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Report No. 199

U.K. Law Commission's Consultation Paper (2002):

The UCTA and UTCCR are completely unrelated to each other and use different concepts and terminologies resulting in complexity and inconsistency between the two. The UCTA despite its name, is not concerned with unfair terms. Whether a term is unfair is not a test of its validity under this Act. Some terms are simply struck out, other terms are valid, if reasonable. Similarly, the regulations can be used to attack any term which can be argued to be unfair.

Therefore, in January, 2001, the U.K. Law Commission and Scottish Law Commission received a joint reference from the Parliament Under Secretary for State and Consumers and Corporate Affairs to consider the desirability and feasibility of replacing the two legal regimes with a unified regime which would be consistent with Council's Directive, more accessible and clearer to the reader.

The Law Commissions thus on 3 rd July, 2002 issued a joint consultation paper No.166 on 'Unfair Terms in Contracts' inviting public views on the provisional proposals suggested therein. The U.K. Law Commission proposed a single piece of legislation for the whole of U.K. Protection against unfair terms is envisaged for both consumers as well as business contracts. The envisaged unified legislation would subject all terms to a fair and reasonable test.

The basic test in the new legislation on what is 'fair and reasonable' should be whether, judged by reference to the time, the contract was made. The new legislation also contains detailed guidelines relating both to fairness in substance and to procedural fairness. (See paras 4.96 - 4.99-4.101). The Commissions invited public views on the question whether the burden should either (i) be on the party claiming that the term is fair and reasonable to show that it is; or (ii) be on the party claiming that it is not fair and reasonable to show that it is not, unless it falls within Schedule-2, in which case it is for the party claiming that the term is fair and reasonable to show that it is.

Unfair (Procedural and Substantive) Terms in Contract Back

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