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THE CONSUMER RIGHTS ACT 2015
The Consumer Rights Act 2015 (CRA) attempts to streamline and consolidate a number of pieces of consumer legislation in the one place. For the purposes of this lecture, we will focus on Part 2 CRA which relates to:The control of unfair terms in consumer contracts and which replace the (now revoked) UTCCR 1999.
Exclusion and limitation clauses in B2C contracts used to be controlled by UCTA
1977, but these are now dealt with by the CRA 2015 as part of its control of unfair terms (although see s65), leaving UCTA to control purely B2B transactions.
The European Heritage of Part 2 of the CRA.
Both the UTCCR and the CRA are the direct result of the UK's membership of the EU. In 1993, the EU passed legislation to protect consumers from unfair terms in contracts -
the EU Directive on Unfair Terms in Consumer Contracts. 1 The UTCCR 1999 and now the
CRA Part 2 is the UK legislation that implemented this EU Directive.
- Implementation of an EU directive.
The Directive was copied verbatim and no attempt was made to adapt the language of domestic legislation into more familiar common law concepts. The European source of the CRA (and previously the UTCCR) has meant some terminological and interpretational difficulty for the common law. For example, 'foreign' concepts such as 'good faith' that can be found in the fairness test of the Directive (and now implemented in s62(4) of the
CRA 2015 - see below) have proved difficult to interpret.
"The Regulations give effect to Council Directive 93/13/EEC on unfair terms in consumer contracts, and these rather opaque provisions are lifted word for word from articles 3 and 4 of the Directive". Cavendish Square Holding BV v
Makdessi; ParkingEye Ltd v Beavis  UKSC 67,  per Lord Neuberger.
Finally, this European heritage of the UTCCR (and now Part 2 of the CRA) explains why judgments of the European Court have played an important role in interpretation of the provisions of the UTCCR and will continue to do so with the CRA.
PERSONAL SCOPE OF THE CRA 2015
Only applies to B2C transactions NOT B2B transactions. This means that if the protections of the Act are to apply, it will be crucial to determine the personal scope of the transaction (is it
B2B or B2C?).
Definition of "Trader'
"Trader" means a person acting for purposes relating to that person's trade,
business, craft or profession, whether acting personally or through another person acting in the trader's name or on the trader's behalf.
Definition of 'Consumer'
1 "Consumer" means an individual acting for purposes that are wholly or mainly outside that individual's trade, business, craft or profession.
Note: the notion of 'wholly or mainly' outside individual's trade or business:
- Leaves room for debate.
CRA Explanatory Guidelines para 36
"… a person who buys a kettle for their home, works from home one day a week and uses it on the days when working from home would still be a consumer. Conversely a sole trader that operates from a private dwelling who buys a printer of which 95% of the use is for the purposes of the business, is not likely to be held to be a consumer (and therefore the rights in this Part will not protect that sole trader but they would have to look to other legislation. For example, if the sole trader were buying goods, they would have to look to the SGA for protections about the quality of the goods)."
A trader claiming that an individual was not acting for purposes wholly or mainly outside the individual's trade, business, craft or profession must prove it'.
'BLACKLISTED' TERMS WITHIN THE CRA 2015
(1) A trader cannot by a term of a consumer contract or by a consumer notice exclude or restrict liability for death or personal injury resulting from negligence.
[see s2(1) of UCTA but in the context of B2B transactions]
Section 31 CRA
(1) A term of a contract to supply goods is not binding on the consumer to the extent that it would exclude or restrict the trader's liability arising under any of these provisions—
(a) section 9 (goods to be of satisfactory quality);
(b) section 10 (goods to be fit for particular purpose);
(c) section 11 (goods to be as described);
[See also sections 47 and 57 CRA for similar unenforceable terms in respect of contracts for digital content and services ]
REVIEW OF UNFAIRNESS:
Section 62 CRA and the 'fairness test':
(1) An unfair term of a consumer contract is not binding on the consumer. [See further discussion on s62(1) below].
(4)" A term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations under the contract to the detriment of the consumer. 'Good faith' and 'significant imbalance': both of these concepts (directly copied from the
EU Directive) seem at first unfamiliar to the common law and there has been much debate about the correct interpretation of the fairness test.
**DG of Fair Trading v First National Bank Plc  1 ALL ER 97 (House of Lords)
The House of Lords was concerned with the interpretation of Reg 3 of the 1995 Unfair
Terms in Consumer Contract Regulations which are identical in wording to Reg 6 of the 1999 Regulations. The House of Lords were determining the question of whether a clause, providing that interest at the contractually agreed price, was payable after a judgment, came within the ambit of Regulation 3 of the 1995 Regulations. It was held that this did not represent a core term under the Regulations notwithstanding the fact that it was an agreed term representing the price of remuneration.
"In any event, article 3(2) must be given a restrictive interpretation. Unless that is done article 3(2)(a) will enable the main purpose of the scheme to be frustrated by endless formalistic arguments as to whether a provision is a definitional or an exclusionary provision. Similarly, article 3(2)(b) dealing with "the adequacy of the price of remuneration" must be given a restrictive interpretation. After all, in a broad sense all terms of the contract are in some way related to the price or remuneration. That is not what is intended....It would be a gaping hole in the system if such clauses were not subject to the fairness requirement."
Lord Bingham: [para 17: interpreting the UTCCR but still relevant to an interpretation of the CRA 2015]
"A term falling within the scope of the regulations is unfair if it causes a significant imbalance in the parties' rights and obligations under the contract to the detriment of the consumer in a manner or to an extent which is contrary to the requirement of good faith. The requirement of significant imbalance is met if a term is so weighted in favour of the supplier as to tilt the parties' rights and obligations under the contract significantly in his favour. This may be by the granting to the supplier of a beneficial option or discretion or power, or by the imposing on the consumer of a disadvantageous burden or risk or duty. The illustrative terms set out in Schedule 3 to the regulations provide very good examples of terms which may be regarded as unfair; whether a given term is or is not to be so regarded depends on whether it causes a significant imbalance in the parties' rights and obligations under the contract. This involves looking at the contract as a whole. But the imbalance must be to the detriment of the consumer; a significant imbalance to the detriment of the supplier, assumed to be the stronger party,
is not a mischief which the regulations seek to address. The requirement of good faith in this context is one of fair and open dealing. Openness requires that the terms should be expressed fully, clearly and legibly, containing no concealed pitfalls or traps. Appropriate prominence should be given to terms which might operate disadvantageously to the customer. Fair dealing requires that a supplier should not, whether deliberately or unconsciously, take advantage of the consumer's necessity, indigence, lack of experience, unfamiliarity with the subject matter of the contract, weak bargaining position or any other factor listed in or analogous to those listed in Schedule 2 of the regulations. Good faith in this context is not an artificial or technical concept; nor, since
Lord Mansfield was its champion, is it a concept wholly unfamiliar to British lawyers. It looks to good standards of commercial morality and practice".
**Parking Eye Ltd v Beavis  3 WLR 1371 (charge of £85 to a motorist for overstaying the free parking period was NOT unfair).
£85 charge for parking ticket was non-core but also not unfair nor in bad faith, a reasonable motorist would agree.
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