Unfair Terms Under CRA 2015

Question 1

What part of the CRA 2015 deals with unfair terms?

Answer 1

Part 2 deals with unfair terms in a business to business contract and consumer notices.

Under the CRA:
- some clauses are automatically void
- some are subject to the test of fairness
- some are in a ‘grey list’ - which is a list of clauses that may be unfair

S62 is an important provision - it requires terms and notices to be fair.

Question 2

What are consumer notices (in relation to CRA 2015)?

Answer 2

CRA deals with consumer notices.

Broadly defined as a notice that relates to rights and obligations between a trader and consumer or a notice which appears to exclude or restrict a trader’s liability to a consumer.

It can be an announcement or in writing - as long as it is reasonable to assume that it intended to be seen or heard by consumer.

Question 3

What is s62(4) of UCTA 1977?

Answer 3

It defines unfairness.

“A term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties rights and obligations under the contract to be detriment of the consumer”

Question 4

What is s62(5) of UCTA 1977?

Answer 4

It defines fairness.

“Fairness is determined by taking into account the nature of the subject matter of the contract and by reference to all the circumstances existing when the term was agreed”

Question 5

What is s68(1) and s68(2) of UCTA 1977?

Answer 5

S68(1) - a written term of a consumer contract or notice must be transparent

S68(2) - it is transparent if it is expressed in ‘plain and intelligible language and it is legible’

Question 6

What is s64 of UCTA 1977?

Answer 6

Sets out the two circumstances where the fairness test will not be applied:

1. Where the clause specifies the main subject matter of the contract
2. Where the clause refers to price (the appropriateness of the price in comparison with goods and service - not subject to the fairness test)

Question 7

What mechanisms are in place in the CRA 2015 which enables certain terms to be automatically invalidated?

Answer 7

Invalid - automatically ineffective and fairness test is not applied.

The main invalid terms are:

1. S31 - sale of goods: any term purporting to exclude or restrict liability for breach of a statutory implied term arising under sections 9-17, 28 & 29 CRA is not binding to consumer.
2. S47 - supply of digital content: any term purporting to exclude or restrict liability for breach of statutory implied terms arising under s34-37 and 41 is not binding to consumer
3. S57 - contract for services: any term purporting to exclude or restrict liability for breach of a statutory implied term arising under s49-52 is not binding to consumer.
4. S65 - a term excluding or restricting liability for death or PI resulting from negligence.

Consumer Protection Act 1987 - gives consumers or business the right to claim compensation against producer of defective prod if if caused damage, death or PI.

Question 8

What is Schedule 2 of CRA 2015?

Answer 8

It sets of terms that ‘may be regarded as unfair’ - the grey list.

The list is not exhaustive and courts can find other terms not on the list.

The list is not a list of automatically banned clauses - meaning that a clause may be fair under circumstances.

Examples:
1. Permitting a trader the discretion to decide the price payable under contract after the consumer is bound by it
2. Permitting the trader to determine characteristics of the subject matter of the contract after the consumer is bound by it.