The Unfair Terms in Consumer Contracts Regulations 1999 105(ii) Whether the customer was given any inducement to agree to the term, or could have
made a similar contract with a different supplier without agreeing to such a term.
(iii) Whether the customer knew or ought to have known that the term existed.
(iv) If the term excludes liability unless some condition is complied with, whether or not it
was reasonably practicable to comply with that condition.
(v) Whether the goods were manufactured, altered or adapted at the customer’s request.
So, for example, a term would be more likely to be reasonable if:
n the parties were of equal bargaining power; or if the customer could have bought from
plenty of other people; or
n if he was given money off to agree to the term; or
n if he could have dealt with someone else who would not have insisted on a similar
term; or
n if the term was pointed out to him; or
n if the goods were changed to suit the customer’s special needs.
Regulations The Unfair Terms in Consumer Contracts
Figure 3.12 gives an overview of the Regulations.
These Regulations were passed to give effect to an EC directive. The Regulations do not
replace the Unfair Contracts Terms Act 1977, but run alongside it.
The Regulations apply only to contracts made between a ‘seller’ or ‘supplier’ and a
‘consumer’ (reg. 4(1)). A consumer is defined as a natural person who does not make the
contract in the course of a business, trade or profession. (Notice that this test is quite differ-
ent from the UCTA 1977 test as to whether or not a buyer deals as a consumer.)
In Evans vCherry Tree Finance Ltd (2008)the Court of Appeal held that a loan taken
partly for a business purpose and partly for a non-business purpose was covered by the
regulations. The defendant finance company, which was arguing that the regulations should
not apply, had conceded that if any of the purposes for which the loan was taken out was
outside the claimant’s trade or business he was a consumer for the purpose of the regula-
tions. The Court of Appeal said that it would not disagree with this, but also indicated that
the true meaning of ‘consumer’ within the regulations would need to be decided in a future
case.
A company is not a natural person and so a company can never be a consumer for the
purposes of the Regulations. Sellers and suppliers are defined as people who supply goods
or services in the course of a business, trade or profession. The Regulations apply to con-
tracts to supply goods or services and are not limited to dealing with exclusion clauses.
Regulation 5(1) provides that:
A contractual term which has not been individually negotiated shall be regarded as unfair if, con-
trary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and
obligations arising under the contract, to the detriment of the consumer.A term will not have been individually negotiated if the contract was drafted in advance
and the consumer had no chance to influence the substance of the term (reg. 5(2)). This
is obviously a similar concept to the UCTA 1977 concept of ‘written standard terms’. It is
for the seller or supplier to prove that a term was individually negotiated (reg. 5(4)). In