is people other than the Office of Fair Trading, such as the Consumers’
Association and the weights and measures authorities – the right to apply to the
court and to stop an unfair term from being used. This should help to spread the
load of policing unfair terms – provided that the rights to supervise in this way
is in itself properly controlled.
The consumer
A consumer is defined in a slightly different way under the Regulations, as
being ‘any natural person who is acting for purposes which are outside his
trade, business or profession’. This may exclude a person acting partly
within the broad context of his business from being a consumer, as in the
case of R and B Customs Brokers Co Ltd v United Dominions Trust Ltd (see
p. 123). The seller, however, has a wide definition, being ‘any person who
sells or supplies goods or services, and who in making a contact is acting
for purposes related to his business’.
Unfairness in the Regulations
An unfair term in a consumer contract will not be binding, and ‘unfairness’
is stated in Regulation 5(1) to be ‘any term which contrary to the
requirement of good faith causes a significant imbalance in the parties’
rights and obligations under the contract to the detriment of the consumer’.
This is a piece of legislation which is clearly European in flavour, since
English law has not in the past recognised the idea of ‘good faith’ to any
extent. The kind of factors which the courts are directed by Schedule 2 to
consider in assessing good faith are not unfamiliar, such as:
- the bargaining strength of parties
- any inducement to contract
- special requirements of the customer
- whether the supplier has acted equitably.
It will be seen that these are similar to those applied under the Unfair
Contract Terms Act 1977. It is also stated within the Regulations that a seller
or supplier should express terms in ‘plain intelligible language’, and where
there is ambiguity, interpretation should favour the consumer. So an unfair
clause, in very small print, buried amongst other terms, or in language which
a consumer will not readily understand, should not be allowed, whether it be
an exemption clause or any other term leading to unfairness toward the
consumer. This may well have a serious impact on any honourable pledge
clauses still being used in consumer contracts, for example on football pools
coupons, should a claim arise (see Chapter 4, Legal intent).
In addition to the specific provisions, the Director-General of Fair
Trading has been given the role of supervising unfair contract terms by
receiving complaints, asking for injunctions to stop the use of specific
unfair terms, and generally publishing information about the Regulations.
Exemption clauses 127