ENF 20.3 The Unfair Terms Regulations

1. (1)

   The Unfair Terms Regulations apply, with certain exceptions, to terms in contracts concluded between a seller or supplier and a consumer which have not been individually negotiated.

2. (2)

   Terms cannot be reviewed for fairness within the meaning of the Unfair Terms Regulations if they are terms which reflect:

   1. (a)

      mandatory statutory or regulatory provisions; or

   2. (b)

      the provisions or principles of international conventions to which the EEA States or the European Community as a whole are party.

3. (3)

   Terms which are written in plain, intelligible language also cannot be reviewed for fairness within the meaning of the Regulations if they relate to the main subject matter of the contract or the adequacy of the price or remuneration, as against the goods or services supplied in exchange. However, the FSA can review terms concerning these matters for fairness within the meaning of the Regulations if they are not written in plain, intelligible language. The FSA does not consider that it is enough that a lawyer could understand the term for the term to be excluded from review for fairness within the meaning of the Regulations. The term must be plain and intelligible to the consumer.

Terms to which the Unfair Terms Regulations apply are regarded as unfair if, contrary to the requirement of good faith, they cause a significant imbalance in the parties rights and obligations to the detriment of the consumer.

1. (1)

   Regulation 12 of the Unfair Terms Regulations states that: '(1) The [Office of Fair Trading] or [...] any qualifying body may apply for an injunction (including an interim injunction) against any person appearing to them to be using, or recommending the use of an unfair term drawn up for general use in contracts concluded with consumers'.'(3) The court, on an application under this regulation, may grant an injunction on such terms as it thinks fit.'

2. (2)

   The FSA is a qualifying body for the purposes of regulation 12.

1. (1)

   In deciding whether to grant an injunction, the court will decide whether the term in question is unfair within the meaning of the Unfair Terms Regulations (see ENF 20.3.2 G).

2. (2)

   If the court were to grant an injunction, the seller or supplier or recommender would have to stop including the unfair term in contracts it concluded with consumers from the date of the injunction

3. (3)

   If the seller or supplier or recommender fails to comply with the injunction, it will be in contempt of court

The FSA also has the power under regulation 13 of the Unfair Terms Regulations to require for certain purposes that the seller or supplier or recommender supply the FSA with certain information or documents relating to pre-formulated standard contracts.

If the court finds that the term in question is unfair, the seller or supplier or recommender would also have to stop relying on the unfair term in existing contracts governed by the Unfair Terms Regulations. This is because regulation 8 of the Regulations provides that an unfair term is not binding on the consumer. To the extent that it is possible, the existing contracts would continue in effect without the unfair term.