Revision Notes - Legislation Unfair Terms

Under the CRA 2015 and UTCA 1977
Under the CRA 2015- The Consumer Rights Act 2015 covers the use of unfair terms in
consumer contracts
 Consumers who buy faulty goods including second hand have up to 30 days to obtain a full
refund.
The CRA 2015 makes a distinction between a product fault discovered before and after the first 6
months of its purchase.
Fault discovered within the first 6 months of purchase it is presumed to have been there at the
time of purchase, unless the retailer can prove otherwise. If an attempt at repair or replacement
has failed, the consumer has the right to reject the goods for a refund or price reduction, if they
wish to keep the product.
The retailer cannot make any “deductions for use” from the price refund in the first 6 months
following an unsuccessful attempt at repair or replacement except for motor vehicles.
Retailer may make a “reasonable” reduction for the use after the first 30 days.
For a fault is detected after the first 6 months the consumer must prove that the product was
faulty at the time of purchase.
 Consumers purchasing digital content such as online films and music, are entitled to a refund if
the goods do not work.
 Consumers are also entitled to services performed with reasonable care and skill. Where services
do not conform to the contract, the following statutory remedies are available to consumers:
• right to require “repeat performance”,
• or right to a reduction in price.
o In respect of a repeat performance, the trader must either repeat the inadequate service
element or perform the whole service again at no extra cost to the consumer, within a
reasonable time and without causing the consumer significant inconvenience.
o if service not performed in a reasonable time, consumers may be entitled to a price
reduction.
o Depending on the severity of the problem, a refund might be up to 100% of the original
price.
With respect to unfair terms

They must pass the reasonableness test
The terms on the:
1. subject matter of the contract or
2. price
are considered only reasonable where they are:
1. Transparent – ie legible and simple, easy to understand language and
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2. prominent- ie they must be brought to the consumer attention in a way that means the average
consumer would be aware of the terms.
In the determination of whether a term is fair, the court will first consider whether a price or subject
matter term is transparent and prominent.
If such a term is not transparent and prominent, it is assessable for fairness.
Terms are automatically unfair (black listed unenforceable by the trader) where:
 The trader can decide the characteristics of the subject matter after the consumer has entered into
the contract
 The trader can make disproportionate charges or require the consumer to pay for services that
have not been supplied eg A term with the object or effect of requiring a consumer who fails to
fulfil his obligations under the contract to pay a disproportionately high sum in compensation.
 The trader is allowed discretion over the price after the consumer entered into the contract
 Notices try to restrict the trader’s liability.
Note: oral or written announcements and communication, must comply with the fairness test.
Courts are bound by law to consider whether terms of a consumer contract were fair even where
arguments about fairness have not been raised by the parties to legal proceedings.
Where misleading information is provided about good or service, the consumer is entitled to take action
under statute for breach of contract.
A grey listed term is only unenforceable by the trader if the courts deem that it fails the fairness or
transparency test.
Unlike black listed which is automatically unenforceable by a trader on contracts with consumers, grey-
listed issues must pass the transparency test ie was it legible and easy to understand and was it prominent
or fairness test. If fail both the terms are then considered unfair by the court.
Summary
What Is reasonable under Business to consumer contracts -CRA 2015- Consumer Rights Act
Exclusion clauses on death, personal injury and legal rights are always ignored by the courts
In deciding on fairness of other terms the courts examine:
 The significant differences in each other’s obligations

 prominent and simply worded clause
 Any disproportionate compensation to be paid
 Opportunity for the consumer to read the clause
 Can the business unilaterally change the terms or price?
Eg of term restricting legal rights -A term which has the object or effect of excluding or hindering the
consumer’s right to take legal action or exercise any other legal remedy, in particular by—
 imposing on the consumer a burden of proof which, according to the applicable law, should lie
with another party to the contract.
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Business to Business contracts UCTA 1977- unfair terms in consumer contract ACT
Exclusion clauses on death and personal injury are always ignored by the courts
To see if other exemption clauses are reasonable – the courts look at:
 Relative Bargaining strengths of the 2 businesses

 Any inducements (e.g., discounts) to allow for agreement on an exemption clause
 Did both parties know about the clause?
 Are the goods bespoke?

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Under the CRA 2015 and UTCA 1977

With respect to unfair terms

 The significant differences in each other’s obligations

 Relative Bargaining strengths of the 2 businesses

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