The Unfair Terms in Consumer Contracts Regulations 1999
SI 1999/2083
is an old UK

statutory instrument In many countries, a statutory instrument is a form of delegated legislation. United Kingdom Statutory instruments are the principal form of delegated or secondary legislation in the United Kingdom. National government Statutory instrumen ...

, which had implemented the EU (then EEC) Unfair Consumer Contract Terms Directivebr>93/13/EEC
into domestic law.Implemented under the European Communities Act 1972. See also, (1993) L95 OJ 29. It replaced an earlier version of similar regulations,See The Unfair Terms in Consumer Contracts Regulations 1994 and overlaps considerably with the

Unfair Contract Terms Act 1977 The Unfair Contract Terms Act 1977c 50 is an Act of Parliament of the United Kingdom which regulates contracts by restricting the operation and legality of some contract terms. It extends to nearly all forms of contract and one of its most im ...

. It was superseded by the

Consumer Rights Act 2015 The Consumer Rights Act 2015 is an Act of Parliament of the United Kingdom that consolidates existing consumer protection law legislation and also gives consumers a number of new rights and remedies. Provisions for secondary ticketing and ...

, which regulates unfair terms in consumer contracts in

English contract law English contract law is the body of law that regulates legally binding agreements in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries ...

Overview

The scope of the Directive is rather limited, seeking merely to harmonise rather basic consumer rights across the EU. In the UK, these 1999 Regulations work to render ineffective terms that benefit seller or suppliers against the interests of

consumer A consumer is a person or a group who intends to order, or uses purchased goods, products, or services primarily for personal, social, family, household and similar needs, who is not directly related to entrepreneurial or business activities. ...

s. They also have provisions specifically covering standard form contracts. The Regulations overlap somewhat with the

which deals specifically with exemption clauses. The Directive set out requirements that in many ways are narrower than rules already in place in

English law English law is the common law legal system of England and Wales, comprising mainly criminal law and civil law, each branch having its own courts and procedures. Principal elements of English law Although the common law has, historically, b ...

. It does, however, extend the scope of terms which can be rendered ineffective; especially when dealing with unfair terms that do not constitute exemption clauses. There was some criticism in legal circles that the UK government had not bothered to repeal and reenact the 1977 Act to embrace the Directive. It has been said the Regulations "sit atop the Act like an ill-fitting wig". The 1994 Regulations were declared an insufficient implementation of the Directive, and had to be replaced by the 1999 Regulations; but once again, the opportunity to consolidate the law into an updated Unfair Contracts Terms Act was missed.

Definition of "unfair"

Regulation 5(1)"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" defines the principle of unfair: *If a contractual term has not been individually negotiatedRegulation 5(2) and *the term causes significant imbalance in the parties' rights and obligations, then *the term is contrary to the requirement of

good faith In human interactions, good faith ( la, bona fides) is a sincere intention to be fair, open, and honest, regardless of the outcome of the interaction. Some Latin phrases have lost their literal meaning over centuries, but that is not the case ...

. "Has not been individually negotiated" encompasses terms of which the consumer has not had the opportunity to mould. Terms that have been individually negotiated are outside this regulation, while other contract terms may be within the regulation.Regulation 8(2) "Causes significant imbalance". For a term to be deemed unfair, this requires the

term Term may refer to: * Terminology, or term, a noun or compound word used in a specific context, in particular: **Technical term, part of the specialized vocabulary of a particular field, specifically: ***Scientific terminology, terms used by scient ...

to be to the detriment of the

and benefit the seller or supplier to an excessive degree. "Contrary to good faith". In the complex case of ''Director General of Fair Trading v First National Bank'', 0013 WLR 1297 the

bank A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital m ...

's seemingly unfair

interest In finance and economics, interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distin ...

was found to be in good faith as the term guarded the

from a possible situation of receiving no interest defeating their business objective. Schedule 2 sets out an indicative, non-exhaustive list of terms that would be unfair.

Effect of the "unfair" term

Regulation 8 provides that an unfair

"shall not be binding upon the consumer".

The ''contra proferentem'' rule

The ''contra proferentem'' rule is that where there is any ambiguity in regards to a clause it is to be interpreted against the party which insisted on including it. Regulation 7 states this very clearly:McKendrick E. (2009 p.161) ''Contract law''. 8th edn. Basingstoke: Palgrave Macmillan

Notes

References

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External links

United Kingdom contract law 1999 in British law Statutory Instruments of the United Kingdom