Vol 7 No 1 - Roger Williams University School of Law

Contracts deals with unfair terms in sales contracts with aconsumer buyer. Under that Directive, a term is unfair if (i) it hasnot been individually negotiated;96 and (ii) it causes a significantimbalance in the parties’ rights and obligations arising under thecontract, to the detriment of the consumer.97 The annex to thedirective lists some terms that are prima facie unfair, includingsome terms ostensibly condoned by UCITA.98 Terms must be inplain and intelligible language.99 Furthermore, where there isdoubt about the meaning of a term, the interpretation mostfavorable to the consumer shall prevail.100 The EuropeanDirective on Distance Selling Contracts grants certain substantivesafeguards in “distance contracts.”101 These safeguards includerequiring certain disclosures prior to formation, in addition togranting consumers a seven-day unilateral right to withdraw.102Choice of law clauses which deny consumers the benefit of such96. Council Directive 93/13/EEC of 5 Apr. 1993 on Unfair Terms of ConsumerContracts, 1993 O.J. (L 95) 29, art. 3.2 (“A term shall always be regarded as notindividually negotiated where it has been drafted in advance and the consumer hastherefore not been able to influence the substance of the term, particularly in thecontext of pre-formulated standard contract.”).97. Id. at art. 4 (“[T]he unfairness of a contractual term shall be assessed, takinginto account the nature of the goods or services for which the contract was concludedand by referring, at the time of conclusion of the contract, to all the circumstancesattending the conclusion of the contract . . . .”).98. Examples of possibly unfair terms under the Directive potentially conflictingwith UCITA include: inappropriate exclusions or limitations on a consumer’s remediesagainst the seller or supplier, including a right of offset granted the seller (Annex 1(b));terms requiring a breaching consumer to pay a disproportionately high sum incompensation (Annex 1(e)); terms allowing the seller to terminate a contract ofindefinite duration without reasonable notice except where there are serious groundsfor doing so (Annex 1(g)); terms irrevocably binding the consumer to terms with whichhe had no real opportunity of becoming acquainted before the conclusion of the contract(Annex 1(i)); and terms allowing the supplier to unilaterally change the terms of thecontract without a valid reason specified in the contract (Annex 1(j)).99. Council Directive 93/13/EEC of 5 Apr. 1993 on Unfair Terms of ConsumerContracts, supra note 96, at art. 5 (stating “where all or certain terms offered to theconsumer are in writing, these terms must always be drafted in plain, intelligiblelanguage”).100. Id.101. Council Directive 97/7/EC of 20 May 1997 on the Protection of Consumers inRespect of Distance Contracts, 1997 O.J. (L 144) 19. A distance contract means anygoods or services contract “concluded between a supplier and a consumer under anorganized distance sale . . . scheme run by the supplier, who, for the purpose of thecontract, makes exclusive use of one or more means of distance communication” priorto contract creation. Id. at art. 2(1). This would include contracts created by e-mail aswell as those concluded electronically.102. Id. at arts. 4-6.