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29th July 2019

New guidance on unfair contract terms issued by the European Commission

By Alexandra Cooke

On 22 July the European Commission published guidance on the Unfair Contract Terms Directive (“UCTD”) (the “Guidance”). In the UK, the UCTD is implemented by the Consumer Rights Act 2015 (“CRA”), which brings together some of the most important consumer law rules applicable in the UK.

The Guidance follows the Commission’s “Fitness Check” of 6 key consumer protection and marketing directives, which found there was lack of clarity on the interpretation of the UCTD and its application across member states. The purpose of the Guidance is to address this shortcoming by clarifying how the Court of Justice of the European Union (the “ECJ”) interprets certain key concepts and provisions of the UCTD. The Guidance covers:

  • the objectives and scope of the UCTD (looking at concepts such as the definition of “seller or supplier” and “consumer”);
  • the relationship of the UCTD with national law;
  • the fairness test and transparency requirements;
  • the non-binding character of unfair contract terms;
  • remedies and procedural guarantees; and
  • injunctions for the protection of consumer’s interests.

To complement the Guidance, the Commission has also published recommendations drawn up by European businesses on how terms and conditions can be presented to consumers in a more user-friendly and transparent way (the “Recommendations”).

However, it is important to remember individual member states can insist on more detailed or stricter rules when implementing the UCTD. For example, in the UK, the CRA has a wider definition of “consumer” than the UCTD. Therefore, the Guidance and Recommendations only provide a minimum standard. Although the Recommendations may, in particular, be a useful starting point for businesses established in the UK, or targeting UK consumers, when ensuring their terms and conditions are compliant, they should be used alongside guidance issued by the Competition and Markets Authority (“CMA”) on unfair contract terms (e.g. see here, and also our recent article on the “Small Print. Big Difference” campaign launched by the CMA, particularly targeting the travel sector).

Hamlins regularly advises businesses in a variety of sectors (including the travel, fashion, real estate and sports sectors) on compliance with consumer legislation. For further information please contact Alexandra Cooke.

 

New guidance on unfair contract terms issued by the European Commission

Have a question? Contact Alexandra

Have a question? Contact Alexandra

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