• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Explain what is meant by an unfair term in a contract and describe and evaluate the effect(s) thereon of the Unfair Terms in Consumer Contracts Regulations 1999

Extracts from this document...


Explain what is meant by an unfair term in a contract and describe and evaluate the effect(s) thereon of the Unfair Terms in Consumer Contracts Regulations 1999. After the Treaty of Maastricht, the European Community made a directive on Unfair Terms in Consumer Contracts 1993. This instructed member states to pass domestic legislation to provide consumer protection. As a result, the UK Government made the Unfair Terms in Consumer Contracts Regulations 1994 which have now been replaced by the Unfair Terms in Consumer Contracts Regulations 1999. The main aim of the new regulations is for UK Law to be drafted more closely to the wording of the European Legislation, to help prevent discrepancies between the two. The principle change from the 1994 regulations and the 1999 regulations are simply that more institutions are now able to enforce the legislation, beyond the Director-General of Fair Trading. An unfair term is defined in Regulation 5(1) of the Unfair Terms in Consumer Contracts Regulations 1999 as; ' 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' 1 In addition to this Reg 6 of the same Regulations states that, ' .....the fairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract and to all the other ...read more.


Where judgment is given for outstanding principal payable under a loan agreement and interest accrued up to the date of judgment, those claims (he accepted) are merged in the judgment. That is a conventional application of the principle of res judicata. But no claim for future interest has been the subject of adjudication by the court and such a claim cannot be barred as res judicata. The borrower's covenant to pay interest on any part of the principal loan outstanding thus survives such a judgment, and Ex p Fewings (1883) 25 Ch D 338 was wrong to lay down any contrary principle. Lord Goodhart adopted the observation of Templeman LJ in Ealing LBC v El Isaac9 Where a term is held to be unfair, the consequences is that it 'shall not be binding on the consumer' but the 'contract shall continue to bind the parties of it is capable of continuing in existence without the unfair term' Regulation 7 further states that a seller or supplier shall ensure that any written term of a contract is expressed in plain intelligible language and if there is any doubt about the meaning of a written term, the interpretation most favourable to the consumer shall succeed. The effect of a term being found to be unfair in accordance to the 1999 Regulations in set out in Reg 8(1) that, 'unfair terms in a contract are not binding on the consumer'10, thus it is the individual term that is avoidable not the contract as a whole. ...read more.


the contracting parties and took a broad approach to the issue of fairness.15 The second further change was, the Director General and the statutory qualifying bodies were given power by Regulation 13 to require disclosure of documents and information where this is necessary for enforcement purposes. It is expected that this will significantly improve the monitoring of compliance with undertakings given to drop or amend contract terms. In conclusion I would say that the effect of the Unfair Terms in Consumer Contracts Regulations 1999 on whether a term is to be deemed fair or unfair prevents an injustice on consumers who may not have strong bargaining power against larger corporations. The regulations have also given more qualifying bodies the right to take action against unfair contracts which will most likely help decrease the level of unfair terms in future contracts and greater equality for consumers. An advantage of the 1999 regulations is that they take into account the previous 1977 and 1994 regulations which mean that there is greater protection for consumers from unfair terms. The fact that the regulations are confined in their scope to consumer contract means that it is kept out of the commercial sphere where the need for certainty is greatest. So the uncertainty which the regulations will initially create is not the grave cause for concern which it would be if it applied to international contracts for the sale of goods.16 Overall the 1999 Regulations have had a significant effect on unfair terms, which will must likely result in a decrease of unfair terms being used in contracts. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Law of Contract section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Law of Contract essays

  1. Marked by a teacher

    "The requirement of consideration is an unnecessary complication in the formation of contracts."

    4 star(s)

    v Kenyon and Roscorla v Thomas, where promises were made after the initial contract had been formed and performed similarly, a promise to increase wages retrospectively was held to be supported by a consideration in the past and again, this lacks reciprocity and so, such a contract will be unenforceable

  2. Marked by a teacher

    Contract Law - Offer And Acceptance

    3 star(s)

    It was held that B's returning of the amended document was not an acceptance but a counter-offer which could be regarded as accepted either when MRC ordered coal or when B actually supplied. By their conduct the parties had indicated their approval of the agreement.

  1. Four ways in which a contract may be discharged.

    4. DISCHARGE BY BREACH. Actual breach: one party fails to perform a contractual obligation. Anticipatory breach: one party shows an intention not to perform. Where there is an anticipatory breach the innocent party can accept the breach and immediately sue for breach of contract or they may refuse to accept it and wait until the due date of performance.

  2. Void and voidable Contracts.

    After two years trading Dan finds he has made nothing like the sum estimated by the oil company. This is known as negligent misrepresentation. Negligent misrepresentation is a false statement made by a person who had no reasonable grounds for believing it to be true.

  1. Free essay

    Outline how consumers are protected in contracts for the sale of goods, identifying relevant ...

    The remedies for these terms would be similar to those under the rest of the act. Remedies Pass (P5) If the terms of a contract are breached by one party, the other may suffer a loss. Where this occurs, there are various remedies which the party suffering from the other's breach can use.

  2. Undue influence in the case of Barclays Bank v. O''Brian [1994] Lord Browne-Wilkinson was ...

    It must also be shown that the transaction was manifestly disadvantageous to the party alleged to be influenced (National Westminster Bank v Morgan [1985]), which in this case won't be difficult to prove as Ann clearly had no aim for personal benefits and the deal will certainly destroy her financially.

  1. What is the importance of implied terms to the contract of employment

    In Malik, an employee whose employers had engaged in fraudulent activities so that the stigma affected his employability was told by the trial judge29 that there was no term in the contract of employment which required the employer to put the employee in a good position for employment, should the current employment be terminated.

  2. Law of Contract - Promissory Estoppel

    effect that 'he who comes to equity must come in clean hands' as stated in D&C Builders v Rees. The question now is whether Kajai is coming to equity with clean hands? The are two possible interpretations that can be drawn from the facts given.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work