Consumers enter into a number of contracts every day and most of the time they do not realise it. Each time consumers make a purchase, they enter into a sales contract that is legally enforceable.
These contracts usually have terms and conditions that set out the rights and responsibilities of each party. It has actually become common practice among companies to present consumers with a standard contract ready to sign. This, however, does not take away the consumers’ right to renegotiate the conditions they do not like before finally agreeing to sign.
Even though companies are free to use whatever contractual terms and conditions they consider reasonable, businesses should never forget consumers’ rights and must ensure that terms and conditions are not unfair.
A contract term could be unfair if it tries to limit consumers’ rights. The Consumer Affairs Act provides a list of what could be considered unfair: contract terms that exclude or limit the liability of a trader for every possible eventuality; terms that establish an unreasonably short period for notifying the trader of any defects; or which exclude or limit the consumers’ legal rights against traders in the eventuality that they do not adhere to their contractual obligations.
Other possible unfair terms could allow the trader to retain sums paid by the consumer if the latter decides not to conclude or perform the contract, without providing for the consumer to receive compensation of an equivalent amount from the trader where the trader is the party cancelling the contract; and terms that prohibit the consumer from seeking the cancellation of the contract if the trader fails to fulfil his obligations.
Moreover, when failing to fulfil their obligations, consumers cannot be requested to pay compensation sums to the trader that are disproportionately high to the value of the goods or services purchased or hired.
Furthermore, if the contract stipulates a compensation to be paid by the consumer, should the latter fail to fulfil their obligations, the same contract should provide for compensation of the same magnitude when it is traders who fail to fulfil their obligations.
Terms which prohibit the consumer from claiming a remedy or compensation in case of a dispute is also considered unfair. Consumer law also stipulates that a consumer cannot be prohibited from cancelling the contract if the trader fails to fulfil his obligations.
This means that a trader cannot have a term that allows the seller to change significantly what the consumer is buying without giving the latter the chance to withdraw from the contract.
When there is a change to what was originally agreed on, be it the price or any characteristics of the product or service ordered, it is considered unfair if the trader reserves the exclusive right to determine the change in price or conformity with the original contract.
When a delivery date is agreed upon during a sale, it is considered legally unfair for a trader to impose a condition that permits him to alter unilaterally the period for delivering the goods or supplying a service.
It is also prohibited to irrevocably bind consumers to terms with which they had no real opportunity of becoming acquainted before the conclusion of the contract.
Basically, what consumer law considers unfair are terms and conditions that cause a significant imbalance between consumer rights and obligations and those of a business. Unfair terms are also terms that when enforced are detrimental to consumers.
Furthermore, the unfairness of a term is determined by taking into account the nature of the goods and services purchased and also whether consumers were subjected to undue pressure or a lack of knowledge improperly taken advantage of.
The law protects consumers from such unfair terms by nullifying the legal consequences of these conditions. Unfair terms are not binding on consumers. Consumer contracts should also be written in plain and intelligible language that can be easily understood. Should a term be ambivalent, or any doubt arises about the meaning of a term, the law provides that the interpretation most favourable to the consumer shall prevail.
However, not all terms that consumers might think are unfair are actually unfair. For instance, consumers cannot challenge the price they have agreed to pay only because they found the same product somewhere else at a better price. Consumers cannot challenge terms they negotiated with the seller but can challenge a contract’s standard terms and conditions.
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 so one can check it quietly at home before signing it. If there is anything unclear or unfair, it should be clarified with the seller. Should there be any amendments of the contract, it is important that these are signed and dated by the company.
customer@timesofmalta.com
odette.vella@gov.mt
Ms Vella is senior information officer, Consumer and Competition Department.