Legal Updates

Unfair Consumer Terms

Written by David Marchese
09/11/2016

The Competition and Markets Authority (CMA), which is responsible for upholding consumer law as well as competition law, has just published research suggesting that the majority of UK businesses do not fully understand the rules on unfair terms in consumer contracts, and that this directly affects how they treat their customers.

The UK law in this area is largely inspired by UK directives, but was recently re-enacted under the Consumer Rights Act 2015, and it is a fairly sure bet that the law will not be relaxed post-Brexit.

Part of the difficulty in applying the law may stem from the fact that the rules are very general: unfair terms in contracts between a trader and a consumer will not be binding on the consumer, and a term is “unfair” if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer.

Undoubtedly this goes against the grain of many centuries of “let the buyer beware”, but in reality enough of us have seen consumer focussed TV shows to know, in general, what it means. And if you have ever been caught up in a situation where a trader unadvisedly seeks to shield behind an unfair term, and is ultimately forced to back down, you will be aware how easily goodwill can be lost by getting it wrong in the first place.

In an attempt to assist businesses, the CMA has republished guidance dating back a number of years, where unfair terms (and their replacements after intervention) have been published on a “before and after” basis. Some of the examples are quite telling:

“The company, its agents and employees, are not under any liability whatsoever in respect of personal injury, loss or damage howsoever caused.”

“The use of any of the Company’s equipment or machinery or the facilities owned by or occupied by the Company is entirely at your own risk.”

“We cannot accept any responsibility for the outcome of any contacts or meetings made through us, or for the accuracy of information supplied to us by members.”

“Neither we nor our servants or agents will be under any liability in respect of defects in goods delivered, nor for any injury, damage or loss resulting from such defects, whatsoever and however caused.”

“All conditions and warranties whatsoever (whether expressed or implied and whether arising at common law or statute) are hereby excluded to the extent permitted by law.”

“It is the customer’s responsibility to make sure they have tried the goods before delivery and that they are fit for the purpose for which they are intended.”

“Your signature constitutes acceptance of all merchandise and indicates 100 per cent satisfaction as per order.”

“No claims whatsoever will be entertained and no liability attaches to the Company in any event for goods sold at discount prices as remnants or as sub-standard stock.”

“Returns will not be accepted unless the goods are returned in their original condition accompanied by the invoice and full and complete packaging.”

“The Company shall have no liability under this Agreement in respect of any indirect or consequential loss resulting from negligence or any other tort on the part of the Company or any of its officers, employees or agents.”

To which may be added:

“The software is provided AS IS, without any warranties.”

and the perennial cop-out, ruled ineffective in 1925, but recently spotted on an invoice of a household name company:

“E&OE (errors and omissions excepted).”

If further elucidation is required, we shall be happy to assist.

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David Marchese

I graduated from Oxford University before qualifying as a solicitor at Herbert Smith. I went on to work at Richards Butler and then Davenport Lyons, before joining Gordon Dadds in 2014. I have extensive experience advising on the law of intellectual property, information technology and commercial contracts. I am the author of Business Licensing Agreements (Longman, 1995), the section on Supply of Goods and Services in Practical Commercial Precedents (Sweet & Maxwell) and several published articles including Joint Ownership of Intellectual Property (EIPR, 1999) and Warranties and Covenants in IP Licences (OUP, 2009).

Gordon Dadds