6.2 The test of Unfairness in Consumer Contracts
There is an overarching requirement under the Act that all terms in a contract with a consumer be fair:
Section 64 (2) CRA 2015 states:
A term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations under the contract to the detriment of the consumer.
To that end the Act provides that:
Whether a term is fair is to be determined –
- a.taking into account the nature of the subject matter of the contract, and
- b.by reference to all the circumstances existing when the term was agreed and to all of the other terms of the contract or of any other contract on which it depends.
Section 61(4) of the Act provides that Pt 2 of the Act applies to a notice (a ‘consumer notice’) to the extent that it:
- a.relates to rights or obligations as between a trader and a consumer, or
- b.purports to exclude or restrict a trader's liability to a consumer.
For this purpose, it does not matter:
Whether the notice is expressed to apply to a consumer, as long as it is reasonable to assume it is intended to be seen or heard by a consumer.
For these purposes, ‘notice’ is defined to include ‘an announcement, whether or not in writing, and any other communication or purported communication’. On the other hand, in keeping with the Act's definition of ‘consumer contract’, the Act excludes from the definition of ‘consumer notice’, a notice relating to rights, obligations or liabilities as between an employer and an employee.
The effects of a finding by a court that a term of a consumer contract is unfair under the CRA 2015 is that it is not enforceable. However, this does not prevent the consumer from relying on the term or notice if the consumer chooses to do so.
Schedule 2 Part 1 of CRA 2015 contains a ‘grey list’ of 20 terms, which may be considered to be unfair. The terms on this list are not automatically unfair, but it is likely that in most circumstances they will be viewed as unfair. It is also possible for other terms not on the list to be held to be unfair.
Activity 6 The ‘grey list’
Read schedule 2 of Part 1 of CRA 2015
In your own words, give two examples of terms which are on the ‘grey list’.
There are 20 different terms listed and your answer will depend on the two you have chosen.