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

The Consumer Affairs Act defines an unfair term 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 contrary to the requirements of good faith is also deemed unfair.

The unfairness of a term is assessed according to:

  • The nature of the goods or services for which the contract was concluded
  • The time of conclusion
  • All circumstances surrounding the conclusion of the contract
  • All the other terms of the contract or another contract on which it is dependent

Such circumstances may also include whether a consumer was unduly pressured, whether both parties were on a level playing field and whether the lack of knowledge or skill 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 can 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 ambiguous terms or any doubt arises about the meaning of a term, the interpretation most favourable to the consumer shall prevail. 

The Unfair Contract Terms Directive (93/13/EEC) protects consumers against unfair standard contract terms imposed by traders. It applies to all kinds of contracts on the purchase of goods and services, for instance online or off-line-purchases of consumer goods, gym subscriptions or contracts on financial services, such as loans.

The Directive has been amended by Directive (EU) 2019/2161 of 27 November 2019 on better enforcement and modernisation of Union consumer protection rules, part of the ‘Review of EU consumer law – New Deal for Consumers”. The amendment introduces an obligation for Member States to provide for effective penalties in case of infringements. It has to be transposed by 28 November 2021 and applied from 28 May 2022.

This directive 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 because of his 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 any of his contractual obligations inadequately, 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 concerning 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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