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Report No. 199

Chapter IX

Substantive Unfairness: Comparative Law

In this chapter, we shall refer to the 'substantive' unfairness provision in several countries, though they have not been expressly segregated in any particular statute.

United Kingdom

UCTA (1977) (substantive unfairness)

Section 2: Relevant matters

Schedule 2 of the UK Unfair Contract Terms Act, 1977 (UCTA) stated that among relevant matters are the following:

"(d) Where the term includes or restricts any relevant liability if some condition is not complied with, whether it was reasonable at the time of the contract to expect that compliance with the condition would be practicable."

UTCCR, 1999: (substantive unfairness)

In the Unfair Terms of Consumer Contracts Regulations, 1999, Regulation 7 states that a seller or supplier shall ensure that any written term of a contract is expressed in plain, intelligible language.

Schedule 2 of the Regulation enumerates in section 1 to a numberof guidelines for judging unfairness. All the clauses (a) to (q) refer to substantive unfairness. The term is one which terms:

(a) deals with exclusion or limiting liability of a seller or supplier in the event of death of a consumer or personal injury to him on account of acts or omissions of the seller or supplier,

(b) inappropriately excluding or limiting legal rights of consumer in the event of breach,

(c) imposing conditions which depend on the sole will of seller or supplier,

(d) retention of consumer's money without delivering goods,

(e) requiring consumer to pay disproportionately upon the latter's breach,

(f) authorize seller or supplier to breach the contract unilaterally without a corresponding right given to consumer,

(g) enabling seller or supplier to terminate the contract according to his discretion,

(h) automatically extending a contract of fixed duration,

(i) irrevocably binding consumer to terms for which he had no opportunity to become acquainted,

(j) enabling the seller or supplier to alter the terms of the contract unilaterally without a valid reason,

(k) enabling the seller or supplier to alter unilaterally the charactercistics of the goods or service to be provided,

(l) allowing seller or supplier to unilaterally increase price of goods,

(m) giving unilateral right to seller or supplier to determine whether the goods or services are in conformity with the contract,

(n) limiting seller's or supplier's obligation in respect of commitments undertaken by their agents,

(o) obliging consumer to perform obligations even if seller or supplier does not,

(p) giving seller or supplier opportunity to transfer his rights or obligations to the detriment of consumer,

(q) excluding the rights of consumer to take legal action.

Unfair (Procedural and Substantive) Terms in Contract Back

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