The Unfair Terms in Consumer Contract
Regulations 1999
These regulations were passed following the European Directive on Unfair
Terms in Consumer Contracts. The Directive was largely incorporated into
English law by the Unfair Terms in Consumer Contract Regulations 1994 and
updated in 1999. The kind of terms covered by these regulations are wider than
those covered by Unfair Contract Terms Act 1977, in that the regulations apply
to unfair terms generally, not just exemption clauses. Examples of the kind of
terms envisaged are listed in Schedule 3 to the Regulations, and include
- terms excluding liability for death or personal injury (as before)
- terms which bind the consumer when they had no opportunity to
discover the terms before the contract - terms which allow the seller to alter the contract without a valid reason
- terms which unreasonably exclude the consumer’s legal rights
The regulations do not apply the fairness principle to core (central) terms of the
contract, providing they are in ‘plain intelligible language’. This is in line with
the idea that the courts only require consideration to be sufficient rather than
adequate (see Chapter 3). So provided the parties do know and understand what
they have agreed to (and they are likely to understand the core, central issues)
the court will not interfere with fairness in terms of actual value. However there
may be difficulty deciding exactly which are the ‘core’ elements of a contract.
When they are known, the task of the court will be to see that all of the other
clauses pass the test of fairness according to the regulations. The most recent
amendments to the Regulations in 1999 and 2001 give ‘qualified bodies’ – that
126 Contract law
Woodman v Photo Trade Processing (1981)
A photographic processor’s liability was limited to a replacement film.
This was held unreasonable, but it was said that it may be reasonable if
it was made clear that a premium service was available, costing more
but without the limitation.Watford Electronics v Sanderson (2001)
The Court of Appeal allowed a computer supplier to limit its liability
for computer equipment not being able to carry out the tasks for which
it was bought. The decision was largely based on the fact that the two
parties were in business and had therefore, presumably, willingly
agreed to this limitation.Granville Oil & Chemicals Ltd v Davies Turner (2003)
The court upheld a nine month limit on reporting problems with goods
in transit, again based on the fact that it was reasonable for parties in
business to be aware of this limitation.