ACCA F4 - Corp and Business Law (ENG)

86 5: Content of contracts  Part B The law of obligations

The new regulations apply to contracts for the supply of goods or services.

 They apply to terms in consumer contracts.

 They apply to contractual terms which have not been individually negotiated.

 There are a number of exceptions including contracts relating to family law or to the incorporation

or organisation of companies and partnerships and employment contracts.

A consumer is defined as 'a natural person who, in making a contract to which these regulations apply, is

acting for purposes which are outside their business'.

A key aspect of the regulations is the definition of an unfair term.

An unfair term is any term which causes a significant imbalance in the parties' rights and obligations

under the contract to the detriment of the consumer.

In making an assessment of good faith, the courts will have regard to the following.

 The strength of the bargaining positions of the parties

 Whether the consumer had an inducement to agree to the term

 Whether the goods or services were sold or supplied to the special order of the consumer

 The extent to which the seller or supplier has dealt fairly and equitably with the consumer

The effect of the regulations is to render certain terms in consumer contracts unfair.

 Excluding or limiting liability of the seller when the consumer dies or is injured, where this results

from an act or omission of the seller

 Excluding or limiting liability for partial or incomplete performance by the seller

 Making a contract binding on the consumer where the seller can still avoid performing the contract

Two forms of redress are available.

 A consumer who has concluded a contract containing an unfair term can ask the court to find that

the unfair term should not be binding.

 A complaint, for example by an individual, a consumer group or a trading standards department

can be made to the Director General of Fair Trading.

Key term

Key term