Unfair Contract Terms
When a dispute arises over a clause in a contract, it is easy for the party defending this clause to say ‘well, you should have read the contract’. But how many of us actually take the time to trawl through the small print when signing up to an agreement? Most of us will assume good faith, and rely on our statutory rights to protect us. However, complaints regarding minimum term clauses in mobile phone contracts and gym membership contracts, as well as the use of exclusion or indemnity clauses by unscrupulous firms is proof that this can be a false assumption.
Such contract terms may be found to be unfair, and hence legally unenforceable. For guidance on this, we refer to the Unfair Contract Terms Act 1977. In a nutshell, this piece of legislation protects consumers who enter into legally binding agreements with suppliers where the contract is biased in favour of the supplier. Unfair clauses are those which try to exclude any of the following:
- liability for negligence in the event of death or personal injury. Liability for loss or damage may be excluded, but only where it is considered reasonable.
- liability for breach of contract. This includes situations in which the supplier did not carry out their contractual obligations (the item was not as described or the service not carried out)
- Indemnity clauses are those which protect an individual or a supplier from legal action in the event of professional negligence
- Product guarantees designed to protect the consumer in case of damage of defect
- Statutory rights with regard to Sale of Goods and Supply of Goods and Services legislation.
- Misrepresentation in the form of false or inaccurate claims
The following are also taken into account when deciding whether a clause is ‘reasonable’ or not:
- The relative strengths of supplier and consumer and whether there is a significant imbalance
- Whether you were offered an inducement to agree to the term
- Whether the items purchased were produced or adapted to your particular requirements.
More recently introduced European Regulations clarify further definitions of what constitutes ‘unfair’.
- Making the arrangement legally binding on you, but not on the supplier.
- Allowing the supplier to retain money in the event that you cancel, but not obliging the supplier to pay compensation in the event that they cancel.
- The requirement for you to pay cancellation charges which are disproportionately high.
- Allowing the supplier to dissolve the contract on a discretionary basis, without giving you the same right.
- Allowing the supplier to cancel the contract without reasonable notice to you.
- Automatic contract renewals where you are not given reasonable opportunity to prevent the renewal.
- Incorporating legally binding contractual terms without giving you reasonable opportunity to become familiar with them before signing.
- Allowing the seller to alter the terms of the contract without a valid reason which is specified in the contract.
- Allowing the supplier to determine the price at the time of delivery, or significantly increasing the price without giving you the chance to cancel.
- Giving the supplier the right to determine whether the goods you receive are as described or allowing him to interpret contractual terms as he sees fit.
- Legally obliging you to fulfil your obligations, while not obliging the supplier to fulfil his.
- Allowing the seller to transfer his rights and obligations if it affects any product guarantees you may have with him.
- Not allowing or restricting your right to take legal action against him for negligence or breach of contract
For further information, see the regulations themselves:
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Hi Catriona,
On 3rd Jan i bought a laptop in Currys & the man sold me modem on 3 network. I asked him what coverage was like at my addres & said it was good but did not view with a map supplied by 3 (i have later found out). My terms do say i only have 3 days to return. Whilst on internet it freezes and logs off internet & have only 2 bars so i know its due to coverage as i work for Vodafone. 2 calls to 3 c.services tell me they cannot cancel & it shows good coverage & i need to pay over £100 early cancellation fee. Then he said if it was bought online i would have had 14 days. What are my rights of entitlement to cancel within 14 days?
Thank You. Kind Regards
Sarah, Phones4U were recently in trouble with Ofcom for claims to customers that coverage was good without checking – which was misselling. You have a statutory 7 day coling off period if you buy online, unfortunately you don’t have this right if you buy in-store. Howver, you have a good case for arguing that it isn’t fit for the purposes specified. Particularly as you asked the sales assistant, he assured you it would work and it didn’t. In this case, the £100 fee should not apply because technically it is in breach of your statutory rights and it isn’t a case of you changing your mind. Go back to 3 and request to have this escalated as a dispute citing Sale of Goods. See also:
http://whatconsumer.co.uk/and-if-my-statutory-rights-are-breached/
I had a hire purchase agreement with Peugeot. At the end of that contract they asked if I wanted to keep the car and I said no, but that I wanted to know how much they would charge, because it was over the contracted mileage. They didn’t tell me, but I still gave back the car, because I didn’t want it. There was only £2,708 left to pay on the contract for me to keep the car. Peugeot nevertheless charged me the whole £2,708 even though I gave the car back! They based this on the contract mileage clause. They said that this clause was fair because it was the amount they had to pay back to the Manufacturer- an amount which was apparently also based on the mileage. This doesn’t seem fair to me.
Hi,
I’ve recently been billed £126.00 for renewal of my web-site that I no longer require. I’ve been in touch with the provider and they say an email was sent to me 2 weeks before the renewal, when I should have cancelled if necessary. They now refuse to give me a refund, quoting one of their contract clauses. They also say they have renewed as per the original contract. But that only cost me £25 or something minimal.
Can they legally take money from my credit card without having express permission from me?
Many thanks
Rachel, this is a very common complaint at the moment. Although what these companies are doing is not unlawful, they don’t give you long enough or provide ample opportunity to cancel. They also put the rolling renewal policy, as well as the enhanced amount of money in small print, so you can’t immediately see it. There are calls to make this practice unlawful, but for now, I don’t think there is a lot you can do. Please let me know if you hear otherwise.
Nevander, I can’t understand this. Surely if you had a maximum mileage clause in your contract, it would also state how much extra they would charge you per mile to go over this? It is usually only about 4p per mile over the agreed amount.
I paid a deposit back in December 08 (£300) for a training course which is scheduled to happen in May 09 and I signed the T&C at the time. I no longer wish to pursue this and have given them written notice in Feb 09, which I believe is a reasonable amount of notice, to cancel. I am now being asked to pay 50% of the course fee because I signed the T&C – this will be around £600. Is there any way to sort this out? I haven’t got the money and I do not want their services (training). Can the unfair contract terms help me with this issue? I believe the cancellation charges are disproportionately high in this case.
KK, with courses you must remember that the company may have had to turn other people away from the course if it was full and the £600 therefore represents compensation against loss of income due to your cancellation. However you could well claim that 3 months in advance is reasonable time and therefore such a high cancellation charge is disproportionately high if in fact the course is not full. The OFT recognise this kind of thing as ‘unfair’, but there is no amount or percentage given in law. Under the Unfair Terms in Consumer Contract Regs a term may be considered unfair if it has the object or effect of ‘requiring any consumer who fails to fulfil his obligation under the contract to pay a disproportionately high sum in compensation’ (paragraph 1 (e) of Schedule 2). Have a look at this:
http://www.oft.gov.uk/advice_and_resources/resource_base/legal/unfair-terms/guidance
Hi,
I bought a watch from this store and was given a receipt that has on a term which i think is unfair. it is stated that
”
This shop accepts no liability for any faults in merchandise caused by the customer. In the unlikely event that any of our merchandise should otherwise be found to be faulty, this shop will only replace or refund, where appropriate the said merchandise, upon proof of payment and return to this shop of the merchandise in its original packaging. All claims regarding any fault must be notified no later than 4 weeks from date of purchase”
I was wondering if i could claim any compensation based on time wasted and stress?
John, the information is correct except for the 4 weeks thing – this is to deny you of your statutory right to quality and durability. You have the right to a remedy if the item develops premature wear/tear/faults at any time and not only in the first 4 weeks. You might like to inform them of this? It is unlikely that you would be able to claim compensation unless you can prove significant economic loss or personal injury.
Hi Catriona, sorry to be a pain, but does this mean that even though the item is faulty and without the box I cannot gain a refund? even though I have a proof of purchase?
John, irrespective of what this clause is saying, your statutory rights dictate that you can get a refund if a repair or a replacement is not possible. And this is at any time (within reason), bot just in the first 4 months. You must have proof of purchase – which you have, and the item needn’t be returned in the original packaging either. Shops often say this but it isn’t a legal requirement.
My daughter, a train driver, joined a karate club, and has been paying each month by DD an express term of her joining was that she may not be able to attend when required due to her shift work nature and the fact that she is obliged under safety regulations to have a certain amount of sleep prior to beginning a shift. This was accepted. The club has without consultation changed the amount of lessons offered in a week to a lesser number of hours. She has now moved from the area and it is now not possible for her to attend the lessons and comply with safety regulations on her rest time. She has politely asked that her membership be cancelled as it is simply not possible for her to attend and they have by changing the lessons times made it even more impossible but they are refusing to agree and are threatening to take her now to court. What can she do?
Floorwalker, if you have an agreement to pay a specific amount of money for a specific number of hours for a fixed amount of time, then this is legally binding. Altering the terms of this agreement without prior consultation and agreement (and the option to withdraw) may leave the karate club in breach of contract. This breach will give you the right to terminate the contract without further penalty. Having said this I should also say that it is not unlawful for a club to refuse withdrawal from contract on the basis of a move away from the area unless this is specifically provided for in the contract.
I have had 2 properties on the market with an estate agent,one being a late parents.
We took them off the market and were told we owed £300 per property, we had not been told this at the time of signing and had asked if there would be a charge, we were told no, sole agents for 6 months (later refused whilst on the market with him at all) and 14 days notice. I WOULD NOT have signed if I new I had a charge to pay. He insisted we sign there and then so he could get marketing our properties asap, we did as we had to leave to pick children up from school. He assured us verbally all was fine.
We then realised that after promising to advertise the properties, he failed to do so. He failed to give us the promised feedback and also failed to take new photograhs when he had promised to do so.
He has admitted all this to the property ombudsman whom we complained to but they went off the written contract where no promises were stated. The contract is on going with no end date so he told us unless we paid him £600 we had to stay with him until the poroperties were sold. All these promises are verbal and are written in the property ombudsman’s report. He hand delivered a letter after midnight, sent texts with smiley face all very unprofessional, we have a voicemail from him telling us about our promised advertising. I have had debt collector letters threatening me with court and CCJs unless i pay, he has accused me of being a thief.
Any help would be very much appreciated
thank you
Hi,
I have been running a small computer software related business since 2007. We were renting an office space at Regus House, Windmill Hill Business Park, Swindon from 2007 till June 2010. We moved out of the premises in March itself , but agreed to pay the rental till June 2010 – in order to honour the contract T&C’s .
Now they have sent us an extra bill for £477 for “Business Continuity Service” from July 2010 – September 2010. We never asked Regus to give us this “Business Continuity Service” but they say it is as per the T&C ?
I feel that it is unfair for REGUS to charge for an extra service beyond June 2010( contract termination date) when we do not want it.
Any help in throwing light onto what I can do will be appreciated.
Automatic renewal clause: What is “reasonable opportunity to cancel”? If a company violates that principle, what powers do consumers have to a refund?
I had no idea this ‘renewal’ clause was hidden in a subscription to a wholesalers directory company. I was surprised to see £30 suddenly disappear from my account and it influences my ability to see off my overdraft. On the sign up page I selected: 6 months subscription @ £30 = 5/per month. Makes you think it is a one-off deal ending after 6 months. They also said that I accessed my account since the renewal – perhaps I did or perhaps I didn’t – but if so I would have only been trying, in a panic, to find out how to cancel my subscription and prevent further charges being made.
Hi there,
I am 6 months in to a 24 month mobile phone contract with Three. I need to move back to Australia and was wondering if there was any way that this could be used to evade ridiculous cancellation charges?
I know that I signed a contract and that I should honour it, but there must be something about moving overseas that could apply?
Any help would be great.
Many thanks.
James
I opened a bank account some which, in return for a monthly fee, I got a number of ‘free’ services. One of these was mobile phone insurance. Some months later I dropped the phone into the bath. I took it to the shop I bought it from who sent it for repair. After a few days they got in touch and said they wouldn’t repair it under warranty. At that point that I remembered that I had insurance and made a claim. The claim was rejected on the basis that I had not registered it within 48 hours of the damage occurring! I wrote rebutting the decision on the basis that the term: did not feature in the ‘key points summary’ and to report within 48 hours was unnecessary when the phone was in my possession and no losses could arise from fraudulent calls. I was then asked to send the phone for repair free of charge. Should I still make a complaint to Trading Standards or similar?