1 July 1995 to 30 September 2015: Unfair Terms in Consumer Contracts Regulations 1999

In most circumstances, for a term to be challengeable as unfair, it must meet certain conditions laid down in the Unfair Terms in Consumer Contracts Regulations 1999.

Generally, these regulations only apply where the consumer has entered a contract on or after 1 July 1995. However, the Competition and Markets Authority (CMA) and the other organisations with shared powers under the regulations can assess a contract, or term, for unfairness where it was entered into before 1 July 1995 and remains in use with consumers on or after that date.

Before 1 July 1995: Unfair Contract Terms Act 1977

A consumer who entered a contract before 1 July 1995 may still be able to argue that a term in their contract is unfair under the Unfair Contract Terms Act 1977.

The act limits the extent to which liability for breach of contract or negligence can be avoided using unfair contract terms. The main example of where the act applies is in the absolute prohibition of terms which attempt to exclude or restrict liability for death or personal injury caused by negligence.

Challenging unfair terms

If a consumer has identified a potentially unfair term in their contract, they should consider making a complaint to one of the enforcement bodies with the power to challenge unfair contract terms.

These bodies only have powers to challenge unfair contract terms to protect consumers in general. They cannot take up individual consumers’ cases.

If a consumer has identified a potentially unfair term in their contract and the seller or supplier refuses to accept that the term is unfair, the consumer could consider taking court action against the seller or supplier to protect or enforce their own rights.

They should seek legal advice before becoming involved in a dispute that could lead to court proceedings. If a court decides a term is unfair, the seller or supplier will not be able to use the term against the consumer.

If a consumer is unclear about whether a particular term is unfair, they could contact their local trading standards department through consumeradvice.scot for more information and advice. However, it is important that they are made aware that only a court can definitely decide whether a particular term is unfair or not.

Challenging unfair terms

If a consumer has identified a potentially unfair term in their contract, they should consider making a complaint to one of the enforcement bodies with the power to challenge unfair contract terms.

These bodies only have powers to challenge unfair contract terms to protect consumers in general. They cannot take up individual consumers’ cases.

If a consumer has identified a potentially unfair term in their contract and the seller or supplier refuses to accept that the term is unfair, the consumer could consider taking court action against the seller or supplier to protect or enforce their own rights.

They should seek legal advice before becoming involved in a dispute that could lead to court proceedings. If a court decides a term is unfair, the seller or supplier will not be able to use the term against the consumer.

If a consumer is unclear about whether a particular term is unfair, they could contact their local trading standards department through consumeradvice.scot for more information and advice. However, it is important that they are made aware that only a court can definitely decide whether a particular term is unfair or not.

The role of enforcement bodies

There are a number of organisations which have the power to consider a consumer’s complaint that a particular term is unfair. These are:

In most situations, it will be appropriate to refer a possible unfair contract term to the local Trading Standards department, which should be able to provide further guidance to a consumer.

The Trading Standards department will also decide whether it wishes to deal with the matter itself, refer it to the CMA, or, if appropriate, refer it to one of the other enforcement bodies.

The CMA has a duty to consider any complaint sent to it that a standard term is unfair, unless it appears to it to be frivolous or vexatious, or another enforcement body has notified the CMA that it will be considering the complaint.

The CMA can be contacted at:

Competition and Markets Authority
Victoria House
37 Southampton Row
London
WC1B 4AD

Tel: 020 7271 0021
Email: info@cma.gsi.gov.uk
Website: www.gov.uk/cma

The other enforcement bodies may act over unfair terms relating to the scope of their work, for example, the Office of Rail Regulation is likely only to act about unfair terms used in contracts relating to rail services.

Complaints that are outside the scope of the other enforcement bodies should always be referred to a local Trading Standards department or the CMA.

Any qualifying enforcement body which considers that a term is unfair can seek a court injunction (in Scotland, an interdict) against any party using the term, or recommending the use of the term, in any consumer contract.

It can also request a temporary order (an interim injunction or interim interdict) to prevent further use of the term until the application for an injunction or interdict has been fully decided by the court.

Alternatively, an enforcement body can apply to the county court (in Scotland, the sheriff court) for an enforcement order which prevents the seller or supplier from using the unfair term in question.

All the enforcement bodies have the power to accept undertakings in lieu of court proceedings from a seller or supplier that they will cease to use an unfair term, or that the seller or supplier will revise the term so that it is no longer unfair.

A consumer who has a legitimate interest in the outcome of a complaint about an unfair term is entitled to be given reasons for any decision about whether the relevant enforcement body will be taking court action against the seller or supplier. When and how reasons are given will depend on all the circumstances of the case.

Unfair contract terms in other EU member states.

The rights that a consumer has in the UK regarding unfair contract terms under the 1999 regulations will be very similar if they have purchased goods or services from a seller or supplier in another EU member state.

If a client has purchased goods or services in another EU member state, and they believe the seller or supplier has used an unfair term in their contract, they could refer the matter to the relevant enforcement authority for that EU member state.

If a consumer’s contract is the subject of a possible unfair contract term, used by a seller or supplier in another EU member state, the adviser should, where applicable, consider referring the matter to the UK European Consumer Centre, which is now responsible for dealing with EU consumer issues faced by UK citizens post-Brexit. UKECC | UKECC