Unfair contract terms

Introduction

A contract is an agreement between two or more people that is enforceable by law. When you buy products or pay for a service, you enter into a consumer contract with the seller or supplier. Both you and the seller are bound by the terms of the contract.

Contracts can be made verbally or in writing. The terms and conditions of each consumer contract can differ depending on the type of business you are dealing with. Sellers and suppliers are free to set contractual terms, but these terms can’t be unfair or take away your legal rights as a consumer. Generally, contract terms are unfair if they put you at an unfair disadvantage.

The Competition and Consumer Protection Commission (CCPC) has supervisory powers to make sure traders comply with the law. In certain circumstances, the CCPC may seek a court order preventing the use of contract terms that are considered to be unfair.

Understanding contract terms

The terms of a consumer contract sets out what you agree to do (for example, pay a certain price) and what you expect the trader to do in return.

There are different types of terms:

  • Express terms – Terms, or direct promises, that are individually agreed between you and the trader (for example, agreeing a price for a good or service if it is not fixed)
  • Standard terms or ‘small print’ – Terms that are already included and you have had no influence over them
  • Core terms – Terms that set out the main conditions of the contract or the basic nature of the goods or services (for example, the price)
  • Mandatory terms – Terms that are required by law or industry regulations
  • Implied terms – These terms are not mentioned but are automatically part of the contract because of consumer law. Products must be of merchantable quality, fit for purpose and as described. Services must be carried out with necessary skill, proper care and diligence, and materials used are fit for purpose. Find out more about your rights as a consumer in Ireland.

Consumer law on unfair contract terms

When you enter into a contract with a trader you have certain protections under the EU Directive on unfair terms in consumer contracts (93/13/EEC). In Ireland, the Unfair Terms Regulations (the Regulations) put the EU Directive into national law.

The aim of the EU Directive is to protect you against the abuse of power by the seller or supplier. In particular, it protects against one-sided standard contracts and the unfair exclusions of essential rights in contracts.

The Regulations require standard contract terms to be fair. The contract is not allowed to create an imbalance between your rights and obligations as a consumer and the rights and obligations of sellers and suppliers. A term is unfair if it puts the consumer at an unfair disadvantage or is harmful to the consumer’s interests. You can find example of ‘unfair’ terms below.

Contract terms must be drafted in clear, plain and understandable language. Any ambiguities in a contract term will be interpreted in your favour. The rules are only for contracts between a consumer and a trader (B2C transactions).

What is not covered?

The Regulations do not apply to:

  • Any term that has been individually negotiated in a contract between you and the seller giving you the chance to change it in some way. The seller or supplier has to prove that the contract was individually negotiated
  • Any contracts between one business and another business (B2B transactions) or contracts between one consumer and another consumer (C2C transactions)
  • Terms that are required or allowed by law (known as mandatory terms)
  • Core terms that set out the price or define the product or service. Core terms must be in clear and understandable language

Other contracts not covered are those relating to:

  • Employment
  • Succession rights
  • Family law
  • The formation of companies or partnerships

What is an unfair term?

The Regulations give a of terms which may be unfair, known as the ‘grey list’. This list does not include every unfait term and in some cases, a term that is included on the list may be fair. Equally, a term which is not on the list, may be found to be unfair if it puts the consumer at a disadvantage.

The ‘grey list’ of terms that may be unfair include:

  • Terms that exclude or limit the trader’s liability if the consumer dies or is injured because of an act or omission by the trader
  • Terms that impose unequal obligations – the consumer is bound to the contract but the trader is allowed to get out of providing a service
  • Terms that exclude or limit consumers’ rights to compensation if the trader does not deliver
  • Terms that allow the trader to keep pre-payments (for example, deposits) if the consumer cancels but does not provide for compensation to be paid to the consumer if the trader cancels
  • Terms that give the trader the right to unilaterally (without your agreement) change the terms of the contract without a valid reason stated in the contract

The fairness test

The Regulations allow for a fairness test, that is, the legal test for assessing the fairness of terms. A number of factors are taken into account when assessing the fairness of a contract term. These include:

  • The strength of the bargaining position of the parties
  • Whether the consumer was offered an inducement to agree to the particular term (an inducement could be a payment or a discount)
  • Whether the products or services were sold or supplied to the special order of the consumer
  • Whether the seller or supplier has dealt with the consumer fairly and equitably

Your Europe has information about unfair contract terms.

Who decides if a term is unfair?

Only the courts can decide whether a term is unfair or not. If you believe that a term is unfair, and you have been unable to resolve the matter directly with the trader, you can consider taking legal action. Find out more about the small claims procedure and taking a civil case. If the trader is based in another EU country, you can use the European small claims procedure.

The Regulations also allow authorised bodies to bring court action in the Circuit or High Court against traders who do not comply – see ‘Where can I report unfair contract terms?’ below.

If the court decides that a contract term is unfair, you will no longer be bound by this particular term. However, if the unfair term is not an essential element of the contract, the remainder of the contract (without the unfair term) will still be legally binding on you and the trader.

What is the effect of a term being unfair?

If a contract contains an unfair term, that term will not be binding on the consumer. The overall contract will continue to be valid (as long as it continues to make sense), but the unfair term will be struck out.

Where to report unfair contract terms

The Unfair Terms Regulations allows authorised bodies to apply to the courts for a declaration that a particular term is unfair.

If you have a complaint about a seller or supplier using unfair contract terms, you can report the issue to the following bodies:

Authorised body

Competition and Consumer Protection Commission (CCPC)

Sector - Consumer contracts for a range of goods and services

What can it do?

  • The CCPC can provide advice about your consumer rights.
  • It can use information received to help inform what enforcement action may be taken depending on the level of consumer harm caused by a trader. Find out more about reporting a business to the CCPC .

What can't it do?

The CCPC does not intervene in individual complaints

Central Bank of Ireland

Sector – Consumer contracts with financial services providers such as banks, financial companies and retail intermediaries.

What can it do?

  • Provide advice about your rights
  • Use information received to inform its supervision of the financial services sector and ensure compliance

What can't it do?

The Central Bank does not intervene in individual complaints

If you need help resolving an individual complaint, contact the Financial Services and Pension Ombudsman.

The Commission for Communications Regulations (ComReg)

Sector – Consumer contracts in relation to telecommunications, electronic communications, broadcasting transmissions, premium rate services and postal sector.

What can it do?

Find out more about consumer protection organisations and how to complain.

Further information

The CCPC has a detailed guide to unfair terms and conditions in consumer contracts.

Find out more about unfair terms and other consumer rights at YourEUright.

Competition and Consumer Protection Commission

Bloom House
Railway Street
Dublin 1
D01 C576

Opening Hours: - Lines open Monday - Friday 9am - 6pm
Tel: (01) 402 5555 or 402 5500
Locall: 1890 432 432

Commission for Communications Regulation

One Dockland Central
1 Guild Street
North Dock
Dublin 1
D01 E4XO
Ireland

Tel: (01) 804 9668
Fax: (01) 804 9680

Central Bank of Ireland

Financial Regulation

New Wapping Street
North Wall Quay
Dublin 1
D01 F7X3
Ireland

Tel: (01) 224 5800
Locall: 1890 777 777
Fax: (01) 671 6561

Financial Services and Pensions Ombudsman

3rd Floor
Lincoln House
Lincoln Place
Dublin 2
D02 VH29
Ireland

Tel: (01) 567 7000

ECC Ireland

Macro Centre
1 Green Street
Dublin 7
D07 X6NR
Ireland

Tel: (01) 879 7620
Fax: (01) 873 4328

Free Legal Advice Centre

85/86 Upper Dorset Street
Dublin 1
D01 P9Y3
Ireland

Tel: +353 (0)1 874 5690
Locall: 1890 350 250

Courts Service

15-24 Phoenix Street North
Smithfield
Dublin 7
Ireland

Tel: +353 (0)1 888 6000
Page edited: 25 June 2020