Exclusion clauses
Exclusion clauses

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Exclusion clauses

8 Getting the balance right

It is important that unfair terms legislation continues to fulfil its primary role, which is to protect consumers against unfair surprise. Unfair terms legislation cannot, however, solve all the problems of the market place and it should not protect consumers against the consequences of their own poor decisions.

(Law Commission, 2012, para. 3.4)

This quotation demonstrates the difficult balance that the courts and Parliament have to strike between protecting the rights of consumers and upholding the traditional notion of freedom of contract. This notion views the role of the law as being to uphold the obligations the parties have agreed without trying to protect either party or rewrite the contract in any way. In the video clip that was watched relating to the CRA 2015, Vince Cable (as the then Business Secretary) was keen to emphasise that the CRA 2015 was ‘pro-consumer but also pro-business’, presumably to avoid accusations that the balance has swung too far in favour of consumers. The diagram in Box 7 demonstrates the full range of protection available to both consumers and businesses.

Please note that this diagram was prepared prior to the coming into force of the CRA 2015. The CRA 2015 has repealed s5 of UCTA 1977.

Box 7 Protection from exclusion clauses

Based on a diagram from Mulcahy (2008, p. 172).

Activity 9 Balancing freedom of contract and consumer protection

Timing: You should allow yourself 45 minutes to do this activity.
  • a.Based on this course and the diagram in Box 7, do you think the current balance between freedom to contract and consumer protection is appropriate?
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Comment

There is no one ‘right’ answer to this question. Your answer may depend on a number of factors, including your analysis of the approach taken by the courts and how legislative provisions apply to both business and consumer contracts.

  • b.The academic, Ben-Shahar, states that the reality for consumers entering into standard form contracts is:

Real people don’t read standard form contracts. Reading is boring, incomprehensible, alienating, time consuming, but most of all pointless. We want the product, not the contract. Besides, lots of people bought the product or the service along with the same contract and seem happy enough, so we presume that there must be nothing particularly important buried in the contract terms.

And what if they did read? Surely, there is nothing they can do about the bad stuff they know they will find. Are they going to cross out the unfavourable term? Are they going to call some semi-automatic ‘customer service agent’ and negotiate? Other than lose the excitement about the deal and maybe walk away from it (to what? A better contract?), there is not much individuals can do. Dedicated readers can expect only heartache, which is a very poor reward for engaging in such time-consuming endeavor. Apart from an exotic individual here or there, nobody reads.

(2009, p. 1)
  • i.Do you agree with Ben-Shahar’s argument?
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Comment

In 2010, the video games retailer, Gamestation, played an April Fool’s joke on its customers and amended the standard terms and conditions on its website to include a term saying it ‘legally owned the soul of each customer who bought from them’. Customers were given an option to opt-out of that term (and claim a £5.00 voucher). Only 12 per cent of customers did so, suggesting the remaining 88 per cent had not read the standard terms before their purchase (Richmond, 2010). This does suggest that Ben-Shahar’s argument is valid.

  • ii.If Ben-Shahar is correct, is there anything that can be done to protect consumers?
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Comment

Ben-Shahar (2009) argues that many legal measures have focused on improving the opportunities to read, and the readability of, such contracts. He suggests that non-legal methods should be used such as a ratings system for contracts (similar to those used by review websites in relation to hotels or restaurants). He also suggests using labelling, rather like on food products, to indicate key features of a contract.

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