Statements on order forms like "I have read the
Conditions of Sale overleaf and agree to be bound by them" are
unfair on consumers, in the OFT's view.
The consultation will result in the first revision to
already-produced guidelines to the Unfair Terms In Consumer
Contracts Regulations. These 1999 Regulations bind all suppliers
who use standard contract terms with consumers. However, the OFT
has said that respondents to a recent survey did not want major
changes made to the existing guidance.
The six-week consultation is now open and the new guidance will
take account of the Enterprise Act of 2002 and the survey which the
OFT conducted into its guidance last year.
Under the Regulations the OFT has a duty to consider any
complaint received about unfair terms. Where a term is considered
unfair, enforcement action may be taken on behalf of consumers to
stop its use, if necessary by seeking a court injunction in England
and Wales or an interdict in Scotland.
The Enterprise Act 2002 gives the OFT separate powers against
traders who breach consumer legislation, including the right to
seek enforcement orders, where there is a threat of harm to the
collective interests of consumers.
As an illustration for companies on what is and is not
appropriate, the Office published some examples of contract clauses
that it looked into and the amendments that were made under its
guidance. The examples are organised according to the group
structure of the guidance itself.
Consumer declarations
Original term: I/we have read the Conditions of Sale overleaf
and agree to be bound by them.
New term: before signing this order, the customer should
carefully read the terms and conditions set out on the other side
of this agreement.
Choosing a jurisdiction
"The terms may be unfair if they have the object or effect of
excluding or hindering the consumer's right to take legal action or
exercise any other legal remedy," say the Regulations.
Original term: English law will apply to these Terms of
Membership. The English courts will have exclusive jurisdiction in
the case of any dispute.
New term: Relevant United Kingdom law will apply to the
Agreement and the relevant courts of the United Kingdom will have
exclusive jurisdiction in relation to the Agreement.
Excessively broad general exclusions
Original term: This car wash is used entirely at owner's
risk.
Action taken [by the OFT]: Term deleted.
Original term: The company does not accept responsibility for
the failure of any fire protection equipment in the event of a
fire.
Action taken: Term deleted.
Limitations of liability
Original term: in respect of any direct damage to property
caused by the negligence of Maples or the negligence or wilful
default of its servants or agent Maples' liability hereunder shall
not exceed £1,000.
New term: we will pay for any damage caused by our
employees.
Clauses excluding the right to monetary compensation
Original term: Microsoft's entire liability and your exclusive
remedy shall be, at Microsoft's option, either a) return of the
price paid or b) repair or replacement of the software or hardware
that does not meet Microsoft's Limited Warranty and which is
returned to Microsoft with a copy of your receipt.
Action taken: term is no longer applied to consumers
Cancellation fees and penalties
Original term: the company may in its absolute discretion agree
to the cancellation of the contract provided that the customer
reimburses the company for all expenses actually incurred together
with the anticipated gross profit had the contract been
completed.
Action taken: term deleted.
Unequal cancellation clauses
Original term: this Contract is not subject to cancellation by
The Customer … the Company reserves the right to cancel or refuse
acceptance of any order at any time by refunding all monies paid
less an administrative charge. Action taken
New term: either party shall have the right to terminate this
Contract without penalty within seven days … In the event of such
termination by either party the Company shall refund to the
Customer all sums paid by the Customer.
Binding consumers to hidden terms
Original term: … the Seller and this contract shall be subject
to any conditions which the Company may from time to time attach to
the supply of the vehicle and the accessories to the Seller.
Action taken: term deleted.
Supplier's right to vary terms generally
Original term: Sky may at any time vary or add to these
Conditions as it deems necessary.
New term: [Sky may] change or add to Conditions … for security,
legal or regulatory reasons … We will give you at least one month's
notice of any changes or additions. We will not use this right to
vary the terms of any special offer which applies to you … you may
end this contract at any time … by giving one month's notice, if we
tell you … we are going to change these conditions.
Right to change what is supplied
Original term: the company reserves the right to vary design
and/or specification of any installation and/or product used
without prior notice to the customer.
New term: as it is our policy to continually improve products,
methods and materials, we reserve the right to change
specifications from time to time, we will not make any significant
variations without your agreement.
Clauses claiming the right to vary services
Original term: … a reduction or other variation in the number or
identity of the channels included in the Sky Multi-Channels Package
will not vary the Subscription Payments payable by the Subscriber …
bonus Channels will be supplied to Subscribers at no additional
cost … Sky may at any time without notice vary the terms on which
these Channels are supplied including but … not limited to
introducing or otherwise making a charge …
New term: you may end this contract at any time … if we …
withdraw any Sky Premium Channel or reduce significantly the level
of service of the Sky Multi-Channels Package.
Price variation clauses
Original term prices of the Goods shall include delivery of the
Goods to the Buyer's premises. Provided however, that the Seller
reserves the right to impose a delivery charge where the Seller
sees fit. Any charge for delivery will be at the Seller's rates
from time to time in force.
Action taken: term deleted.
Original term: MDT may vary all or any of its charges …
variations to charges may be made retrospectively and the
subscriber will be charged accordingly.
New term: … you may terminate this agreement at any time whether
in or after the Minimum Period in the event of … any increase in
the monthly charges or the call charges [which] will be notified in
writing to you by us giving at least 14 days notice.
Allowing the supplier to impose unfair financial burdens
Original term: you must indemnify us against any claims or legal
proceedings arising from use of BT Cable which are brought or
threatened against us by another person.
New term: if you use the service for business purposes you must
also indemnify us against any claims made against us by third
parties because the service is faulty or cannot be used.
