The Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083) is a UK statutory instrument, which implements the EU Unfair Consumer Contract Terms Directive 93/13/EC into domestic law.[n 1] It replaced an earlier version of similar regulations,[n 2] and overlaps considerably with the Unfair Contract Terms Act 1977.
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These Regulations overlap somewhat with the Unfair Contract Terms Act 1977 which deals specifically with exemption clauses. The Directive set out requirements that in many ways are narrower than rules already in place in English law. It does, however, extend the scope of terms which can be rendered ineffective; especially when dealing with unfair terms that do not constitute exemption clauses. It also has provisions specifically for standard form contract.
The regulations only work to render ineffective terms that benefit seller or suppliers against the interests of consumers.
Regulation 5(1)[n 3] defines the principle of unfair:
"Has not been individually negotiated" encompasses terms of which the consumer has not had the opportunity to mould. Terms that have been individually negotiated are outside this regulation, while other contract terms may be within the regulation.[n 5]
"Causes significant imbalance". For a term to be deemed unfair, this requires the term to be to the detriment of the consumer and benefit the seller or supplier to an excessive degree.
"Contrary to good faith". In the complex case of Director General of Fair Trading v First National Bank[1], the bank's seemingly unfair interest term was found to be in good faith as the term guarded the bank from a possible situation of receiving no interest defeating their business objective.
Schedule 2 sets out an indicative, non-exhaustive list of terms that would be unfair.
Regulation 8 provides that an unfair term "shall not be binding upon the consumer".
The 'contra proferentem' rule is that where there is any ambiguity in regards to a clause it is to be interpreted against the party seeking to rely on it. Regulation 7 states this very clearly:[2]