Last updated on February 9th, 2021 at 01:40 pm

When it comes to signing contracts related to the provision of goods and services, it is imperative that the consumer reads very carefully the terms, conditions and clauses that have been inserted, including the “small print”. In consumer contracts it is unlawful to use unfair terms, or terms or combination of terms which are unfair, and any such term inserted in any consumer contract shall be deemed never to have been so inserted.

What is an unfair term?

An unfair term is defined by the Consumer Affairs Act as any term in a consumer contract, which on its own or together with other terms creates a significant imbalance between the rights and duties of the buyer and seller. It is also unfair if it causes the contract’s performance to be detrimental to  the consumer, or if it  causes its performance to be significantly different from what the consumer was reasonably expecting. Likewise a term which is contrary to the requirements of good faith is deemed as unfair. The unfairness of a term is assessed according to the nature of the goods or services for which the contract was concluded; its time of conclusion; all the circumstances surrounding its conclusion and all the other terms of the contract or of another contract on which it is dependent. Such circumstances may also include whether a consumer was unduly pressured or whether both parties were on a level playing field; and whether the lack of knowledge or skill of a consumer was improperly taken advantage of. A consumer contract that includes a prohibited or unfair term shall not be binding on the consumer unless the contract may still exist without the unfair term. In any consumer contract, where all or some terms offered by the  trader to a consumer are in written form, these terms must be written in plain and understandable language. If there are any ambivalent terms, or any doubt arises about the meaning of a term, the interpretation most favourable to the consumer shall prevail.

Which kinds of terms may be classified as unfair?

Directive 2005/29/EC concerning unfair business-to-consumer commercial practices in the internal market provides us with a non-exhaustive list of such terms.  A trader may not insert  terms having the object and effect of, for example, excluding or limiting the trader’s liability  by reason of his own fraud or gross negligence, or that of his employees or agents or because he has not carried out a fundamental obligation of the contract. Likewise, a trader may not impose on the customer an unreasonably short period for notifying the trader of any defects. Should the trader fail to perform, or perform inadequately any of his contractual obligations, he may not insert any terms that exclude or limit the legal rights of a consumer against the trader, nor may he prohibit the consumer from seeking the cancellation of the contract in such cases. The law also deems as unfair those terms which allow the trader to provide services or goods subject to a condition whose fulfilment depends only on the trader’s will. The trader is prohibited from retaining sums paid by the consumer if the consumer decides not to conclude or perform the contract, if the consumer is not granted the right to receive an equivalent compensation from the trader if the latter decides to cancel the contract.   A consumer is not irrevocably bound by any terms imposed by the trader which he did not have the opportunity to know about before signing the contract. The trader cannot alter the terms of a contract unilaterally, without specifying a valid reason in the contract. Hence, although the consumer is still advised to read a contract carefully before signing, he is still protected by the law with respect to unfair terms. An awareness of such terms empowers the consumer even further, and may prevent the trader’s possible abuse of his position.

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