Publication of AG Opinion on consequence of removing unfair terms in consumer contracts

The European Court of Justice has published the AG’s Opinion in a case concerning the effect of a declaration of unfair terms for the purposes of the Unfair Contract Terms Directive (in UK law as the Consumer Rights Act 2015).

The Directive provides that where a contract term is found to be ineffective as a consequence of being unfair, the remainder of the contract shall continue to bind the parties on the remaining terms if it is capable of continuing in existence without the unfair terms.  The Court was asked whether the other terms in the contract could be implied into or modified in light of common practice, in order to enable the operation of the contract without the offending term.  However, the AG’s Opinion was that under the Directive, the court did not have the power to modify the contract.  Therefore unless the unfair term was expressly affirmed by the customer notwithstanding its deemed unfairness, it must be removed, even if this rendered the resulting contract ineffective and even if this were to result in detriment to the customer.

Emma Radmore