The Law Commission have outlined proposals to give consumers greater protection from unfair terms hidden within small print in contracts.
The Unfair Contract Terms Act 1977 (UCTA) and the Sale of Goods Act 1979 (SGA) apply to contracts generally and consumers currently have additional protection by virtue of the Unfair Terms in Consumer Contracts Regulations 1999.
Interestingly UCTA and SGA were both introduced when the UK was in recession and the Law Commission have indicated that part of the reason for their review is that fierce competition during the current recession could be driving businesses to hide hidden surcharges in their terms and conditions to keep their advertised costs low. The classic example is in the airline industry but the practice is also frequently encountered in the banking and utilities industries.
A consultation has been launched and the findings will be presented to the Government as part of an ongoing review of consumer protection guidelines. The key recommendations are likely to be that legislation is passed to oblige companies to make the total charges for a transaction clear at the outset and for contracts to be written in plain language.
Businesses would already be well advised to take this approach in their contracts with consumers to avoid challenges to their contracts, to maintain good relations with customers, and to ‘future proof’ their long term contracts in the expectation that new legislation will be forthcoming.