Understanding unfair terms in consumer contracts
Sales contracts outline the rights and obligations of both consumers and sellers. These contracts are often standard and ready to be signed by consumers upon agreeing to the sale.
These agreements usually include clauses pertaining to delivery schedules, price agreed and payment terms, cancellation policies, and also, where applicable, information on guarantees. More often than not, the contracts are written in small print and sometimes are also quite lengthy to read. So consumers tend to just sign and agree to all the terms written in the sales contract.
At times, these sales contracts unfortunately include unfair terms that create an imbalance between the rights and obligations of the parties, to the detriment of the consumer. In other words, unfair terms may try to diminish or take away consumers’ legal rights.
Such terms and practices are prohibited by consumer protection legislation.
The Consumer Affairs Act lists several terms that are deemed unfair, and these include clauses that prevent consumers from exercising their rights when the seller is at fault. Other examples of unfair contract terms include: liability exclusion for every possible eventuality; terms that impose unreasonably brief time frames for notifying the trader for defects; and terms that enable the trader to retain payments made by the consumer in case of contract cancellation, while simultaneously denying consumers the right to seek compensation if the trader cancels the contract.
Additionally, it is unfair to compel consumers to pay disproportionately high sums as compensation compared to the value of the goods or services purchased. Furthermore, consumers cannot be prevented from cancelling a contract if the trader fails to fulfil their obligations. The latter include terms that limit the consumer’s
“Consumer legislation protects consumers from unjust terms by rendering them void, meaning that even if consumers sign and agree to them, they cannot be legally enforced
right for compensation when a service or product is not provided as agreed or on the date agreed.
Traders are also prohibited from enforcing contract terms that allow them to significantly change the original sales agreement without allowing consumers to withdraw from the contract.
Likewise, binding consumers with terms they had no real opportunity of review before the conclusion of the contract is prohibited. Consumers must be provided with a copy of the contract terms and conditions before and after the sale is concluded.
Traders are also not allowed to automatically extend fixed contracts. This includes clauses that enable the trader to automatically extend a contract of fixed duration where the consumer does not indicate otherwise.
Consumer legislation protects consumers from unjust terms by rendering them void, meaning that even if consumers sign and agree to them, they cannot be legally enforced. Additionally, the law stipulates that contract terms must be clear and easily understandable by consumers, enabling them to make informed decisions.
In instances where a term is ambiguous, or any doubt arises about the meaning of a term, the law states that the interpretation most favourable to the consumer shall prevail.
It is important to understand that when a consumer contract contains an unfair term, although that specific term is not legally enforceable, it does not invalidate the entire contract.
Instead, it is the unfair term that loses its effectiveness, while the rest of the contract remains valid. However, if the contract cannot function without the unfair term, it may become unenforceable in its entirety.
Despite this protection, consumers are still encouraged and expected to diligently review any contracts they are requested to sign. By doing so, they can verify that what was verbally agreed to has been actually included in the contract of sale.
Thus, although there may be a temptation to sign on the dotted line without a second thought, allocating time to review a contract and understand its terms can help consumers to detect any disparities with verbal agreements and clarifying any ambiguous terms.
If there are any amendments to the original sales contract, it is important that these are signed and dated by the company’s representative.
In cases where consumers find themselves in disagreement with traders regarding unfair contract terms, they have the option to seek assistance from the Office for Consumer Affairs at the MCCAA.
This to verify whether the contract term in question is indeed unfair and, if confirmed, receive guidance on the appropriate course of action.
This office can be reached either through the ‘contact us’ form on the MCCAA website below, or by phoning 8007 4400, or by sending a message through the Facebook page @MCCAA.
Odette Vella is director, Information and Research Directorate, MCCAA.
WWW.MCCAA.ORG.MT ODETTE.VELLA@MCCAA.ORG.MT