Unfair Contract Terms For Consumers

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Unfair contract terms for consumers

M S Siddiqui
Part Time Teacher, Leading University Pursuing PhD in Open University, Malaysia e-mail: [email protected] All are entering into some sorts of contracts in our every day life with seller or service providers. A consumer is a person who is buying a service or a product from someone whose normal business it is to sell that product or service. Contracts may be written or oral. It is easier to know precisely what the terms are in a written contract but an oral contract may have many terms but is also enforceable in law. A contract is an agreement between two or more people that is enforceable by law and the contract between buyer and sellers for supply of goods and services are called consumer contract. Consumer contracts may differ and there are no hard and fast rules governing what terms should be in a consumer contract. The contract may contain mandatory, core and optional terms. The optional term truly decided by the seller and in some rare instances imposed by the big buyers. These buyers usually buy significant percentage of total production and in a position to dictate any term. The consumers contract between big seller or service providers are subject to unfair term of contract due to uneven financial and logistic strength. The service provider like Bank, Insurance, Housing company, Clubs, amusement park etc use to impose unfair contract term usually non negotiable in the written order form or agreements. These are mostly standard and non negotiable terms. There are may implied terms in consumer contract. An example of an implied term might be that the product or service will last for a reasonable length of time taking the cost of the item or service into account. Mandatory terms must remain in the contract law have to be included in contracts these are not common in consumer contracts. The Core terms are terms that set out the main conditions of a contract. In a consumer contract, these core terms might include the price of the product or service. The core terms and mandatory terms are not considered as unfair term of contracts. The Suppliers of goods and services and the consumers are in dispute regarding unfair contract terms. The unfair contract terms contract will typically be one that has been prepared by one party to the contract (the supplier) and is not subject to negotiation between the parties that is, it is offered on a take it or leave it basis.
2 In case of legal dispute, the court may take into account the circumstances surrounding the conclusion of the contract whether the product or service was sold to the consumer in a fair and equitable manner. An unfair term in a consumer contract is a term that can cause a significant imbalance in the parties rights and obligations to the detriment of the consumer. There are three main categories that unfair terms may fall into. These term may be in disguise of other terms and conditions. - Terms that give the supplier of goods or services the right to change the terms of the contract. - Terms that limit the liability of the supplier of goods and services. For example no liability for death or personal injury arising out of an act or an omission by the supplier of goods or services. - Terms that put an unfair burden on the consumer. Unfair terms violate the principle of good faith. If one party enters a contract in good faith it means that his intention is honest. For example a term states that a deposit will be kept by the supplier of goods or services if the consumer cancels the contract but does not include a term saying that the supplier of goods or services will pay compensation if it does not fulfill its commitments. Some time the seller insert some terms in the small print of the contract agreement where the consumer cannot see it easily. This is violation of good faith. In the case of written contracts, all terms must be written in plain, understandable language. The standard law and convention of many other countries enforce that, If there is a doubt about the meaning of a term, the meaning that is most favorable to the consumer will prevail. The terms of contracts should be negotiated between both the parties and should not be a standard contract. The contract shall considered to study whether the contract is standard or negotiated between and -whether one of the parties has all or most of the bargaining power, the contract was prepared by one party before any discussion relating to the transactions occurred, whether other party was required to accept or reject the terms of the contract in the form in which they were presented, whether a party was given an effective opportunity to negotiate the terms of the contract. The contracting parties should take into account the specific characteristics of a party or the particular transactions. The European Union issued regulation for EU countries for all standard term contracts entered into since 1 July 1995 and make unfair terms unenforceable against the consumer. They apply across a broad range of industries, including the financial services sector. Article 5(1) of the Regulations sets out a test for assessing the fairness of a contract term and provides that a contract term which has not been individually negotiated shall be regarded as unfair if, contrary
3 to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer. The 'Doctrine of Reasonableness' will determine the situation to evaluate the factors mentioned to determine reasonableness. Upfront price payable under the contract or are required or permitted by a law of the Country is not treated as unfair but other charges like the up-front price of a mortgage includes the amount borrowed and the interest payable and any fees disclosed at the time the contract is entered into, but does not include contingent fees, such as default fees. As a result, principal and interest cannot be challenged under the unfair contract terms provisions. The financial sector has free hand for Financial Institutions in Bangladesh and there is institution to look into the situation and suffering of consumers. Usually the situation where at least one of the parties is an individual who is acquiring the financial product or financial service wholly or predominantly for personal, domestic or household use or consumption. A term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance between the rights and obligations of the firm and the consumer, to the detriment of the consumer. The Terms that charge the consumer, a disproportionately large sum if they do not fulfill any of their obligations under the contract or cancels the contract. An agreement may tie a consumer into the contract, while letting the seller decide whether or not to provide the service. It the contract give the seller the absolute right to decide if its products or services have met the requirements under the contract or to interpret any term of the contract as it sees fit. If any of the term require the consumer to fulfill all their contractual obligations, while letting the firm avoid its own. The Financial Institutes (FI) enjoy unbelievable immunity of their acts and all liability of their acts and omission transferred to the shoulders of borrowers due to Banking act and Artho Rin Addalat Act. FI will charge Tk 25 for each phone call or letter and Tk 300 for each visit to the borrower as conveyances charges. Customer must pay all loan processing fees, documentation charges, legal fees of FIs etc. Borrower will have to pay additional 2% for payment of installation of loan repayment originally proposed by FIs and shall pay 5% extra in case of final settlement of loan before agreed date. Some of the remarkable conditions as appeared in some contract and undertaking of borrowers indemnify the bankers of all losses or damages that may cause due to improper documentation. If a terms that automatically extend a fixed-length contract where the deadline for the customer opting not to extend the contract is unreasonably short (e.g. these could apply to some renewable insurance contracts). If there is any term that limits a firm's obligation to honor its agents' commitments to the consumer (e.g. whole agreement clauses). If any term tie the consumer into the contract, even
4 if they have not had a real opportunity to understand the terms before they sign it. If any terms that mislead the consumer about the contract or their legal rights. If the contract has any terms that exclude or limit the consumers legal rights or remedies when the firm has failed to meet its obligations under the contract. Any contract having any condition reflecting that have to be included in contracts by law, have been individually negotiated is a valid contract. On the other hand any condition of contract between businesses are not considered as unfair contract term and it any contract between private individuals, employeremployee, partnership etc may contain any unfair contract term. The regulations should not apply to any term that has been individually negotiated in a contract between a consumer and a supplier of goods and services. They also do not cover contracts between individuals selling products or services outside the course of their normal business or between one trader and another. Other contracts relating to employment, succession rights, family law or the formation of companies or partnerships are not covered by the regulations.

Unfair Contract Terms For Consumers

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Unfair contract terms for consumers

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