Article 5 Unfair Terms Directive 93/13/EEC Transparency and interpretation in consumer contracts

Transcription

1 Article 5 Unfair Terms Directive 93/13/EEC Transparency and interpretatin in cnsumer cntracts Jhanna Waelkens PhD Candidate Centre fr Methdlgy f Law Ius Cmmune Cnference Edinburgh 28 Nvember 2014

2 Unfair Terms Directive 93/13/EEC What? facilitate the establishment f the internal market safeguard the citizen in his rle as cnsumer when acquiring gds and services under cntracts Hw? remve unfair terms frm thse cntracts cntract shuld be drafted in plain, intelligible language interpretatin mst favurable t the cnsumer shuld prevail

3 Article 5 Unfair Terms Directive 93/13/EEC In the case f cntracts where all r certain terms ffered t the cnsumer are in writing, these terms must always be drafted in plain, intelligible language. Where there is dubt abut the meaning f a term, the interpretatin mst favurable t the cnsumer shall prevail. This rule n interpretatin shall nt apply in the cntext f the prcedures laid dwn in Article 7 (2).

4 Transparency rule In the case f cntracts where all r certain terms ffered t the cnsumer are in writing, these terms must always be drafted in plain, intelligible language. Reference persn Plain language Intelligible language

5 Reference persn Cnsumer in abstract average cnsumer Unfair Cmmercial Practices Directive ntinal, typical cnsumer reasnably wellinfrmed and reasnably bservant and circumspect, taking int accunt scial, cultural and linguistic factrs naïve and inexperienced cnsumer everyday layman nn-jurist E.g. Pres. Cmm. C. Brussels 16 June Le fait que, seln les circnstances, un acte puisse être cnsidéré u nn cmme clairement téméraire n'implique pas que la clause ne sit pas claire pur le cnsmmateur nnjuriste.

6 Plain language Clarity Frmal clarity easy access t the cntract befre the cnclusin f the agreement frmally easy t read Substantive clarity wrding f the clauses is clear n lng and bscure sentences n legal jargn n cntradictins E.g. The Gvernrs f the Peabdy Trust v Mr Michael Reeve

7 The Gvernrs f the Peabdy Trust v Mr Michael Reeve Altering the Agreement. (a) With the exceptin f any changes in Rent this Agreement may nly be altered by the agreement in writing f bth the Tenant and the Trust. (b) The terms f this Agreement may be varied by the Trust by a ntice f variatin served n the Tenant and the prvisins f sectin 103 f the Husing Act 1985 shall apply t this Agreement as if this tenancy were a secure tenancy prvided that in n case shall the variatins be such as t be prperly regarded as creating a new tenancy. Accrdingly, given that there is 'dubt' as t the meaning f clause 5 as a whle, and, in the light f the cntradictry terms f the subclauses, as t the meaning f the sub-clauses themselves, I am bliged in terms f Regulatin 7(2) t adpt the interpretatin mst favurable t the cnsumer, in ther wrds the tenant in this case.

8 Intelligible language the cnsumer must be able t gather frm the cntract the cntent and the range f his rights and bligatins clse t clearness bligatin t avid jargn cmmn terminlgy nrmal meaning E.g. OFT v Abbey Natinal plc & Others

9 OFT v Abbey Natinal plc & Others Regulatin 6(2), as the OFT submits and as I accept, requires nt nly that the actual wrding f individual clauses r cnditins be cmprehensible t cnsumers, but that the typical cnsumer can understand hw the term affects the rights and bligatins that he and the seller r supplier have under the cntract. This was said abut the plain and intelligible language prvisin in regulatin 6(2), but OFT cnsiders it applies equally t the requirement in regulatin 7.

10 Interpretatin rule Where there is dubt abut the meaning f a term, the interpretatin mst favurable t the cnsumer shall prevail. Tp f the hierarchy Rule in favrem cnsumentis

11 Interpretatin in favrem cnsumentis rights as extensive, bligatins as limited as pssible wh? Judge E.g. Ms G C Cahalane v Lndn Brugh f Wandswrth what? mst favurable fr the cnsumer in cncret limited margin f appreciatin E.g. Cass. fr. (1e civ.) 11 March 2010

12 Ms G C Cahalane v Lndn Brugh f Wandswrth (2) t repair cleanse uphld supprt and maintain the exterir f the Blck and the cmmunal televisin aerials dr entry systems fences walls and the entrance ways paths lifts staircases main walls party walls rf fundatins and all structural parts theref [ ]" and "(3) T repair and maintain the exterir f the windw frames windw sashes and balcny r pati drs and f the frames theref (if any) f the Flat and as ften as may be necessary t replace the whle r part f the windw frames windw sashes windw furniture and balcny r pati drs and frames and furniture theref (if any). Even if there were dubt as t the scpe f paragraph 2 I am by n means sure that case law and the Unfair Cntracts Regulatins wuld require the dubt t be reslved in favur f the lessee in the present case. Paragraph 2 impses bligatins n the landlrd, and in ther circumstances the lessee might be dispsed t cntend that the bligatins extended t the repair and maintenance f the windws f ther flats in the blck. The value f her flat and her enjyment f it culd be adversely affected if lack f repair f these adversely affected the appearance f the blck. It is nly the service charge cnsequences in a situatin where the cuncil have replaced sme windws in the blck but nt hers that causes her t argue fr a limited meaning t be given t the bligatins f the cuncil under paragraph 2. It des nt seem t me that t cnstrue the prvisin cntra prferentem wuld require that the bligatin shuld be cnstrued narrwly r that such narrw interpretatin wuld necessarily be the ne 'mst favurable t' the lessee'.

13 Cass. fr. (1e civ.) 11 March 2010 UAP-VIE majrera vtre cmpte de la façn suivante: de la nzième année et jusqu'à la quinzième année incluse. UAP-VIE investit sur vtre cmpte 110 % de vtre prime péridique annuelle. Il y a une cnfusin dans l'interprétatin des clauses du cntrat qui a sa surce dans l'ambiguïté rédactinnelle. 500 eur was nt the mst beneficial utcme

14 Exceptin This rule n interpretatin shall nt apply in the cntext f the prcedures laid dwn in Article 7 (2). cllective actins fr cessatin Cmmissin v Spain The distinctin made in Article 5 f the Directive cncerning the applicable rule f interpretatin, as between actins invlving an individual cnsumer and actins fr cessatin which invlve persns r rganisatins representative f the cllective interest f cnsumers may be accunted fr by the different aims pursued by thse actins. In the frmer case, the curts r cmpetent bdies are required t make an assessment in cncret f the unfair character f a term cntained in a cntract which has already been cncluded, while in the latter case it is their task t assess in abstract the unfair character f a term which may be incrprated int cntracts which have nt yet been cncluded. In the frmer case, an interpretatin favurable t the individual cnsumer cncerned benefits him r her immediately. By cntrast, in the latter case, in rder t btain, by way f preventin, the mst favurable result fr cnsumers as a whle, it is nt necessary, where there is dubt, t interpret the term in a manner favurable t them. Accrdingly, an bjective interpretatin makes it pssible t prhibit mre frequently the use f an unintelligible r ambiguus term, which results in wider cnsumer prtectin.

15 Article 5 Unfair Terms Directive 93/13/EEC: Transparancy and interpretatin in cnsumer cntracts Outline 1. UNFAIR TERMS DIRECTIVE 93/13/EEC Prir t 1993, laws existed relating t unfair terms in cnsumer cntracts in many Eurpean Member States. Hwever, the laws shwed marked divergences, with the result that the natinal markets fr the sale f gds and services t cnsumers differed frm each ther. Cnsequently, distrtins f cmpetitin culd arise amngst the sellers and suppliers. The Cuncil f the Eurpean Cmmunities drawed up Directive 93/13/EEC n unfair terms in cnsumer cntracts in rder t tackle these disparities, with the aim f prgressively establishing the internal market. Tw different systems f implementatin f the Directive can be discerned. In England, the entire Directive was laid dwn almst literally in a seperate law, namely the Unfair Terms in Cnsumer Cntracts Regulatins 1994, which were in 1999 replaced by the Unfair Terms in Cnsumer Cntracts Regulatins In ther cuntries, fr instance Belgium, France and the Netherlands, the Directive was integrated in existing laws. 2. ARTICLE 5 UNFAIR TERMS DIRECTIVE 93/13/EEC Article 5 Directive 93/13/EEC runs as fllws: "In the case f cntracts where all r certain terms ffered t the cnsumer are in writing, these terms must always be drafted in plain, intelligible language. Where there is dubt abut the meaning f a term, the interpretatin mst favurable t the cnsumer shall prevail. This rule n interpretatin shall nt apply in the cntext f the prcedures laid dwn in Article 7 (2)." The rule, adpted in England as Regulatin 7 UTCCR, in France as article L133-2 Cde de la Cnsmmatin, in the Netherlands as article 6:238, 2 NBW and in Belgium as article VI Wb Ecnmisch Recht, cnsists f tw parts: an infrmatin r transparancy requirement and an interpretatin rule. Bth rules are intertwined, since the secnd sentence acts as a sanctin fr nn-cmpliance with the first sentence. Any lack f transparancy suffices t put int effect the interpretatin rule. The rules can be cnsidered tw sides f the same cin: the first ne is preventive, the secnd ne is punitive. 3. FUNCTIONING OF THE RULE IN TWO PHASES In rder t prtect cnsumers, every term f a cntract between the seller f gds r supplier f services, n the ne hand, and the cnsumer f them, n the ther hand, has t be transparent, plain and intelligible. If this is nt the case, the cntract will be interpreted in favur f the cnsumer (interpretatin in favrem cnsumentis). An apprach in tw steps is required. In a first phase, the questin needs t be ascertained whether a cntract, a clause r a term is (1) clear and intelligible, (2) unclear r (3) unintelligible. In rder t d that, it is necessary t interpret the text prvisinally, because 1

16 it is nt pssible t examine whether mre than ne reading f a text can exist withut turning t interpretatin. In a secnd phase, cnsequences need t be attached t the results f the first phase. Three different utcmes can arise. First, the interpretatr might cnclude that the clause is cmpletely clear and intelligible. Only ne meaning is pssible, s n interpretatin is needed. A secnd scenari happens when n meaning can be attached t a clause. It is nt intelligible, s it cannt be interpreted. Such an incmprehensible clause is unfair, s incmprehensibility results in nullity f the clause. A third situatin arises when the clause can have mre than ne meaning: it is unclear. Than it needs t be interpreted in favrem cnsumentis. 4. TRANSPARENCY RULE: PLAIN AND INTELLIGIBLE LANGUAGE The questin if a cnsumer cntract is plain and intelligible is answered by the judge, wh has t prject himself int the rle f the cnsumer. Determining whether r nt the clause at hand is transparent, happens in abstract, by means f a reference persn, namely the "naïve and inexperienced cnsumer". All clauses in a cnsumer cntract have t be plain and clear n the ne hand and intelligible n the ther hand. Clearness means that there are n ambiguities, n dubts abut the meaning f the clauses, because they are accurate, precise, cncrete, transparent and bvius. This ntin has a frmal and a substantive side. Frmal clearness arises when the cnsumer has easy access t the cntract and when the cntract is easy t read (e.g. the fnt is clear, the wrds are nt printed t small ). Substantive clearness cmes int being when the cntent f a clause bears n sectrets fr the average cnsumer, when the sentences are nt lng r bcure, where there is n use f technical jargn, and where there are n cntradictins. Intelligibility means that it must be pssible fr the average cnsumer t understand a clause: at least ne cnstructin f the clause must be plausible. 5. INTERPRETATON RULE: INTERPRETATION IN FAVOREM CONSUMENTIS The sanctin fr nn-cmpliance with the transparancy-duty cnsists f an interpretatin in favur f the cnsumer. This rule prvides the cnsumer with the pssibility t anticipate the utcme f an interpretatin dispute, since it prevails ver all ther interpretatin rules. The precedence f the rule in favrem cnsumentis is t be grunded n its aim t fully prtect the cnsumer. That is als the reasn why a judge is allwed t apply the rule f its wn mtin. But what des this interpretatin rule achtually entails? Which is the interpretatin mst favurable t the cnsumer? It is the interpretatin that burdens the cnsumer the least, the interpretatin that makes his rights as wide as pssible and his bligatins as limited as pssible. It is the judge, nt the cnsumer himself, wh has t find ut which interpretatin is mst expedient, even if that means he has t depart frm the cnsumers claim. He has t investigate in each case in cncret the unclear clause, find ut which pssible meanings it can have, and chse which f these are mst favurable fr this specific cnsumer, at this mment, given these circumstances. His margin f appreciatin is limited. He cannt interpret in a way that is interesting fr the cnsumer, but has t balance the different pssible utcmes in rder t find ut the interpretatin that is mst favurable. This means that in sme cases, he has t interpret a clause in a way that it is makes it unfair, s that it needs t be declared null and 2

17 vid. An interpretatin that leads t nullity can in sme cases indeed be mre favurable fr a cnsumer than an interpretatin that leaves the clause be, since a clause, even when it is interpreted in the cnsumers favur, can still be unappealing t him. Jhanna Waelkens PhD Candidate Centre fr Methdlgy f Law KU Leuven 3