Unfair terms in consumer contracts

Signing a contract before ordering a product or service has become a common and frequent commercial practice. The big do is not getting a consumer to sign a contract but convincing him/her that it is in his/her best interest to read every single clause that is written. If this is not done, consumers might find conditions in the contract that they might not agree with but once signed must be observed.

Prior to signing any kind of documentation, consumers have the responsibility to double check that what they have agreed on with the trader is actually in the contract. Consumers should specifically check that details of the product/service ordered, delivery date, and deposit paid are included in the contract.

Nevertheless, should consumers sign for any unfair term, there is the Consumer Affairs Act that protects them. A contract term could be unfair if it tries to limit the legal rights consumers have.

The Consumer Affairs Act actually provides a list of contract terms that are considered unfair, among which we find those that exclude or limit the liability of a trader for every possible eventuality and terms that establish an unreasonably short period for notifying the trader of any defects, or which exclude/limit the legal rights of consumers against the trader in the eventuality that the trader does not adhere to the contract agreed on.

Terms that allow the trader to retain sums paid by the consumer should the latter cancel the contract (the consumer is prohibited from requesting compensation if it is the trader who cancels the contract) are also prohibited.

Moreover a consumer cannot be requested to pay to the trader as compensation a sum that is disproportionately high to the value of the goods/services purchased or hired. The consumer cannot be prohibited from cancelling the contract if the trader fails to fulfil his obligations.

This means that a trader cannot impose a contract term that allows the seller to change significantly what the consumer is buying without giving the consumer the chance to withdraw from the contract. It is also prohibited to irrevocably bind the consumer to terms with which he hadn't become acquainted before the conclusion of the contract.

The law protects consumers from such unfair terms by nullifying the legal consequences of these conditions. Unfair terms are not binding on consumers. Consumer contracts should also be written in plain and intelligible language that can be easily understood.

Should a term be ambivalent, or any doubt arise about the meaning of a term, the law provides that the interpretation most favourable to the consumer shall prevail.

Ms Vella is senior information officer, Consumer and Competition Division.

customer@timesofmalta.com, odette.vella@gov.mt