Chapter 11 Guidance on answering the questions in the book

Direct control over terms

1. ‘First appearances suggest that the Unfair Contract Terms Act 1977 only applies to terms that limit or exclude liability, but the reality is far messier, and the Consumer Rights Act 2015 does not resolve this complexity.’ Discuss.

See 11.5 Types of terms controlled by UCTA and control mechanisms

11.6 Types of terms controlled by CRA and control mechanisms

Diagram 11C Terms controlled under UCTA and CRA

This question invites you to discuss the jurisdictional question raised by UCTA and the significance of the answer.  The sub-questions you should address are:

  • What sorts of terms are controlled by UCTA?  You must cite 'chapter and verse' of UCTA (ie the precise sections and sub-sections).
  • In particular, what sections expand the meaning of ‘exemption clauses’ (eg section 3 (2)(b), section 13?  How do they do that?
  • What uncertainties do they generate?  That is, what is the scope of the extensions?  Here, look at what courts and commentators have said (eg the 'but for' test).
  • Discuss the controversy over whether exemption clauses are 'defensive' or 'duty-defining'.  Why does the answer matter (eg consider the legitimacy of the law controlling the reasonableness of the contract versus that of merely controlling exemptions of liability, a remedial term)? 
  • Look at the problems in the context of the jurisdiction of CRA which goes beyond exemption clauses.

2. 'The picture of legislative control of unfair terms is bewildering. Some terms are "blacklisted", some are "greylisted", some must be reasonable and some must not be unfair, whatever they mean. Reform is sorely needed.' Discuss. Has the Consumer Rights Act 2015 resolved improved this picture?

See 11.5 Types of terms controlled by UCTA and control mechanisms

11.6 Types of terms controlled by CRA and control mechanisms

Diagram 11C Terms controlled under UCTA and CRA

This question invites you to discuss and compare the control mechanisms of UCTA and CRA, and consider the changes introduced by CRA.  The sub-questions you should consider are:

  • What does 'blacklisted' terms mean?  Which terms are blacklisted by which legislation?  What might be the justification for mandating this?
  • What does 'greylisted' terms mean?  Which terms are greylisted by which legislation?  What might be the justification for doing this?
  • What is the actual effect of a term appearing on the greylist (eg what is the likely effect of a term which would be blacklisted under one legislation but is only greylisted by the other)? 
  • What terms must be 'reasonable' under which legislation? 
  • What terms must not be 'unfair' under which legislation?
  • Who has the burden of proof in each case?
  • Compare the reasonableness and fairness tests?  Give examples and identify the sources of uncertainty (eg meaning of good faith).
  • Identify the changes introduced by the CRA. Has it improved the consistency and clarity of the law or does of lack of clarity still remain in some areas?

3. 'To avoid frustrating the purpose of Part 2 of the Consumer Rights Act 2015, the scope of unreviewable contractual terms, sometimes called core terms, must be narrowly construed.' Discuss

See 11.6.3 The jurisdictional question: what are main subject matter or adequacy of price terms?

This question invites you to address the jurisdictional question raised by CRA.  The sub-questions you should consider are:

  • What terms are reviewable under CRA?  What terms are not reviewable?  You must cite chapter and verse here.
  • What is the scope of unreviewable terms?  In what circumstances might they nevertheless become reviewable?
  • Why should certain terms be identified as unreviewable?  Why must their scope be narrow? Discuss this in the light of the purposes of CRA and the effect of invalidity.  You must refer to the restrictive approach of the European Court of Justice in relation to the equivalent European legislation in cases such as Kásler v OTP Jelzalogbank Zrt and Matei v SC Volksbank Romania SA and compare with the English cases, especially Office of Fair Trading v Abbey National. Did the Supreme Court’s approach in the latter case take an unduly narrow approach to allowing review for unfairness?
  • What do the unreviewable terms tell us about the nature of the unfairness targeted by CRA (procedural or substantive or both; note the controversy here)? 

4. What amounts to 'unfairness' under the CRA 2015?

See 11.6.4 Review for unfairness.

This question invites you to discuss the meaning of unfairness under CRA.  The sub-questions you should consider are:

  • What is the general test of unfairness (cite chapter and verse)? 
  • What do the components of ‘good faith’ and ‘significant imbalance’ mean (note the differences of opinion over this and what iss at stake?)?
  • What guidance can be gleaned from the parent EU Directive?
  • What guidance can be gleaned from the 'grey list' in schedule 2, Part 1?
  • The over-arching question is whether procedural unfairness is necessary to amount to unfairness under CRA, consistent with the orthodox view of the legitimate sphere of legal control, or more unusually, unfairness can consist merely of substantive unfairness?  Refer to both the European and English cases and the academic debate on this.

5. Finn, a business, and Gigi, a consumer, each purchase computers, the price payable by six monthly instalments, from Herman, a retailer. Finn and Gigi are handed a document. They do not notice the following terms in very small and feint print:

  • All implied terms are excluded.
  • Herman's liability is limited to £200 per customer
  • Customers must notify Herman of any complaints within 48 hours of purchase and cannot withhold any monthly payments for whatever reason.

Advise Finn and Gigi who find out a week later that the computers are seriously defective and practically useless.

F and G will want to argue that they are not bound by these terms.  How can they do that?

  • Is the unsigned document incorporated?  What further facts would you need to know to answer this question?
  • If properly incorporated, do the terms cover the situation in question?  If so, F and G must continue paying the instalments and may not recover any damages as H may not have committed a breach.  Moreover, they do not complain in time.
  • Is there any ground for direct challenge of these terms under UCTA or CRA?  Note that the application of each of these will depend on whether the complainant is a business or consumer.
  • What parts of UCTA and CRA apply to i), ii) and iii)?  With what effect?