Some purchases consumers make are concluded with the signing of a contract. Most of these contracts contain standard terms and conditions, which companies draft and consumers are requested to sign and agree to these clauses.

Unfortunately, the majority of consumers are too willing to sign and blindly rely on the seller’s assurance that the contract is just a standard procedure. What consumers do not realise is that once a sales contract is agreed, it must be observed and cannot be renegotiated. Hence, before signing anything, consumers should carefully read each and every term and at the same time verify that what was verbally agreed during the sale is included in writing in the contract of sale – such as the model, type of product or service ordered, the date of the agreement, when the product ordered will be delivered, the amount of deposit paid and also how the rest of the payment will be made.

Fortunately, the law protects consumers when sellers try to enforce clauses signed by consumers that are deemed unfair and that try to limit the consumers’ legal rights.

When is a contract term unfair?

A contract term can be deemed unfair if it creates an imbalance between the rights and obligations of the contracting parties to the detriment of consumers. An unfair term tries to diminish or take away consumers’ legal rights. The Consumer Affairs Act lists a number of terms that are considered unfair. These include

• terms that limit the liability of the supplier of goods and services for every possible eventuality;

• terms that allow the trader to retain sums paid by the consumer should the latter decide to cancel the contract, but in the same contract the consumer is prohibited from requesting compensation if it is the trader who cancels the contract;

• contract terms that are binding on consumers, while the provision of the goods or services is made subject to conditions depending on the will of the trader;

• clauses that establish an unreasonably short period of time for notifying the trader of any defects;

• require a consumer to pay to the trader as compensation a sum that is disproportionately high to the value of the goods or services purchased or hired;

• prohibit the cancellation of the contract if the trader fails to fulfil his obligations;

• enable the trader to alter the terms of the contract unilaterally, without a valid reason which is specified in the contract;

• cause the price to vary by reference to factors depending only on the trader’s will;

• give the trader the exclusive right to interpret any term of the contract;

• permitting the trader to establish or alter unilaterally the period for delivering goods or supplying a service;

• automatically extending a contract of fixed duration where the consumer does not indicate otherwise.

It is also prohibited to irrevocably bind the consumer to terms with which they had no real opportunity of becoming acquainted with before the conclusion of the contract.

In the case of written contracts, all terms must be written in plain, understandable language. If there is a doubt about the meaning of a term, the meaning that is most favourable to the consumer will prevail. If a term in the contract is found to be unfair, the remainder of the contract may still be legally binding on the consumer and the supplier of the goods or services. This means that while one term or condition of the contract may be illegal, the remainder of the contract is still valid.

Despite the protection the law provides for consumers when signing an unfair contract, consumers should never sign any contract without first reading and understanding it well.

The best advice is to ask for a copy of the contract to check it quietly at home before signing it, and if there is anything one does not understand, or thinks it is unfair, it should be clarified with the seller. The company’s representative may say not to worry and that it is a standard clause that is never enforced by the company. If that is the case, then there should be no problem with taking it out. Should there be any amendments to the contract, it is important that these are signed and dated by the company.

odette.vella@mccaa.org.mt

Odette Vella is director, Information, Education and Research Directorate, Office for Consumer Affairs, Malta Competition and Consumer Affairs Authority.