Unfair Agreement

Contractual clauses are abusive and therefore do not engage consumers when they lead, contrary to good faith requirements, to a significant imbalance of the rights and obligations of the parties to the detriment of the consumer. A list of terms that could be considered abusive illustrates this general requirement (see appendix to the directive). Given the complexity of litigation, costs and value cases, when claims are low, relatively few cases are ever directly brought by consumers. In order to ensure the effective implementation of consumer protection legislation, the Fair Trade Office has the power to raise consumer regulation cases on behalf of consumers following a complaint. In accordance with Regulation 10-12 of Regulation 10-12 on unfair clauses in contracts with consumers in 1999, which meet the requirements of Directive 93/13/EC on abusive clauses in contracts with consumers, THE OFT has jurisdiction over the collection and review of complaints and then asks the courts to prevent companies from using abusive clauses (under all legislation). UTCCR 1999 is broader than UCTA 1977 because it covers all abusive clauses, not only derogatory clauses, but also stricter clauses, since they apply only to contracts with consumers. The 1999 UTCCR consumer definition is also narrower under Rule 3 when a consumer must be a natural person (and never a corporation as a business[10]) who enters into contracts outside his or her business. While the United Kingdom has always been able to opt for better protection, when translating the directive into national law, it has chosen to comply with simple minimum requirements and not cover all the durations of the contract. Under Regulation 6, paragraph 2, a court can only assess the fairness of terms that do not relate to the "definition of the primary purpose of the contract" or the terms relating to the "price or remuneration" of the thing sold. Apart from these "fundamental concepts," a clause in Regulation 5 can be abusive if it is not negotiated individually and if, contrary to fairness, it results in a significant imbalance in the rights and obligations of the parties. A list of examples of abusive clauses is listed in Appendix 2.

In DGFT/First National Bank plc,[11] the House of Lords found that Regulation 6, paragraph 2, must be interpreted in a restrictive manner because of the objective of consumer protection and that Lord Bingham stated that good faith meant fair, open and honest trade. All of this meant that the bank`s practice of using its late (higher) interest rate to customers who had set a (lower) interest rate by a court as part of a rescheduling plan could be subject to fairness review under Regulation 6, paragraph 2, but that the clause did not create such an imbalance under Regulation 5, since the bank wished to have only its normal interests.