Consumer Rights Act
The Consumer Rights Act 2015 is a very important piece of legislation that provides several levels of protection to consumers in the UK. The legislation came into force on 1st October 2015 and it consolidated consumer protection laws — it replaced the Sale of Goods Act 1979, Unfair Terms in Consumer Contracts Regulations 1999 and the Supply of Goods and Services Act 1982. The 2015 Act enhances and expands consumer protection that already existed under the Unfair Contract Terms Act 1977.
The Consumer Rights Act deals extensively with the sale and supply of goods and services between traders and consumers. The sale of digital contents is also covered by the Act. The Consumer Rights Act applies to both written and oral contracts. This article focuses on unfair consumer contract terms as set out in Part Two of the Consumer Rights Act 2015. The primary purpose of this part of the legislation is to ensure that traders do not insert, into their consumer contracts, terms that are unfair in the eyes of the law. It is important to note that the Consumer Rights Act does not provide blanket protection to consumers. Although the law has provided an extensive (but non-exhaustive) list of terms that may be regarded as unfair, it is vitally important that you properly review any contract before agreeing to the terms because the law does not consider all disadvantageous contract terms as unfair.
Meaning of unfairness
Under the Consumer Rights Act, a consumer contract term is unfair if it causes significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer. Thus, if the term is “one-sided” in favour of the trader and to the detriment of the consumer then that term may be regarded as unfair under the Consumer Rights Act 2015.
Having established that the Consumer Rights Act regards certain contract terms as unfair, the natural question that must follow is which contract terms are regarded by the law as unfair. Under the 2015 Act, there are two distinct types of unfair contract terms, contract terms that may be regarded as unfair and contract terms that must be regarded as unfair.
Contract terms that must be regarded as unfair
Any consumer contract term that places the burden of proof on the consumer with regards to compliance by a distance supplier or intermediary with an obligation under the Distance Marketing Directive must be regarded as unfair. Distance marketing relates to the sale of pensions, mortgages and other financial services products by email, telephone, fax, mail, or online.
The law limits the types of consumer contract terms that must be regarded as unfair contract terms (only distance sale of financial products and services fall within this category). The vast majority of other consumer contract terms may be regarded as unfair, but they are by no means automatically unfair under the Consumer Rights Act. In fact, some contract terms will not be regarded as unfair regardless of how detrimental they may appear to the consumer if the detrimental terms relate to the fairness of the price payable under the contract in comparison to the goods or services supplied or if the term of the contract in question is transparent and prominent.
Contract terms that may be regarded as unfair
The following are some of the terms in a consumer contract that may be regarded as unfair if they relate to:
- Excluding or limiting the trader’s liability in the event of death or personal injury of the consumer as a result of the trader’s act or omission.
- A term which permits the trader to increase the price of goods and services without giving the consumer the right to cancel the contract if the final price is much higher than the price agreed when the contract was concluded.
- Requiring the consumer that breaches the contract to pay a disproportionately high sum in compensation.
- Irrevocably binding the consumer to terms of a contract if the consumer did not have a real opportunity of becoming acquainted with the terms before the conclusion of the contract.
- Permitting the trader to determine the characteristics of the subject matter of the contract after it has become binding on the consumer.
- Excluding or limiting the rights of a consumer in the event that the event of total or partial non-performance or inadequate performance of the contractual obligations by the trader.
- Permitting the trader to retain monies paid by the consumer where the consumer decides not to proceed with the contract without compensating the consumer if the trader cancelled the contract.
- A term that makes an agreement binding on a consumer where the provision of services by the trader under the agreement is subject to a condition that depends solely on the will of the trader for its realisation.
- Permitting the trader to transfer the trader’s rights and obligations under the contract where the transfer may reduce the guarantees for the consumer without the consumer’s agreement.
- A term requiring the consumer to fulfil all of the consumer’s obligations under the contract where the trader does not perform the trader’s obligation.
A more detailed list of consumer contract terms that may be regarded as unfair can be found here. The list is not exhaustive and other detrimental terms may also be regarded as unfair.
Effects of unfair consumer contract terms
Contract terms that are regarded as unfair will not be binding on the consumer. However, the remaining terms of the contract will remain binding insofar as they are practical.