(1)A term of a consumer contract may not be assessed for fairness under section 62 to the extent that—
(a)it specifies the main subject matter of the contract, or
(b)the assessment is of the appropriateness of the price payable under the contract by comparison with the goods, digital content or services supplied under it.
(2)Subsection (1) excludes a term from an assessment under section 62 only if it is transparent and prominent.
(3)A term is transparent for the purposes of this Part if it is expressed in plain and intelligible language and (in the case of a written term) is legible.
(4)A term is prominent for the purposes of this section if it is brought to the consumer's attention in such a way that an average consumer would be aware of the term.
(5) In subsection (4) “average consumer” means a consumer who is reasonably well-informed, observant and circumspect.
(6)This section does not apply to a term of a contract listed in Part 1 of Schedule 2.
Cases considering section 64 10
[2024] EWCA Civ 1111 · 3 October 2024Limits
The Court treated section 64(1) as the statutory safe-harbour framework, but held that the payment term was not excluded from assessment under either relevant limb (see paras [42]-[52]).
The Court upheld the conclusion that the payment term was not protected as a term specifying the main subject matter of the contract. That issue was not pursued on the appeal (see paras [45]-[46]).
The Court interpreted the price safe harbour narrowly. It excludes assessment of whether the agreed fees are too high, but does not protect a term requiring payment where the contracted services were not supplied (see paras [42]-[50]).
The Court applied the prominence requirement as part of the statutory framework but held that clear disclosure alone could not establish good faith or fairness. The term’s transparency did not prevent substantive assessment (see paras [25], [97], [105]-[107]).
The Court recognised that a term listed in Part 1 of Schedule 2 is not excluded from fairness assessment by section 64(1), so the grey-list route preserved assessment of the payment term (see paras [25], [30], [52]).
[2024] EWCA Civ 630 · 10 June 2024Limits
Section 64 excludes core terms from fairness assessment only where they are transparent and prominent. The court held that the guarantee’s core obligation was transparent in its broad economic effect. (see paras [38]-[40] and [107]-[122])
Section 64(1) identifies the categories of core terms excluded from fairness assessment. The relevant term was treated as specifying the main subject matter of the guarantee. (see paras [38] and [53]-[56])
Section 64(1)(a) concerns terms specifying the main subject matter of a consumer contract. Clause 2 was treated as a core term because it defined the guarantor’s principal liability. (see paras [38] and [53]-[56])
Section 64(2) makes the core-term exclusion conditional on transparency and prominence. The court held that the relevant guarantee term satisfied the transparency requirement. (see paras [38]-[40] and [53]-[56])
Section 64(3) defines transparency through plain and intelligible language and legibility. The court interpreted that requirement as extending to the term’s economic consequences. (see paras [38], [108]-[110] and [122])
Section 64(4) defines prominence by reference to bringing the term to the average consumer’s attention. The statutory standard was recorded, and the transparency challenge was rejected. (see paras [38]-[40] and [107]-[122])
Section 64(5) defines the average consumer as reasonably well informed, observant and circumspect. The court held that the standard varies with the transaction’s nature and context. (see paras [39] and [111]-[118])
[2023] EWHC 2539 (KB) · 12 October 2023Limits
Section 64(1)(a) protected the core bargain concerning the subject matter of the barristers’ services, including preparation for and representation at trial. It did not protect the ancillary payment term. (see paras [47]-[51])
Section 64(1)(b) protected the agreed level of fees from an assessment of price appropriateness, but did not protect the timing of payment or payment for services not supplied. (see paras [47]-[51])
Section 64(6) prevented reliance on the safe-harbour exclusions for terms listed in Part 1 of Schedule 2. (see paras [35]-[36])
What each judgment says about section 64 is in the case-law panel in the full Act.
312.This section describes how the assessment of fairness of price and subject matter terms in consumer contracts is limited.
313.If a term is of the type listed in Part 1 of Schedule 2, it can be assessed for fairness. Other terms in a consumer contract can be assessed for fairness except to the extent that:
they specify the main subject matter of the contract (usually the goods, services or digital content being purchased); or
the assessment is of the appropriateness (usually the level) of the price payable under the contract compared with what is supplied under it.
313.However, if such price or subject matter terms are not transparent and prominent (e.g. if they are in the small print) they are assessable for fairness.
314.Then, in order to determine whether it is assessable for fairness, the court will first consider whether a price or subject matter term is transparent and prominent. If such a term is not transparent and prominent (e.g. if it is in the ‘small print’), it is assessable for fairness. If the term is transparent and prominent, it is exempt from assessment for fairness.
315.This provision replaces regulation 6(2) of the UTCCRs, and implements the exemption in Article 4(2) of the UTCCD. Regulation 6(2) was considered in Office of Fair Trading v Abbey National plc [2009] UKSC 6. The Supreme Court concluded that the concepts of main subject matter and price are to be narrowly construed as “the two sides of the quid pro quo inherent in any consumer contract”, that is, the goods or service that the trader agrees to provide, and the price that the consumer agrees to pay (Lord Walker at para.39). Lord Walker explained that the fact that other types of price terms appeared on the grey list reinforced this narrow construction of the exemption:(Lord Walker, para.43)
316.Reflecting this case law, the effect of this section is that, if a term concerns other aspects of the price other than the amount, for example the timing of payment, the term may be assessed for fairness, but the amount of the price cannot be assessed (if it is transparent and prominent as defined here).
317.For example, if an individual contracts with a catering company to provide a buffet lunch, and the contract includes a term that the individual will pay £100 for a 3 course meal, the court cannot look at whether it is fair to pay £100 for 3 courses. It may, however, look at other things, such as the rights of the company and the individual to cancel the lunch, and when the price is due to be paid.