The co-existence of the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999 often produced inconsistent, overlapping, and unnecessarily complex rules.

Critically evaluate this statement in light of the Consumer Rights Act 2015.

Answer

Whenever you are asked to compare or discuss a new case or new piece of legislation, it is always helpful to start by explaining the old or previous rules and then compare them to the new case or legislation.

A good starting point for this question is to explain the difference between the two pieces of legislation. You should point out that despite its title the UCTA was passed to control the use of clauses or notices that purport to exclude or limit a party’s liability, whereas the UTCCR really do deal with “unfair terms”.

UCTA applies (although differently) both to consumers and non-consumers whereas UTCCR only applies to render ineffective certain unfair terms in consumer contracts. You should provide a good summary of the key provisions in UCTA together with a discussion of some of the key cases. In particular, you will need to explain that certain terms can only be excluded if it is reasonable to do so, whereas other terms simply cannot be excluded at all.

You should explain the meaning of consumer in both pieces of legislation. s 61(5A) SGA tells us (in a rather roundabout way) when a buyer is dealing as a consumer by referring to s 12(1) of UCTA. It also provides that it is for a seller claiming that the buyer does not deal as consumer to show that he does not. s 12(1) UCTA provides that a party to a contract deals as a consumer if:

(a) he neither makes the contract in the course of a business nor holds himself out as doing so, and

(b) the seller does make the contract in the course of a business.

Furthermore, s 12(1)(c) UCTA provides that the goods must be of a type ordinarily supplied for private use or consumption.

This should then be applied to the terms implied by the SGA 1979 and similar legislation.

Although the UTCCR doesn’t deal specifically with exclusion clauses, it can render ineffective any terms that purport to exclude liability for breaching the statutory implied terms. A significant difference between the two pieces of legislation is that the UTCCR only deals with unfair terms in contracts where the buyer is a consumer (Reg. 4.1). You need to explain that the definition of “consumer” is different to that in UCTA. For the purpose of the UTCCR, “consumer” is defined in Regulation 3(1) as “any natural person who, in contracts covered by these Regulations, is acting for purposes which are outside his trade, business or profession.” The words “any natural person” preclude a company from being a consumer for the purpose of the UTCCR.

You should explain what is meant in the UTCCR by an unfair term by reference to Regulation 5(1). Good answers will also explain that “core terms” are not covered by the UTCCR (Reg. 6(2)) and explain when a contractual term will be “core”.

You should also explain that Schedule 2 of the UTCCR provides an indicative and non-exhaustive list of terms which may be regarded as unfair and point out that a term that is regarded by UTCCR as being unfair will not be binding on the consumer (Reg. 8(1)) although the remainder of the contract will continue to bind the parties if it is capable of continuing in existence without the existence of the term that has been rendered unfair (Reg. 8(2)).

Before moving on to discuss the changes introduced by the Consumer Rights Act 2015, it will be helpful to conclude this part of your answer by explaining that the co-existence of the UCTA and the UTCCR often produced inconsistent, overlapping and unnecessarily complex results and that legislative reform was long overdue. The Law Commission has recommended that both pieces of legislation are merged into a new single statute (Law Commission Report on Unfair Terms in Contracts, Law Com. No. 292, (2005)). They also produced a draft Bill that unifies the law on unfair contract terms and exemption clauses.

Where the Consumer Rights Act applies, s 31 sets out the extent of a trader’s liability to the consumer that cannot be restricted or excluded. With contracts for digital content, the relevant section is s 47. The purpose of s 31 is to prevent traders from contracting out of the consumer’s statutory rights under ss 9 – 16, as well as ss 28 and 29 on time of delivery, and the passing of risk and, for contracts other than hire, the requirement on right to title contained in s 17. This section also has the effect that any term in a contract which seeks to prevent the consumer from having access to the statutory rights and remedies or to make exercising these rights less attractive to the consumer by either making it more difficult and onerous to do so, or by placing the consumer at a disadvantage after doing so, will also be void. For hire contracts, ss 31(5) and (6) provide that s 31 does not prevent the parties from contracting out of the protection that the trader must have the right to transfer possession or that the consumer must enjoy quiet possession (under s 17), but a term seeking to exclude or limit these protections is subject to the test of fairness in s 62.

For contracts for digital content, section 47 prevents a trader from attempting to contract out of the provisions in ss 34 – 37 and 41. A trader can exclude or restrict their liability arising under s 46 (remedy for damage to device or to other digital content) to the extent that any limitation or exclusion is fair. Any such exclusions would be subject to s 62 which provides the requirements for contract terms and notices to be fair. A term of a contract to supply digital content 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: s 34 (digital content to be of satisfactory quality); s 35 (digital content to be fit for particular purpose); s 36 (digital content to be as described); s 37 (other pre-contract information included in contract); s 41 (trader’s right to supply digital content).

A term of a contract to supply digital content is not binding on the consumer to the extent that it would exclude or restrict a right or remedy in respect of a liability under a provision listed above (s 47(2)(a)), make such a right or remedy or its enforcement subject to a restrictive or onerous condition (s 47(2)(b)), allow a trader to put a person at a disadvantage as a result of pursuing such a right or remedy (s 47(2)(c)), or exclude or restrict rules of evidence or procedure (s 47(2)(d)). However, s 47(4) makes plain that any agreement in writing to submit present or future differences to arbitration is not to be regarded as excluding or restricting any liability for the purposes of s 47.

Schedule 2 to Part 1 of the CRA 2015 contains a non-exhaustive indicative list of terms which may be regarded as unfair. This list is based on the equivalent list laid down in the Unfair Terms in Consumer Contracts Regulations 1999 under which there were two kinds of term that were not subject to the fairness requirement: (a) terms which are individually negotiated and (b) core terms of the contract (insofar as they are in plain and intelligible language). The CRA 2015 has removed the limitation on individually negotiated clauses but not that relating to core terms. This is set out in s 64(1), which provides that, provided it is transparent and prominent (s 64(2)), a term of a consumer contract may not be assessed for fairness (under s 62) to the extent that it specifies the main subject matter of the contract, or 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. For these purposes, a term is transparent if it is expressed in plain and intelligible language and, in the case of a written term, is legible (s 64(3)), and a term is prominent if it is brought to the consumer’s attention in such a way that an average consumer would be aware of the term (s 64(4) and 64(5)). A number of these provisions were considered in Green v Petfre (Gibraltar) Ltd t/a Betfred (2021). Mr Green (“G”) played an online game ‘Frankie Dettori’s Magic Seven Blackjack’ on Betfred’s (“B”) mobile casino app. At the end of the session, the app showed that he had won £1,722,500.24. The app would not allow him to withdraw his winnings so he called B’s customer service team who told him that they would need to carry out certain checks which included speaking with the game provider, Playtech (“P”). P advised B that there was a glitch in the game and B informed G that as a result his winnings would not be paid. The glitch (of which neither B nor G were aware) meant that players who played the game for long periods of time without a break enjoyed better than intended odds of winning. G had been playing for around 5 hours. G sued B for his winnings. B sought, inter alia, to rely on various terms contained in their general terms and conditions and on the doctrine of mistake which they said meant that the contract between them was void. In response, G asserted that there was no malfunction in the software but rather a malfunction of the game which was not covered by B’s exclusion clause; that the relevant exclusion term was not sufficiently notified to him, was inaccessible and unclear; and that the doctrine of mistake was not applicable to the specific circumstances of the case. As a result, G sought summary judgment, alternatively to strike out B’s defence. Foster J held that the wording of each of B’s clauses it sought to rely upon was inadequate “as a matter of the natural meaning of the language in context” to exclude liability to pay G as a result of the game’s fault. Further, none of B’s terms seeking to exclude liability were sufficiently brought to G’s attention nor were they transparent or fair, meaning they were not enforceable against him. B was not entitled to rely on the clauses pursuant to the CRA 2015. The judge also rejected B’s argument that the contract was void for mistake. Consequently, G succeeded in his application for summary judgment.