The Competition and Markets Authority (CMA) is consulting on draft guidance on the unfair terms provisions in the Consumer Rights Act 2015 (the Act). Broadly, the Act gives effect in the UK to the Unfair Contract Terms Directive and will consolidate and replace the provisions in the Unfair Terms in Consumer Contracts Regulations 1999 and the Unfair Contract Terms Act 1977. Among other things, the guidance: explains the fairness and transparency tests; considers terms and notices which are always unfair under the Act; and considers the exemptions from the assessment of fairness.

The guidance considers and explains the following proposed changes under the Act:

  • A written term of a consumer contract or notice must be transparent (i.e. in plain and intelligible language and legible) in order to be fair. This specific transparency requirement sits alongside and reinforces the more general obligation, embodied in the requirement of good faith, of fair and open dealing in the use of contract terms.
  • The application of the fairness requirements is subject to certain exemptions. The main exemption relates to terms that set the price or specify the main subject of the contract. The exemption will apply provided such terms are transparent and prominent.
  • A revised, non-exhaustive list of types of terms that may be regarded as unfair, known as the ‘grey list’.

The consultation document, published alongside the guidance, ask respondents to consider whether the draft guidance is sufficiently clear, whether greater detail would be helpful and whether the guidance is sufficiently comprehensive, among other things. The consultation closes on March 30, 2015.

Unfair contract terms guidance: draft for consultation, 26 January 2015

Draft guidance on unfair contract terms: consultation document, 26 January 2015