Updated : 20/11/2015
You may not always realise it, but every time you buy a product or service from a professional trader, you are entering into a contract - whether it's signing up for gym membership, ordering car tyres online, getting a mortgage for your house or even just buying groceries from the supermarket.
The standard contract terms used by traders, whether they are called "terms and conditions" or are part of a detailed contract that you may actually have to sign, have to be fair.
Contract terms must be drafted in plain, understandable language. Any ambiguities will be interpreted in your favour.
Under EU law, in order to be fair, standard contract terms may not create an imbalance in the rights and obligations of consumers on the one hand and sellers and suppliers on the other.
Besides the general requirement of "good faith" and "balance", the EU rules contain a list of specific terms that may be judged unfair. If specific terms in a contract are unfair, they are not binding on consumers and the trader may not rely on them.
Here are some situations where contract terms may be judged unfair under EU rules:
Terms which exclude/limit a trader's liability if a consumer dies or is injured because of an act/omission by that trader.
Sam joined his local gym. When he had a closer look at his membership contract, he was surprised to read that the gym does not accept responsibility for any harm or injury caused by the use of the facilities and equipment.
Upon checking, he was indeed told by his national consumer association that a term excluding the trader's liability is not valid. Following an investigation by the national enforcement authority, initiated on the basis of Sam's complaint, a court prohibited the trader from using such a term in all its contracts.
Terms which inappropriately exclude/limit consumers' rights to compensation if the trader doesn't keep to his side of the contract.
Costas went on a package holiday with his girlfriend to Kenya for which he paid € 2000 per person. The holiday was a disaster. The flight was delayed by 12 hours. The air conditioning in the hotel was not working at all. The safari trip took place but not in the park they had been promised; on top of that, they were transported there by bus instead of by plane. They complained to the tour operator and asked for compensation amounting to a total of €5,000 (€4,000 for the cost of the package and €1,000 for lost time and enjoyment). The tour operator agreed to compensate them €1,000 only, pointing to a provision in the contract limiting the organiser's liability to 25% of the total cost of the holiday.
When Costas asked, his local consumer association told him that terms which inappropriately limit the trader's liability in case of inadequate contractual performance are most probably unfair. Costas decided to take the tour operator to court to enforce his rights.
Terms which bind the consumer but allow traders to get out of providing a service just because it doesn't suit them.
Liese was travelling a lot and decided to hire a gardener to come twice a week to look after her lawn and flowerbeds. But one month in summer the gardener didn't come and the flowers died from lack of water. When Liese complained, the gardener showed her a term in the contract allowing him not to come if he had too much work on for other clients.
Liese told the gardener that, according to information she had found on the internet, this clause wasn't valid - she therefore managed to get amicable compensation for the lost flowers and obtained a formal commitment from the gardener guaranteeing his twice-weekly services.
Terms which allow a trader to keep pre-payments if the consumer cancels the contract without allowing for equivalent compensation to the consumer where the trader cancels.
Mary ordered kitchen furniture for her new apartment. She paid a 30% deposit up-front and the company came to her apartment to take measurements. The furniture was supposed to be ready and installed in 8 weeks.
After two months Mary called the seller and was told that, unfortunately, it would not be possible to deliver the furniture for several months. Since Mary wanted to move to her new apartment, she cancelled the contract, bought furniture which was in stock in another shop, and asked for a refund of her deposit. The seller refused to return the deposit pointing to a contract term stating that, if the customer cancels the contract, the seller is entitled to keep the deposit. When Mary had a closer look at the contract she discovered that, had the seller decided to cancel the contract, she would not have been entitled to an equivalent compensation.
Mary checked with her national consumer association, who told her that the contract clause was clearly unfair. Therefore, Mary contacted the seller again, referred to her contacts with the legal experts in the consumer association and managed to get her deposit refunded.
Terms which require a consumer who doesn't fulfil an obligation to pay an unreasonably high amount of compensation.
Tom rented a car at Malaga airport. He was supposed to return it with a full tank 3 days later. On the day, there was a traffic jam on the road to the airport due to an accident. Tom didn't want to waste additional time filling the car up with petrol if it meant missing his flight. He returned the car with the tank half empty. Once back home, he saw that he was charged €45 for the fuel, plus a €150 fee for returning the car with an empty tank.
Tom contacted the European Consumer Centres network and was told that imposing such disproportionately high fees is unfair. With the ECC-net's support, the rental company returned €100.
Terms which allow a trader to dissolve a contract unilaterally but where the consumer does not enjoy the same right.
Cristina ordered a wedding dress from a fashion designer. Two weeks before the wedding, she was supposed to meet the designer for a final fitting. When she called him to make an appointment, he told her he'd terminated their contract without providing any real justification.
Cristina checked with a lawyer friend whether the designer could just cancel the contract like that. Her friend explained it was clearly an unfair term because the contract doesn't give Cristina the same right to cancel. Her friend called the designer and explained the legal situation. The designer contacted Cristina and made an appointment for the fitting. Her dress was ready just in time for the wedding.
Terms which authorise a trader to terminate a contract with no fixed end-date at short notice, except where absolutely justified.
Nathalie had a contract with a small local Internet provider, with no end-date specified. One day she received an e-mail informing her that the contract would be terminated as of next week. She called the provider and asked for an explanation but they couldn't give any real reason for cancelling the contract at such a short notice.
Nathalie contacted a consumer association, who told her such term was most likely unfair. She therefore contacted the Internet provider again and managed to get her Internet subscription extended for sufficient time to enable her to switch to a different provider.
Terms whereby a consumer has to notify an intention to end such contracts but where the deadline for doing so is unreasonably early.
Mark has a one-year mobile phone contract which he concluded 10 months ago. His wife recently switched to a new mobile phone company offering very attractive bundle packs and free calls within the network. Mark decided to switch to this new operator as soon as his contract expired. He checked his contract and found out that, if he wanted to terminate it, he should have given 6-months' notice. Since he didn't do that, his contract would have been automatically extended for another year.
Mark was disappointed and decided to contact his national consumer organisation. They informed him it was unfair on the part of the mobile phone company to require that much notice. They advised him to take the matter to court if the company tried to enforce the unfair term.
Terms which bind consumers even though they could not easily have been aware of them before signing the contract.
Monika rented an apartment, on a 3-year lease. But it was only when she moved in that she found out she had to use a cleaning service that charged €100 every month, on top of the rent. Sure enough there was a clause in the contract referring to a document about cleaning services. But Monika had never been given this document.
Monika searched on the Internet and found that "hidden" terms like this are unfair. She told the owner of the apartment that this additional obligation wasn't fair because she hadn't been informed of it before signing the lease - and she eventually managed to avoid that fixed cost.
Terms which allow the trader to alter a contract unilaterally unless the contract states a valid reason for doing so.
Pavel took out a loan from his bank to buy a new car. After 8 months, he discovered that his monthly instalments had gone up.
When he looked more closely at the contract, Pavel discovered a term authorising the bank to unilaterally change the interest rate without giving Pavel a chance to terminate the contract.
He contacted his local consumer association for advice. They told him that, since there was no clause giving Pavel the right to terminate the contract, the term allowing the bank to put up the interest rate was unfair. They advised him not to pay the higher interest rate and to file an official complaint with them, had the bank refused to review the unfair term - Pavel followed their advice and managed to have the contract clause changed.
Terms which allow a trader to make changes to the product or service to be provided unilaterally and without a valid reason.
Birgit ordered new tiles for her renovated bathroom. She chose white-and-blue striped tiles. After 4 weeks, the tiles arrived but they were simple white matt tiles with no stripes. When she contacted the supplier, they pointed out that, under the terms and conditions displayed on the order, if the company was unable to supply any particular item for whatever reason, it would replace it with an item of equivalent standard and value.
Birgit contacted the European Consumer Centres network and was told it was unfair to have terms and conditions that provided for unilateral changes in the product supplied. With the support of the ECC-net, she eventually got her money back.
Terms where the trader can fix the final price on delivery or increase it without giving consumers the option of cancelling the contract if the amount is much higher than initially agreed.
Thomas signed a 5-year contract for servicing of the central heating system in his new house. After 18 months, he found that the monthly fee had unexpectedly risen. When asked for an explanation, the trader pointed to a clause in the contract reserving the company's "right" to increase its prices for servicing the heating with written notice of just one month.
Thomas checked with his national consumer association, who told him that a term allowing the trader to increase the price of a service without allowing the consumer to cancel the contract was most likely unfair. Thomas decided to cancel the contract instead of paying unforeseen additional costs.
Terms where the trader alone has the right to interpret any clause of the contract and to decide whether the product or service complies with the contract.
Krisztina ordered a personalised photo book with pictures of her child. When the book arrived she discovered that the cover of the book was not the colour she'd chosen. She complained to the seller but he refused to reprint the book. He referred to the terms and conditions displayed on the order, saying that the delivery is in conformity with the contract when the seller decides it is.
Krisztina knew that such terms are unfair and insisted that the trader reprint the book or give her money back. By pointing to her rights, she eventually got the book reprinted at no additional cost.
Terms under which a trader tries to dodge commitments made by his staff or where such commitments are subject to other conditions.
Jake bought some shoes in a shop. He did not have time to try them on but the shop assistant told him that, should the size be wrong, he could take them back and exchange. The shoes indeed turned out to be the wrong size, so Jake took them back. But the manager refused the exchange and showed him a written document on the conditions of sale which specified in particular that no exchange was possible, and that notwithstanding commitments made by shop assistants, only the rules contained in that document were valid.
Jake contacted the European Consumer Centres network who confirmed the unfairness of the term. With the ECC-net's assistance, he soon managed to exchange the shoes for another pair.
Terms obliging consumers to fulfil all their obligations when the trader doesn't abide by his.
Louise subscribed to a business-press–review newsletter. She was supposed to receive a business press review from all EU countries in English every day. But sometimes there was no newsletter for 2 or 3 days, and not all the news was translated into English. The next month she received just one newsletter. Even though the service wasn't working properly, she still received invoices for the full subscription fee. She asked the supplier to reduce the price so she only had to pay for the days when she had actually received the service. However, the company refused pointing out that, according to the contract, the service could be temporarily interrupted without releasing the client from their payment obligations.
In the end, the national consumer organisation stepped in; Louise's fee was reduced and the service provider was forced to change the unfair term in the contract.
Terms which allow the trader to transfer the contract without the consumer's consent and which may give the consumer a worse deal.
Karl ordered a new kitchen from a company that promised a "10-year guarantee". It was one of the decisive factors for him. The kitchen was to be installed in his apartment in six weeks' time. When the day finally came, Karl noticed the workers were from a different company. He asked and they confirmed that his contract had been transferred to their company. Karl called to check whether the 10-year guarantee was still valid. The new company explained that the current policy was the usual two-year guarantee and that Karl's contract had given the old company the right to transfer their rights and obligations to the new company.
Karl sought advice from a national consumer association. He was told that a clause authorising contractual rights and obligations to be transferred was unfair and, therefore, invalid - when it meant a reduced guarantee. Therefore, Karl was still entitled to the 10-year guarantee against the company from which he ordered the kitchen originally. Based on the consumer's association advice, he managed to get a warranty-extension from the former company, which committed to provide him with necessary after-sales services.
Terms which restrict how and where consumers can take legal action and obliging them to provide proof which is the responsibility of the other party to the contract.
For the summer holidays, Alain bought a flight ticket from Paris to Porto. On his way to the airport, he was stuck in public transport, arrived at the airport 30 minutes late and ended up having to buy a new flight ticket to reach his holiday destination. When checking-in two weeks later at Porto's airport, he was shocked to discover that his return flight had been cancelled on the grounds that he had not used the outward ticket. He had no choice but to buy another ticket with the same airline. When boarding the plane, he informed the flight attendant that he would start court proceedings as soon as he got back to France in order to obtain compensation. But he was told by flight attendant that, under the airline's standard terms and conditions, he was allowed to take action only in the UK, where the airline was based. Alain had a closer look at the terms and conditions on the company's website and indeed, found a term stating that any legal action should be brought before a UK Court.
Alain contacted the European Consumer Centres network, who told him that a term that limited his legal right to take action was unfair and invalid, so he could take the matter to court in France after all. He also received confirmation that a term providing for the cancellation of a return ticket purely on the grounds that the outward ticket had not been used may, in certain circumstances, be considered as unfair.
Contract terms that are unfair under EU law have no legal or binding force on consumers. Provided the unfair term is not an essential element of the contract, the rest of the contract (but not the unfair term) will remain valid. This means, for example, that you won't have to give up your gym membership just because one clause in the contract is unfair.
EU countries must make sure that consumers know how to exercise these rights under national law, and must have procedures under which business may be prevented from using unfair terms.
Throughout the EU, autorités nationales are in charge of ensuring enforcement of the EU consumer protection rules. If you feel that a particular trader is repeatedly breaching national laws implementing it, including at a cross-border level, you should also report your case to them.