The Unfair Terms in Consumer Contracts Regulations 1994

Citation and commencement

1.  These Regulations may be cited as the Unfair Terms in Consumer Contracts Regulations 1994 and shall come into force on 1st July 1995.

Interpretation

2.—(1) In these Regulations—

• “business” includes a trade or profession and the activities of any government department or local or public authority;

• “the Community” means the European Economic Community and the other States in the European Economic Area;

• “consumer” means a natural person who, in making a contract to which these Regulations apply, is acting for purposes which are outside his business;

• “court” in relation to England and Wales and Northern Ireland means the High Court, and in relation to Scotland, the Court of Session;

• “Director” means the Director General of Fair Trading;

• “EEA Agreement” means the Agreement on the European Economic Area signed at Oporto on 2 May 1992 as adjusted by the protocol signed at Brussels on 17 March 1993(1);

• “member State” shall mean a State which is a contracting party to the EEA Agreement but until the EEA Agreement comes into force in relation to Liechtenstein does not include the State of Liechtenstein;

• “seller” means a person who sells goods and who, in making a contract to which these Regulations apply, is acting for purposes relating to his business; and

• “supplier” means a person who supplies goods or services and who, in making a contract to which these Regulations apply, is acting for purposes relating to his business.

(2) In the application of these Regulations to Scotland for references to an “injunction” or an “interlocutory injunction” there shall be substituted references to an “interdict” or “interim interdict” respectively.

Terms to which these Regulations apply

3.—(1) Subject to the provisions of Schedule 1, these Regulations apply to any term in a contract concluded between a seller or supplier and a consumer where the said term has not been individually negotiated.

(2) In so far as it is in plain, intelligible language, no assessment shall be made of the fairness of any term which —

(a) defines the main subject matter of the contract, or

(b) concerns the adequacy of the price or remuneration, as against the goods or services sold or supplied.

(3) For the purposes of these Regulations, a term shall always be regarded as not having been individually negotiated where it has been drafted in advance and the consumer has not been able to influence the substance of the term.

(4) Notwithstanding that a specific term or certain aspects of it in a contract has been individually negotiated, these Regulations shall apply to the rest of a contract if an overall assessment of the contract indicates that it is a pre-formulated standard contract.

(5) It shall be for any seller or supplier who claims that a term was individually negotiated to show that it was.

Unfair terms

4.—(1) In these Regulations, subject to paragraphs (2) and (3) below, “unfair term” means any term which contrary to the requirement of good faith causes a significant imbalance in the parties' rights and obligations under the contract to the detriment of the consumer.

(2) An assessment of the unfair nature of a term shall be made taking into account the nature of the goods or services for which the contract was concluded and referring, as at the time of the conclusion of the contract, to all circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent.

(3) In determining whether a term satisfies the requirement of good faith, regard shall be had in particular to the matters specified in Schedule 2 to these Regulations.

(4) Schedule 3 to these Regulations contains an indicative and non-exhaustive list of the terms which may be regarded as unfair.

Consequence of inclusion of unfair terms in contracts

5.—(1) An unfair term in a contract concluded with a consumer by a seller of supplier shall not be binding on the consumer.

(2) The contract shall continue to bind the parties if it is capable of continuing in existence without the unfair term.

Construction of written contracts

6.  A seller or supplier shall ensure that any written term of a contract is expressed in plain, intelligible language, and if there is doubt about the meaning of a written term, the interpretation most favourable to the consumer shall prevail.

Choice of law clauses

7.  These Regulations shall apply notwithstanding any contract term which applies or purports to apply the law of a non member State, if the contract has a close connection with the territory of the member States.

Prevention of continued use of unfair terms

8.—(1) It shall be the duty of the Director to consider any complaint made to him that any contract term drawn up for general use is unfair, unless the complaint appears to the Director to be frivolous or vexatious.

(2) If having considered a complaint about any contract term pursuant to paragraph (1) above the Director considers that the contract term is unfair he may, if he considers it appropriate to do so, bring proceedings for an injunction (in which proceedings he may also apply for an interlocutory injunction) against any person appearing to him to be using or recommending use of such a term in contracts concluded with consumers.

(3) The Director may, if he considers it appropriate to do so, have regard to any undertakings given to him by or on behalf of any person as to the continued use of such a term in contracts concluded with consumers.

(4) The Director shall give reasons for his decision to apply or not to apply, as the case may be, for an injunction in relation to any complaint which these Regulations require him to consider.

(5) The court on an application by the Director may grant an injunction on such terms as it thinks fit.

(6) An injunction may relate not only to use of a particular contract term drawn up for general use but to any similar term, or a term having like effect, used or recommended for use by any party to the proceedings.

(7) The Director may arrange for the dissemination in such form and manner as he considers appropriate of such information and advice concerning the operation of these Regulations as may appear to him to be expedient to give to the public and to all persons likely to be affected by these Regulations.

Ferrers

Minister of State,

Department of Trade and Industry

8th December 1994