A term which has the object or effect of requiring that, where the consumer decides not to conclude or perform the contract, the consumer must pay the trader a disproportionately high sum in compensation for goods, digital content, a digital service which have not been supplied.
- A term which has the object or effect of requiring any consumer who fails to fulfil his or her obligations under the contract to pay a disproportionately high sum in compensation.
- A term which has the object or effect of authorising the trader to dissolve the contract on a discretionary basis where the same facility is not granted to the consumer, or permitting the trader to retain the sums paid for goods, digital content, a digital service or a service not yet delivered or supplied by the trader, where it is the trader who dissolves the contract.
- A term which has the object or effect of enabling the trader to terminate a contract of indeterminate duration without reasonable notice except where there are serious grounds for doing so.
- A term which has the object or effect of permitting a trader, where the consumer has cancelled the contract, to retain a payment which, had the contract been performed, would have been paid to a third party in accordance with a contractual obligation or a mandatory statutory or regulatory provision.
- A term which has the object or effect of automatically extending a contract of fixed duration where the consumer does not indicate otherwise, when the deadline fixed for the consumer to express a desire not to extend the contract is unreasonably early.
- A term which has the object or effect of irrevocably binding the consumer to terms with which the consumer had no real opportunity of becoming acquainted before the conclusion of the contract.
- A term which has the object or effect of enabling the trader to alter the terms of the contract unilaterally without a valid reason which is specified in the contract.
- A term which has the object or effect of enabling the trader to alter unilaterally without a valid reason any characteristics of the goods, digital content, digital service or service to be delivered or supplied.
- A term which has the object or effect of giving the trader the discretion to decide the price payable under the contract after the consumer has become bound by the contract, where no price or method of determining the price has been agreed with the consumer before the consumer becomes bound.
- A term which has the object or effect of providing for the price of goods, digital content, a digital service or a service to be determined at the time of delivery or supply, or permitting a trader to increase the price of goods, digital content, a digital service or a service without giving the consumer the right to cancel the contract if the final price is too high in relation to the price agreed when the contract was concluded.
- A term which has the object or effect of limiting the trader’s obligation to respect commitments undertaken by the trader’s agents or making the trader’s commitments subject to compliance with a particular formality.
- A term which has the object or effect of obliging the consumer to fulfil all of his or her obligations where the trader does not perform the trader’s obligations.
- A term which has the object or effect of giving the trader the possibility of transferring the trader’s rights and obligations under the contract, where this may serve to reduce the guarantees for the consumer, without the consumer’s agreement.
- A term which has the object or effect of requiring a consumer to pay a fee in order to exercise a statutory right.
- A term which has the object or effect of preventing, without a valid reason, the consumer from obtaining repairs or spare parts from another trader.
- A term which has the object or effect of imposing disproportionate formal or other requirements where the consumer wishes to terminate the contract, whether for the purposes of switching to another trader or otherwise.
- A term which has the object or effect of requiring from the consumer excessive advance payments or excessive guarantees of the performance of future obligations.
- A term which has the object or effect of unduly restricting the evidence available to the consumer in respect of the performance of the contract.
- A term which requires a consumer to restrict his or her rights as a data subject under the Data Protection Acts 1988 to 2018 or the General Data Protection Regulation (Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 201620 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation)).
- A term specified in any regulations made
Restrictions on Presumptions
The following restrictions apply to the above presumptions
- Term 7 (cancellation of contract without reasonable notice) does not include a term of a consumer contract by which a supplier of financial services reserves the right to terminate unilaterally a consumer contract of indeterminate duration without notice where there is a valid reason, provided that the supplier of financial services is required to inform the consumer and any other contracting party of the cancellation immediately.
- Terms 11 (alteration of contract terms without valid reason) and 13 (determination of price after consumer bound by contract) do not include a term of a consumer contract whereby a supplier of financial services reserves the right to alter the rate of interest payable by or due to the consumer, or the amount of other charges for financial services payable by the consumer where there is a valid reason for doing so, provided that the supplier is required to inform the consumer and any other contracting party or parties of the alteration at the earliest opportunity and the consumer is free to dissolve the contract immediately.
- Terms 11 (alteration of contract terms without valid reason) and 13 (determination of price after consumer bound by contract) do not include a term under which a trader reserves the right to alter unilaterally the conditions of a contract of indeterminate duration provided that the trader is required to inform the consumer of the alteration with reasonable notice and the consumer is free to dissolve the contract.
- Terms 7 (cancellation of contract without reasonable notice), 11 (alteration of contract terms without valid reason), 13 (determination of price after consumer bound by contract) and 14 (determination of price upon delivery or increase in price) do not apply to— (a) transactions in transferable securities, financial instruments and other products or services where the price is linked to fluctuations in a stock exchange quotation or index or a financial market rate that the trader does not control, or (b) contracts for the purchase or sale of foreign currency, traveller’s cheques or international money orders denominated in foreign currency, provided that the consumer is made aware of the possibility of such cancellation, alteration or determination of price in the contract before the consumer is bound by the contract.
- Term 14 (determination of price upon delivery or increase in price) does not apply to a price-indexation clause, where otherwise lawful, provided that the method by which prices may vary is explicitly described.