Consumer agency warns firms over unfair contract terms

Legislation says terms are unfair if they give trader an unfair advantage over a consumer

The National Consumer Agency has published guidelines aimed at helping businesses to comply with legislation on unfair terms in consumer contracts and to ensure their standard-form consumer contract terms are fair.

According to legislation, standard terms are unfair if they give a trader an unfair advantage over a consumer or take away their legal rights. The legislation requires that standard terms are written in understandable language.

Terms that could be considered unfair include those which provide for an automatic renewal of a contract without the consumer’s agreement or those which impose unequal obligations, stating that a consumer is bound to perform the contract but not the seller.

Unfair cancellation clauses and terms that impose disproportionate penalties on a consumer are also deemed unfair.

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NCA chief executive Karen O’Leary said standard-form consumer contracts were common across areas such as utilities, travel and leisure. She called on all businesses using such contracts to review the NCA guidelines carefully “to ensure their contracts don’t contain any terms which could be considered unfair”.

Investigations

The NCA has taken action against firms in the waste sector over contracts. After investigations into the terms of domestic waste collectors’ contracts, it secured undertakings from seven firms to alter contracts.

“Standard-form contracts, when fair, can be beneficial to both businesses and consumers as they quickly and efficiently allow for a transaction to be completed,” said Ms O’Leary. “However . . . they have the potential to be detrimental to consumers if the terms are unfairly balanced in favour of the trader.”

Conor Pope

Conor Pope

Conor Pope is Consumer Affairs Correspondent, Pricewatch Editor and cohost of the In the News podcast