Unfair Contract Terms
in Consumers Contracts
in the pCESL
Ursula Pachl
Deputy Director General
European Parliament
Legal Affairs Committee (JURI)
31 May 2012
Background
•
The 1993 Unfair Contract Terms Directive provides for a binding
system of control of business’ use of unfair terms in consumer
contracts;
•
In March 2011 on the proposed Consumer Rights Directive the EP
voted in favour of a mixed harmonisation system to update these
rules;
•
The pCesl would introduce a parallel and voluntary
system for business to control the fairness of their
contract terms used in consumer contracts, leaving it up to
them to choose between national and the optional law even
if to the detriment of consumers;
Impact assessment
•
The role of contract law as a main barrier to b2c cross-border trade is
being significantly exaggerated; Research into trade obstacles shows
the lack of harmonisation of some parts of contract law is not a
significant concern, neither to consumers nor to business;
•
The Commission’s impact assessment on the pCESL does not assess
the impact of the Consumer Rights Directive, which fully
harmonises nearly all relevant aspects of online consumer contracts,
including some aspects of unfair contract terms;
•
The Commission’s impact assessment on the pCESL does not assess
the impact of the proposed rules on unfair contract terms;
Consequences of an “optional”
regime for consumers

2 different EU laws on the same issue;

2 standards of “unfairness” in the laws of Member States;

Complication of the legal environment by introducing a
parallel set of rules: confusion for consumers and SMEs, legal
uncertainty, incoherence of application and of the interpretation
of EU law;

Less protection for European consumers against unfairness
in consumer contracts offering business a means to circumvent
better mandatory national standards;
Modus operandi of the pCESL
How do the substantive rules of the pCESL function? The ‘chapeau’
rules raise fundamental questions and problems of application to
consumer contracts.
•
Objective and subject matter: Article 1. A stand-alone, single
set of rules?
•
The optional nature: Article 3. Can a contract of adhesion be
optional? Consumer protection à la carte for business;
•
Agreement on the use of pCESL: Article 8 and 9.
Consumer’s consent to pCESL : “informed”
and “conscious”?
Example Standard Notice: “Trader's standard contract terms which are
unfair are not legally binding for you.”
EU « Tandem Law » Approach –
Better Regulation ?
•
How will the two sets of EU rules on the same subject matter be
linked and how will they be developed further?
•
Cost-benefit analysis of an “EU tandem law” approach?
•
Will we create legal certainty by developing (diverging) case law on
the base of two sets of EU rules covering the same issues?
•
What about legislative changes? Will they go in parallel or follow
different procedures?
•
How will the CJEU deal with the expected tsunami of preliminary
questions, in particular regarding unfair contract terms?
The level of consumer protection
in UCT
•
pCESL objective: preclude the application of better protection granted
by national laws to consumers;
•
BEUC’s preliminary analysis shows that the level of protection
against unfair contract terms in the pCESL is LOW; consequently it
would deprive consumers in many countries of their current rights;
•
"WARNING: BY USING THIS SITE YOU AGREE
YOUR BETTER RIGHTS UNDER NATIONAL LAW.”
•
The reference for measuring the level of protection must not be the
existing EU Directives, but the national laws, which determine the
currently available protection for consumers;
•
The pCESL does not address long identified problems in the field of
unfair terms; it will lock up consumer law instead of providing
necessary further development of ‘real’, binding rights and obligations;
TO
RENOUNCE
Examples of the low level of
protection from UCT
•
Article 80 - problematic exclusions from the unfairness test: e.g.
main subject matter and adequacy of price;
•
Article 82 - Exclusion of control of individually negotiated contract
terms leaves consumers without protection;
•
Article 83 - Definition of ”unfairness” is too narrow: requirement of
good faith, significant imbalance, application only to circumstances
during the contract conclusion;
•
Article 84 and 85 - The lists of “always unfair” and “presumed
unfair” terms is problematic due to stricter and diverging clauses in
MS: example price increase clauses;
•
Missing elements: protection from “surprising clauses”, protection
in relation to transparency/accessibility of terms; special rules for
digital content.
pCESL impedes necessary
developments in consumer law
Example: Digital Content
Consumer detriment is a fact – modernisation of rules is necessary.
–
Commission's impact assessment on pCESL: Europe Economic’s
study for Commission published December 2011 estimates
consumer detriment across the EU to be €64 billion.
–
Recital 17, pCESL: Legal uncertainty and incoherence in the EU
is significant;
Consumer rights weakened by legal uncertainty and outdated laws
(study of the University of Amsterdam published for Commission,
December 2011).
Conclusion: ALL consumers need better rights, but Commission says
no initiative besides CESL. European consumers left with business
self regulation.
EU model contracts
Comparison of the elements of a typical “life cycle” of a consumer
contract:
 Contract information
 Contract formation/ordering
 Delivery
 Substitution
 Right of withdrawal
 Passing of risk
 Price
 Good not conforming to the contract
 Remedies for non-conformity
 After-sales services and Additional Guarantees
 Complaint handling
 Dispute Resolution
Key findings
•
pCESL would duplicate significant parts of EU law, including unfair
contract terms: Making two diverging European consumer contract
laws;
•
Optional regulation is an inappropriate solution for b2c contracts;
No real “choice” for consumers;
•
More complexity and legal uncertainty for businesses and
consumers in relation to substantive rules, but also conflict of law
rules;
•
The low level of protection on unfair contract terms in pCESL would
deprive consumers of rights applicable under their national law
•
pCESL blocks necessary clarification and modernisation
consumer law, including on unfair contract terms
•
Requesting an ex ante waiver from consumers of the better
protection available under their national law = unfair business
practice?
of
Suggestions for a future strategy
for consumer contracts
Instead of ‘optional’ regulation:
•
Address the key barriers to cross-border trade, i.e. those listed in
the Commission's 2012 Communication on e-Commerce
•
Alternative tools, such as model contracts linked to ODR, should be
developed;
•
Consumer rights need to be improved and modernised. The EU
institutions should seek to improve consumer contract law for
ALL consumers and all transactions in a transparent
manner:
 EU model contracts and toolbox approach instead of optional




regulation.
“Mixed” harmonisation works - see CRD.
Limited review of 1993 Unfair Contract Terms Directive?
Limited review of 1999 Guarantee Directive?
A new Directive on digital content products
Thank you for your attention.
Our most recent papers on European contract law available on website: :
www.beuc.eu
Consumer Contracts team
•
BEUC/X/118/2011 Analysis of the Commission’s impact assessment
•
BEUC/X/14/2012 Position on the pCESL
•
BEUC/X/23/2012 Proposal for an EU model contract
www.beuc.eu – consumers@beuc.eu