Unfair Term in a Contract Essay examples

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Unfair Term in a Contract After the Treaty of Maastricht, the European Community made a directive on Unfair Terms in Consumer Contracts 1993. This instructed member states to pass domestic legislation to provide consumer protection. As a result, the UK Government made the Unfair Terms in Consumer Contracts Regulations 1994 which have now been replaced by the Unfair Terms in Consumer Contracts Regulations 1999. The main aim of the new regulations is for UK Law to be drafted more closely to the wording of the European Legislation, to help prevent discrepancies between the two. The principle change from the 1994 regulations and the 1999 regulations are simply that more …show more content…
The earlier list, referred to clauses which enabled a business to alter unilaterally the contract terms without a valid reason being specified in the contract. This was then qualified to exclude changes in interest rates in contracts with a supplier of financial services. This exception has now been removed, so that consumers have a better chance of challenging the fairness of a clause in a contract for the provision of financial services.3

The 1999 Regulations does not have a list of factors which are to be taken into account when assessing the issue of good faith or unfairness which is present in the 1994 Regulations. The 1999 Regulations simply say that the fairness of a term is decided in the light of the circumstances at the time of making the contract.

As stated in Reg 5 for a term to be deemed unfair, the significant imbalance it generates must be contrary to good faith. Good faith is likely to require that contracting parties deal with each other in an open and honest way, taking into account their relative bargaining skills.4

In the case of Interfoto Picture Library Ltd V Stiletto Visual Programmes Ltd 1989, [1988] 1 All ER 348, Bingham LJ5 summarised the position. Most legal systems outside the common law enforce an overriding principle that parties should act in good faith when making and carrying out contracts. This does

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