Bank charges and the unfair terms in consumer contracts regulations 1999: the end of the road for consumers

Morgan, Phillip (2010) Bank charges and the unfair terms in consumer contracts regulations 1999: the end of the road for consumers. Lloyd's Maritime and Commercial Law Quarterly, 2010, 208-215.

Record type: Article

Abstract

Bank charges and the unfair terms in consumer contracts regulations 1999: the end of the road for consumers? OFT v. Abbey National Whilst on the surface the Supreme Court has dealt with a small point of construction, its unanimous decision in Office of Fair Trading v. Abbey National Plc 1 to overturn the decision of the Court of Appeal 2 has significantly limited the scope of protection provided for consumers. Macdonald’s statement that the Unfair Terms in Consumer Contracts Regulations “are possibly the single most significant piece of legislation in the field of contract law” 3 may need to be revised. 1. Drafting The Unfair Terms in Consumer Contracts Regulations 1999 are the United Kingdom’s second attempt to implement the EC Council’s Unfair Terms Directive, 4 a minimum harmonisation measure designed to ensure that contracts concluded with consumers do not contain unfair terms. 5 In implementing it, the Regulations broadly “copy out” its provisions. 6 The Regulations subject terms contained within contracts concluded between a seller or a supplier and a consumer 7 which have not been individually negotiated 8 to a test of fairness. 9 Terms held to be unfair do not bind the consumer, 10 although the contract continues to bind the parties if it is capable of continuing in existence without the unfair term. 11 The test of fairness does not apply to all terms. Art 4(2) of the directive states: “Assessment of the unfair nature of the terms shall relate neither to the definition of the main subject matter of the contract nor to the adequacy of the price and remuneration, on the one hand, as against the services or goods supplies[ 12 ] in exchange, on the other, in so far as these terms are in plain intelligible language”. 1. [2009] UKSC 6; [2009] 3 WLR 1215; [2010] 1 Lloyd’s Rep 281 . 2. [2009] EWCA Civ 116; [2009] 2 WLR 1286. 3. E Macdonald, “Scope and Fairness of the Unfair Terms in Consumer Contracts Regulations: Director General of Fair Trading v. First National Bank ” (2002) 65(5) MLR 763, referring to both the earlier 1994 and the superseding 1999 Regulations. 4. EC Council Directive 93/13/EEC. The first attempt was the Unfair Terms in Consumer Contracts Regulations 1994 (“UTCCR 1994”). 5. Directive, Recital 4. The Regulations were made under the European Communities Act 1972, s 2(2). The directive includes all consumer contracts unless they are expressly excluded; E Peel (ed), Treitel: The Law of Contract , 12th edn (London, 2007), 291–292. Member States may adopt or retain measures providing for greater protection of consumers. 6. As did UTCCR 1994. See S Bright, “Winning the battle against unfair contract terms” (2000) 20(3) LS 331, 342. The 1999 Regulations follow the English text of the directive more closely: Abbey National , [5], per Lord Walker of Gestingthorpe. 7. Reg 4(1). 8. Reg 5(1). Guidance is provided in Reg 6(1). 9. Reg 5(1). 10. Reg 8(1). 11. Reg 8(2). 12. Error in the original (“supplie s ”): (1993) OJ L95/29, 35. CASE AND COMMENT 209.

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