Unfair contract terms

March 2009

Barclays Bank PLC [PDF]

Our latest undertaking is from Barclays Bank PLC regarding their Fixed Rate Savings Bond contract. This undertaking shows that variation terms in contracts should be carefully drafted to ensure they are compliant with the Unfair Terms in Consumer Contracts Regulations 1999. A firm should also consider our May 2005 Statement of Good Practice on 'Fairness of Terms in Consumer Contracts'. In particular, where a firm includes a variation clause in its terms and conditions, valid reasons should be included to explain why the term may be varied. We would expect a 'valid reason' to be, amongst other things, clearly and unambiguously defined. Paragraph 3.5 of the Statement also provides that a term 'which confers an unnecessarily broad discretion on the firm or could be used to the advantage of the firm, rather than the consumer, is likely to be unfair'. Similarly the firm should consider whether or not the terms provide for notice to be given to the consumer of the change and if the consumer can freely dissolve the contract should they reject the proposed variation. The firm was fully cooperative in amending the term.

February 2009

Undertaking: Jarvis Investment Management Plc [PDF]

Our latest undertaking is from Jarvis Investment Management Plc regarding their Terms of Business. This undertaking shows that variation terms in contracts should be carefully drafted to ensure they are compliant with the Unfair Terms in Consumer Contracts Regulations 1999. In particular, where a firm includes a variation clause in its terms and conditions, valid reasons should be included to explain why the term may be varied. Similarly the firm should consider whether or not the terms provide for notice to be given to the consumer of the change and if the consumer can freely dissolve the contract should they reject the proposed variation. The firm was fully cooperative in amending the term.