Duty of court to consider fairness of term
PART 2 Unfair terms
(1)Subsection (2) applies to proceedings before a court which relate to a term of a consumer contract.
(2)The court must consider whether the term is fair even if none of the parties to the proceedings has raised that issue or indicated that it intends to raise it.
(3)But subsection (2) does not apply unless the court considers that it has before it sufficient legal and factual material to enable it to consider the fairness of the term.
(3) A contract to which this Part applies is referred to in this Part as a “consumer contract”.
Defined in s.61(3) · see it in the full Act“consumer contract” has the meaning given by section 61(3);
Defined in s.76(1) · see it in the full ActWhen applicable, the court must consider a term’s fairness even if the parties do not raise it, provided sufficient material is available. This supported domestic judicial determination but did not itself confer jurisdiction (see paras [144]-[145]). The court’s fairness duty is qualified where it lacks sufficient legal and factual material (see para [27]).
In criminal proceedings, the statutory duty to consider the fairness of a consumer-contract term is for the judge, not the jury. The court held that this civil-law function requires judicial determination (see paras [145]-[148]). The court noted that the duty to consider fairness arises whether or not the parties raise the issue. This supported its conclusion that the duty is judicial rather than one for a jury (see paras [145]-[147]). The court relied on the qualification for insufficient legal and factual material to illustrate that fairness is an integrated legal and evidential inquiry for the judge (see para [147]).
Section 71(1) identified proceedings relating to a consumer-contract term as engaging the court’s duty to consider fairness. (see para [31]) Section 71(2) required the court to consider fairness even if no party raised the issue, subject to sufficient legal and factual material. The court found that threshold satisfied. (see para [31]) Section 71(3) limited the duty to consider fairness where the court lacked sufficient legal and factual material. The court held that sufficient material was available despite opaque pleadings. (see para [31])
What each judgment says about section 71 is in the case-law panel in the full Act.
339.Courts hear a wide variety of disputes between traders and consumers concerning contracts. However, courts are not always specifically asked to look at the fairness of a term in a consumer contract. This provision places a duty upon the courts to look at the fairness of terms even if the parties do not specifically ask the court to do so.
340.This section reflects the view of the EUCJ in Case C-168/05 Mostaza Claro (2006) ECR I-10421 that “the nature and importance of the public interest underlying the protection which the Directive confers on consumers justify, moreover, the national court being required to assess of its own motion whether a contractual term is unfair” (paragraph 38).
341.In fulfilling this duty, the courts would not have to look at the fairness of the term if they do not have adequate information to do so, as was emphasised by the Court of Justice in Case C-243/08 Pannon (2009) ECR I-4713 (at para.35). In addition, the courts would only have to look at the term or terms in question, not the entire contract; this reflects the principle in Case C-137/08 VB Penzugyi v Schneider in 2010.