Your terms and conditions have never been at such risk!

You may think that if a case comes to court, the only facts that will be considered are the ones put before the judge.  It’s a reasonable assumption and certainly used to be the case. However, recently things have changed.

The Consumer Rights Act 2015 (CRA) says that where cases involve consumers, the judiciary has a duty to consider the fairness of contractual terms, even when no one is asking them to do so! 

In cases where the question of fairness is under legitimate scrutiny, the court must give its assessment. The CRA gives courts a wide scope to apply generalised criteria of fairness, which effectively allows them to assess whether terms are fair in the light of current commercial and social standards.

This assessment of fairness is undoubtedly a difficult exercise and is unavoidably influenced by the subjective views of the assessor.  There are quite complex provisions in the CRA governing which consumer contract terms can be assessed for fairness and which cannot.  For example, a term which is ‘transparent’ or ‘prominent’ is excluded from assessment. ‘Transparent’ terms refer to those expressed in plain and intelligible language, and, where appropriate, written legibly; ‘prominent’ terms are those brought to the consumer’s attention in such a way that the average consumer would be aware of that term. For the purposes of the court, the ‘average consumer’ is deemed to be a person who is reasonably well informed, observant and circumspect. 

Naturally, all this is subject to the interpretation, social background and attitude of the person doing the assessing!  Making a decision on these provisions will undoubtedly be difficult. 

This leaves businesses in the B2C sector with a significant amount of uncertainty as to which of their terms and conditions could be assessed for fairness. How can they safeguard against possible litigation and what action should they take to make sure they are transparent and open in their transactions with consumers?

The case of Radlinger v Finway is a good example. It was brought before the European Court of Justice on 21 April this year and concerned a consumer credit agreement regulated by the Consumer Credit Directive. The court was asked to decide whether the debt under this agreement was enforceable. The court said that in consumer credit cases, such as this, it had a duty to consider any relevant issue arising out of the Consumer Credit Directive, whether or not it had been raised by the parties.

Decisions taken by the European Court of Justice are binding on UK courts, which means we are likely to be left with a situation - both in unfair contract cases and in consumer credit cases - where the court is obliged to investigate such matters fully, and not just consider specific issues raised by the parties.  It will have to be seen how relevant cases progress as they go through the judicial system.

Business owners, particularly those of smaller enterprises, can sometimes be guilty of viewing their terms and conditions as a regrettable necessity, or at least, not giving them the attention they deserve!  This may not be the most stimulating aspect of your business but there is a clear message here.  Reassess your terms and conditions and, where necessary, amend them in the light of this developing area of law.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.