Unfair Terms in Consumer Contracts Regulation 1999 in a nutshell...
You might begin by questioning what is the need for this legislation if we already have UCTA? Well the answer lies in that the regulations were an EU directive and thus were not an active choice for the judiciary to make when deciding to incorporate them within the system. So it will become clear that there are quite a number of similarities and overlap with the Unfair Terms in Contracts Act.
R3 -> This sets out what it means to be a consumer and a supplier or seller, this is absolutely crucial for utilising the act because the act specifically states that it can only apply to consumer contracts (Reg 4)
R8-> This states that should any term in a contract be found unfair then the courts have power to strike it out.
So what is an unfair term and how do we define it?
We most of the guidance can be found in R5, terms may be found unfair if:
- They have not been individually negotiated
- Are part of a standard form contract
- And that the onus is on the seller to prove they are fair
- Sch 2 is mentioned here as it gives a non-exhaustive list of terms that may qualify as unfair but do note the classification of unfairness is not limited to this
R6, goes on to provide more guidance on how a term can be assessed:
- It shall take into consideration the nature of the contract and circumstances within which it was formed
- If the language is plain and intelligible it is important to note that courts will not interfere in pricing issues (as good faith is not assumed within the English Legal System) and the adaquacy of the bargain (OFT v Abbey National, bank charges were not found to be unfair).
(1)(a) - most important part as it suggests that exemption and limited liability clauses can be found to unfair.
Director General of Fair Trading v First National Bank
-> This case is important as Lord Bingham discusses good faith and defines what it means in our legal system, stating that it is good standards of commercial morality and practice, so nuances with the civil law system can be demonstrated here