It is important for everyone to be aware of the requirement to treat consumers fairly. In the absence of such a requirement consumers may seek to have these terms thrown out by a Judge.Â This could be highly significant if you have a large number of customers and someone challenges the terms or a particular term. The term will not be binding although the other terms may still remain valid. This could cause significant embarrassment and dozens of small claims as the drums on the bulletin board begin to beat.
A 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. The OFT have defined good faith to mean Âyou must deal fairly and openly with consumersÂ and that whilst your terms may be drafted to protect commercial needs you must take in to account the interests and rights of consumers by Âgoing no further than is necessary to protect those legitimate commercial interests.Â
Now this is highly subjective but I was once before a Judge who asked me to explain to him the meaning of a clause regarding liability. I did but with difficulty and my explanation was to a fellow Solicitor/Judge. He gave me the benefit of the doubt and we won but it was a close call.Â
The plain language requirement or the transparency test
The Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083) (UTCCRs), dictate that a seller must draft the terms in Âplain and intelligible languageÂ (regulation 7(1), UTCCRs).Â We are not talking about terms which have been individually negotiated but the standard terms which you would find in most B2C transactions. Such terms will be unfair if Âit causes a significant imbalance in the parties’ rights and obligations, to the detriment of the consumer (regulation 5(2), UTCCRs)Â.
The legislation 1. Consumer Protection from Unfair Trading Regulations 2008 (SI 2008/1277) (Consumer Protection Regulations). 2. Sale of Goods Act 1979 (SGA), amending the Sale and Supply of Goods to Consumers Regulations 2002 (SI 2002/3045) (SSGCR). 3. Unfair Contract Terms Act 1977 (UCTA).