Unfair Terms in Consumer Contracts Regulations 1999

Superseded UK statutory instrument

United Kingdom legislation

Unfair Terms in Consumer Contracts Regulations 1999
Dates
Statutory Instrument
Parliament of the United Kingdom
Citation	SI 1999/2083
Made	22 July 1999
Laid before Parliament	22 July 1999
Commencement	1 October 1999
Revoked	1 October 2015
Other legislation
Made under	European Communities Act 1972
Transposes	Council Directive 93/13/EEC
Revoked by	Consumer Rights Act 2015
Status: Revoked
Text of statute as originally enacted

The Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083) was a UK statutory instrument, which implemented the EU (then EEC) Unfair Consumer Contract Terms Directive into domestic law. It replaced an earlier version of similar regulations, and overlaps considerably with the Unfair Contract Terms Act 1977.

It was superseded by the Consumer Rights Act 2015, which regulates unfair terms in consumer contracts in English contract law.

Overview

Contract law

Formation
Capacity Offer and acceptance Meeting of the minds Abstraction principle Posting rule Mirror image rule Invitation to treat Firm offer Consideration Implication-in-fact Collateral contract
Defences
Misrepresentation Mistake Threats and unequal bargaining power Illegality and public policy Unconscionability Culpa in contrahendo Force majeure Frustration of purpose Impossibility Impracticability Hardship Set-off Illusory promise Statute of frauds Non est factum Unclean hands Accord and satisfaction Exculpatory clause
Interpretation
Parol evidence Contract of adhesion Integration clause Contra proferentem UNIDROIT Principles
Dispute resolution
Choice of law clause Forum selection clause Hague Choice of Court Convention Arbitration New York Convention UNCITRAL Model Law Mediation Singapore Mediation Convention Enforcement of foreign judgments Hague Judgments Convention
Rights of third parties
Privity of contract Assignment Delegation Novation Third-party beneficiary
Breach of contract
Anticipatory repudiation Cover Exclusion clause Efficient breach Deviation Fundamental breach
Remedies
Specific performance Money damages Liquidated, stipulated, or penal damages Rescission
Quasi-contractual obligations
Promissory estoppel Quantum meruit Unjust enrichment Restitution Negotiorum gestio
Duties of parties
Duty of honest contractual performance (or doctrine of abuse of rights) Duty of good faith (also implied covenant of good faith and fair dealing or duty to negotiate in good faith) Contract A and Contract B in Canadian contract law
Related areas of law
Conflict of laws Commercial law
By jurisdiction
Australia Canada China (mainland) Ireland India Saudi Arabia United Kingdom England and Wales Scotland United States
Other law areas
Tort law Property law Wills, trusts, and estates Criminal law Evidence
Notes
1 Specific to common law jurisdictions 2 Specific to civil and mixed law jurisdictions 3 Historically restricted in common law jurisdictions but generally accepted elsewhere; availability varies between contemporary common law jurisdictions 4 Specific to the German Bürgerliches Gesetzbuch and other civil codes based on the pandectist tradition 5 Explicitly rejected by the UNIDROIT Principles of International Commercial Contracts 6 Specific to Canadian contract law both in Québec and in the country's common law provinces 7 Specific to civil law jurisdictions, the American Uniform Commercial Code, and Canadian jurisprudence in both Québec and the common law provinces pertaining to contractual and pre-contractual negotiation
v t e

The scope of the Directive is rather limited, seeking merely to harmonise rather basic consumer rights across the EU. In the UK, these 1999 Regulations work to render ineffective terms that benefit seller or suppliers against the interests of consumers. They also have provisions specifically covering standard form contracts.

The Regulations overlap somewhat with the Unfair Contract Terms Act 1977 which deals specifically with exemption clauses. The Directive set out requirements that in many ways are narrower than rules already in place in English law. It does, however, extend the scope of terms which can be rendered ineffective; especially when dealing with unfair terms that do not constitute exemption clauses.

There was some criticism in legal circles that the UK government had not bothered to repeal and reenact the 1977 Act to embrace the Directive. It has been said the Regulations "sit atop the Act like an ill-fitting wig". The 1994 Regulations were declared an insufficient implementation of the Directive, and had to be replaced by the 1999 Regulations; but once again, the opportunity to consolidate the law into an updated Unfair Contracts Terms Act was missed.

Definition of "unfair"

Regulation 5(1) defines the principle of unfair:

If a contractual term has not been individually negotiated and
the term causes significant imbalance in the parties' rights and obligations, then
the term is contrary to the requirement of good faith.

"Has not been individually negotiated" encompasses terms of which the consumer has not had the opportunity to mould. Terms that have been individually negotiated are outside this regulation, while other contract terms may be within the regulation.

"Causes significant imbalance". For a term to be deemed unfair, this requires the term to be to the detriment of the consumer and benefit the seller or supplier to an excessive degree.

"Contrary to good faith". In the complex case of Director General of Fair Trading v First National Bank, the bank's seemingly unfair interest term was found to be in good faith as the term guarded the bank from a possible situation of receiving no interest defeating their business objective.

Schedule 2 sets out an indicative, non-exhaustive list of terms that would be unfair.

Effect of the "unfair" term

Regulation 8 provides that an unfair term "shall not be binding upon the consumer".

The contra proferentem rule

The contra proferentem rule is that where there is any ambiguity in regards to a clause it is to be interpreted against the party which insisted on including it. Regulation 7 states this very clearly:

(1) A seller or supplier shall ensure that any written term of a contract is expressed in plain, intelligible language.
(2) If there is doubt about the meaning of a written term, the interpretation which is most favourable to the consumer shall prevail but this rule shall not apply in proceedings brought under regulation 12.

Notes

Implemented under the European Communities Act 1972. See also (1993) L95 OJ 29.
Unfair Terms in Consumer Contracts Regulations 1994
"A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary 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"
Regulation 5(2)
Regulation 8(2)

References

Lyons, Trevor - Contract Law - Staffordshire University 1994
3 WLR 1297
McKendrick E. (2009). Contract law. 8th ed. Basingstoke: Palgrave Macmillan. p. 161.

External links

OPSI: SI 1999/2083

Categories: