Unfair Contract Terms in a Consumer Setting

This blog post is written by Veronica Uddsten, lawyer at Synch

When drafting terms and conditions for a B2C-business, it is easy for businesses to primarily focus on the need of the business and fail to take into consideration the fairness of the provisions included from a consumer perspective. As unfair contract terms may become unenforceable, it is important to review the fairness of the provisions included before implementing such terms and conditions. In this blog post, we look closer at the rules related to fairness from a consumer perspective.

The Swedish Consumer Agency has stated that there are three main types of unfair contract terms in a B2C-situation. The first and most obvious type is when a provision does not comply with mandatory legislation. In this context it is worth noting that much of consumer protection legislation is mandatory and therefore may not be deviated from through an agreement between the business and the consumer.

The second type of unfair contractual terms is, unless it has been individually negotiated (i.e. not standard terms that constitute a “take it or leave it”-offer), when the provision is not in accordance with good faith, or non-mandatory consumer protection legislation, and creates a significant imbalance in the parties’ rights and obligations to the detriment of the consumer. Whether there is a significant imbalance depends on the nature of the goods or services sold, the other terms of the contract and the circumstances surrounding the conclusion of the contract.

The third type of unfair contract terms are provisions that are so misleading or vague that the consumer cannot foresee the consequences they may cause. On a side note, it is important to keep in mind that unclear provisions in standard terms will be interpreted to the benefit of the consumer.

Much guidance on what may constitute unfair provisions can be found in the so called “Grey List” of the EU directive 93/13/EEC referenced in the preparatory works of the Act on Contract Terms in Consumer Relations (SFS 1994:1512). The Grey List sets out several examples of what generally may be considered unfair contract terms but in rare cases, depending on the circumstances at hand, may not. Thus, the list is a “grey” list rather than a “black” list as it is not an absolute ban on the listed provisions. Some of the provisions that are set out in the Grey List are terms that:

  • give the seller a right to terminate the contract and keep money already paid for services that are not yet performed;
  • giving the seller a right to unilaterally change the contract terms without there being a justified ground that is listed in the terms at hand; and
  • requiring the consumer to comply with formal requirements for the consumer to be entitled to exercise its rights under the contract e.g. that termination requires written notice to a certain address.

In relation to unfair contract terms there may be both marketing law and civil law consequences, i.e. a ban on using the same or similar provisions in the future, non-compliance entailing a penalty, or the provision being deemed as unfair being adjusted to become more consumer friendly or being completely set aside and ignored, potentially leading to additional changes being made in the contract.

To ensure that a B2C-contract is enforceable and that it will hold up for the inspection of the Swedish Consumer Agency and the courts, it is important to keep consumer rules and regulations in mind when drafting the contract. For that reason, having a legal advisor that is experienced in consumer legislation is a great first step. If you run a B2C-business and need assistance in drafting or reviewing your terms and conditions, you are more than welcome to contact us at contact@synchlaw.se. This is our first post in our blog series on consumer protection. Make sure to check out our other posts in this series as well!

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