Very often, it is wrongly assumed that to enter a law-binding contract, one needs to engage a lawyer to draft it and the parties involved have to sign it.

If we fail to read the terms of the contract before signing it, we may face unpleasant surprises and may not plead ignorance- Odette Vella

In fact, we enter into binding contracts each time we purchase something, and these contracts do not always involve signing documents. What is verbally agreed between a consumer and a seller is also valid.

However, we must be very careful when we make verbal agreements. In case of disputes, it may be difficult to prove what was promised and agreed. Hence, it would be wiser if all the important aspects of the sale are put down in writing.

We should also bear in mind that once we enter a sales contract, we are committed. We have rights and obligations to adhere to, as stated in the terms of the contract. Hence, it is our responsibility to read and understand the terms of a contract carefully before signing.

It is also in our interest to make sure that specific information is included, such as a detailed description of the goods ordered or service agreed on, the time of delivery and also the total price and terms of payment.

These are usually the seller’s obligations, but there are also obligations on the part of consumers, which mainly consist of continuing with the sale and paying for the goods when these are delivered to us. Once a sale is agreed, we cannot change our mind. If we do, there is usually a price to pay.

Hence, before signing, it would be wise to have a look at the consequences of breach of contract.

In case of long-term contracts, we should also pay attention to how much notice we should give if we do not intend to renew the contract. We should also acquaint ourselves with the termination procedure.

If we fail to read the terms of the contract before signing it, we may face unpleasant surprises and may not plead ignorance. But it is legally considered unfair to irrevocably bind consumers to contract terms which they had no real opportunity to familiarise themselves with before the conclusion of the contract.

Furthermore, the law protects consumers in that it stipulates that contract terms may not be unfair. Despite the principle of freedom of contract, the rights and obligations of both parties must be balanced. In fact, contract terms that create an imbalance to the detriment of the consumer are considered unfair.

The law provides a non-exhaustive list of contract terms that are considered unfair, among which we find contract terms that exclude or limit the liability of a trader for every possible eventuality; terms that establish an unreasonably short time for notifying the trader of any defects; or that exclude or limit the legal rights of consumers against the trader in the event that latter does not adhere to terms in the contract .

Terms that allow a trader to retain sums paid by a consumer if the latter cancel a contract but prohibit the consumer from seeking compensation if it is the trader who cancels the contract, are also prohibited.

Moreover, a consumer cannot be asked to pay a trader as compensation a sum that is disproportionately high when compared to the value of the goods or services purchased or hired. The consumer cannot be prohibited from cancelling a contract if the trader fails to fulfil his obligations. This means traders cannot impose a contract term that allows them to change significantly what we are buying without allowing us to withdraw from the contract.

When such unfair terms are included in consumer contracts, these cannot be legally enforced. Furthermore, the law stipulates that contracts must clearly disclose the terms and conditions relevant to consumers. In case of disputes, unclear standard terms are interpreted in favour of the consumer.

When consumers have a dispute over unclear contract terms, or do not agree with the seller on the interpretation or enforcement of a contract, they may contact the Office for Consumer Affairs at the Malta Competition and Consumer Affairs Authority to check what their legal rights are and how best to proceed.

This office is authorised to take legal action and have unfair terms removed from consumer contracts.

info@mccaa.org.mt

odette.vella@mccaa.org.mt

Ms Vella is senior information officer, Office for Consumer Affairs, Malta Competition and Consumer Affairs Authority.