Re-examined proposal for a COUNCIL DIRECTIVE on unfair terms in consumer contracts
Date: 1993-01-26
Institutions: European Commission
Subjects: approximation of laws, consumer protection, contract, goods and services, single market, unfair terms of contract

COMMISSION OF THE EUROPEAN COMMUNITIES 

C0M(93) 11 final  - SYN 285 

Brussels, 26  January 1993 

Re-examined  proposal  for a 

COUNCIL  DIRECTIVE 

on  unfair  terms  in consumer  contracts 

(presented  by the Commission  pursuant  to Article  149.2(d) 
of  the EEC treaty) 

t  -

E x p I ana t or y itsroor andum 

On  15  and  16 December  1992,  the  European  Parliament  concluded  its  second 
reading  of  the  proposal  for  a Council  Directive  on  unfair  terms  in 
consumer  contracts  and  proposed  7 amendments  to  the  common  position 
adopted  by  the  Council  of  Ministers  on  22  September  1992. 

The  text  of  the  reexamined  proposal  clearly  incorporates  amendments  3 and 
5,  as  well  as  the  spirit  of  amendment  4.  The  17th  and  21st  recitals  have 
been  modified  on  the  basis  of  the  amendments  to  the  provisions  of  the 
Direct ive. 

Amendments  1,  2, 6  and  7  have  been  rejected  by  the  Commission. 

Amendment  3  reintroduces  the  second  general  criterion  for  assessing 
whether  contract  terms  are  unfair, which  had  been  deleted  from  the 
Commission's  amended  proposal  (March 9 2 ). 

According  to  this  criterion,  a  term  is regarded  as  unfair  if, contrary  to 
the  requirement  of  good  faith,  it causes  the  performance  of  the  contract 
to be  significantly  different  from  what  the  consumer  could  legitimately 
expect.  Although  it could  be  argued  that  this  situation  is, to  some 
extent,  already  covered  by  the  criterion  contained  in  the  common 
position,  the  inclusion  of  this  second  criterion  could  help  to  clarify 
the meaning  of  the  phrase  "unfair  term".  It  also  has  the  advantage  of 
showing  clearly  that  the  requirement  of  good  faith  Is not  restricted  to 
the  circumstances  prevailing  at  the  time  the  contract  is drawn  up  but 
extends  to  the  probable  consequences  of  its performance  for  the  consumer. 

Amendment  5  is chiefly  concerned  with  wording.  The  provision  in  Article 
6(1) of  the  common  position  (that  unfair  terms  shall  be  void)  is  intended 
specifically  to ensure  that  no unfair  term  may  be  enforced  to  the 
detriment  of  a  consumer.  The  precise  legal  classification  (relative  or 
absolute  nullity,  non-existence,  "voidance",  etc.)  should  be  left  to  the 
legal  system  in each  Member  State.  It  appears  that  the  term  "void"  is 
still  not  sufficiently  neutral. This  is why  the  new  wording  "not  bind  the 
consumer"  has  been  proposed. 

Amendment  4 concerns  the  legal  nature  of  the  Annex  and  aims  to 
reintroduce  the  principle  of  a  "blacklist",  in other  words  a  list  of 
terms  always  regarded  as unfair.  However,  this  is somewhat  ill-suited  to 
the  present  wording  of  the  Annex,  chiefly  because  of  the  discret ionary 
terms  contained  in many  of  its clauses. 
Furthermore,  the  discussions  within  the  Council  showed  that  the  majority 
of  Member  States  would  not  readily  accept  a  completely  "black"  list. 

-  3 -

However,  the  solution  envisaged  in  the  common  position  is not  entirely 
satisfactory  either.  The  idea of  an  "indicative"  list  is  too  vague  to 
give  a clear  indication  of  the  aims. This  vagueness  would  also  make  the 
transposition  of  this  part  of  the  text  more  difficult. 

In view  of  this,  the  Commission  feels  that  it would  be  useful  to give  the 
Annex  more  specific  legal  force,  and  has  therefore  incorporated  the 
spirit  of  amendment  4 by  adopting  the  principle  of  a  list  of  types  of 
term  presumed  to  be  unfair.  Generally  speaking,  all  terms  listed  can  be 
presumed  to  be  unfair,  but  this  presumption  may  be  contested  by  a  seller 
or  supplier  who  uses  this  type of  term  in specific  situations. 

AI I the other  amendments  adopted  by  the  EP were  rejected  by  the 
Commission. 

Amendments  1 and  2 are  based  on  the  idea  that  the word  "mandatory"  is 
used  in  this  case,  as  it  is  in civil  law, as distinct  from 
"supplementary",  and  are  thus  aimed  at  eliminating  the  contradiction 
between  Article  1(2) and  the  13th  recital.  In fact,  there  is no  real 
contradiction  because  the  distinction made  in civil  law  has  no  relevance 
to  the way  in which  the  term  "mandatory"  is used  in Article  1(2), where 
it has  a more  general  meaning. 

Amendment  6  is  inadequate  for  the  aims of  the  Directive.  To  replace  the 
obligation  on  Member  States  to ensure  the existence  of  "adequate  and 
effective means  ...  to prevent  the continued  use of  unfair  terms" by  the 
obligation  to  "prohibit"  unfair  terms  does  not  necessarily  increase 
consumer  protection.  Furthermore,  the  discussions  within  the  Council 
showed  that  the word  "prohibit"  would  make  it difficult  to  determine 
whether  penal  sanctions  should  be  imposed.  Although  the  control  of  unfair 
terms  by  means  of  penal  law may  be  an effective  means  of  implementing  the 
Directive,  the  Commission  considers  that  it  is by  no means  the  only 
adequate  way  to  eliminate  the use  of  unfair  terms. 

Finally, Amendment  7  aims  to  introduce  a  14-day  "cooling-off"  period  for 
the  consumer,  following  the  signing  of  timeshare  contracts. Although  a 
similar  provision  was  included  in the Commission's  first  proposal,  the 
Commission  has  in  the meantime  presented  a specific  proposal  for  a 
Directive  aimed  at  providing  protection  for  consumers  in  relation  to 
contracts  on  the  use  of  timeshare  property  (Com  (92) 220  final  of 
24.7.92). 

-  4 -

The proposal  for  a Directive already  incorporates  the principle of a 
"cooling-off" period,  in some cases even  longer  than  that  requested  by 
the European  Parliament, while  at  the same  time guaranteeing  the consumer 
much  fuller  protection. 

Furthermore, Amendment  7  is not  now appropriate  to the current  text of 
the common  position. 

-  5 -

Reexamined proposal  for  a Council  Directive 
on unfair  terms  in consumer  contracts 

(presented  by  the Commission pursuant  to Article  149(2)(d) of  the EEC 
Treaty) 

Common  position of  the Council 

Reexamined proposal 

First  to sixteenth  recitals unchanged 

Seventeenth  recital 

Seventeenth  recital 

Whereas,  for  the purposes of  this 
Directive,  the annexed  list of  terms 
can be of  an  indicative value only 
and, because of  the minimal 
character  of  the Directive, the 
scope of  these  terms may be the 
subject  of amplification or more 
restrictive editing by  the Member 
States  in their  national  law; 

Whereas,  for  the purposes of  this 
Directive, a  list of  terms presumed 
unfair  should  be provided  in an 
Annex ; whereas, furthermore. 
because of  the minimal  character of 
the Direct ive. the scope of  these 
terms may be the subject of 
amplification or more  restrictive 
editing by  the Member  States in 
their  national  law; 

Eighteenth  to twentieth  recitals unchanged 

Twenty-first  recital 

Twenty-first  recital 

Whereas  the Member  States should 
ensure  that  unfair  terms are not 
used  in contracts  concluded  with 
consumers by a seller or supplier 
and  that  if, nevertheless, such 
terms are so used,  they shall at 
least  be declared  void as against 
the consumer, and  the contract  shall 
continue to bind  the parties upon 
those  terms  if  it  is capable of 
continuing  in existence without  the 
unfair  provisions; 

Whereas  the Member  States should 
ensure  that unfair  terms are not 
used  in contracts concluded with 
consumers by a seller or supplier 
and  that  if, nevertheless, such 
terms are so used,  they shalI not 
bind  the consumer  and  the contract 
shall  continue  to bind both  parties 
upon  those  terms  if  it  is capable 
of continuing  in existence without 
the unfair provisions-, 

Counc i1's common  pos i t i on 

Reexamined  proposai 

-  6 

Twenty-first  to  twenty-fourth  recitals  unchanged 

Articles  1 and  2 unchanged 

Art icle  3 

Article  3 

1. 
1. A contractual  term which  has not 
been  individually  negotiated  shall 
be  regarded  as unfair  if, contrary 
to  the  requirement  of  good  faith,  it 
causes  a significant  imbalance  in 
the parties'  rights  and obligations 
arising  under  the contract,  to the 
detriment  of  the  consumer. 

1. 
1. A  contractual  term  which  has not 
been  individually  negotiated  shall 
be  regarded  as unfair  if,  in spite 
of  the  requirement  of  good  faith: 

-  it causes  a significant  imbalance 
in the parties'  rights  and 
obligations arising  under  the 
contract,  to  the detriment  of  the 
consumer 

or 

-  it causes  the performance  of  the 
contract  to be  significantly 
different  from what  the  consumer 
could  legitimately  expect. 

2. 

2.  unchanged 

3. The Annex  shall  contain  an 
indicative  list of  the  terms which 
may  be  regarded  as unfair. 

3. The  Annex  shall  contain  a  list 
of  terms  presumed  to be unfair. 

Art icle 6 

Art icle 6 

Articles 4 and  5 unchanged 

1. 
Member  States  shall  lay down  that 
unfair  terms  used  in a contract 
concluded  with  a consumer  by a 
seller  or  supplier  shall, as 
provided  for  under  their  national 
law, be  void  as against  the  consumer 
and  that  the  contract  shall  continue 
to bind  the parties upon  those  terms 
if  it  is capable of  continuing  in 
existence  without  the unfair  terms. 

1. 
Member  States  shall  lay down  that 
unfair  terms  used  in a contract 
concluded  with  a consumer  by a 
seller  or  supplier  shall, as 
provided  for  under  their  national 
law, not  bind  the  consumer  and  that 
the contract  shall  continue  to bind 
the parties  upon  those  terms  if it 
is capable  of  continuing  in 
existence  without  the unfair  terms. 

-t 

Council's  joint  position 

Reexamined  proposa 

2. 

2.  unchanged 

Articles 7  to 11  unchanged 

Annex  unchanged 

European  Parliament  amendments  rejected  by  the  Commission 

(Amendment  1) 
Thirteenth  recital 

Deleted 

...whereas  in that  respect  the 
wording  "mandatory, statutory  or 
regulatory  provisions"  in Article 
1(2) also  covers  rules which, 
according  to  the  law, shall  apply 
between  the contracting  parties 
provided  that  no other  arrangements 
have been  established; 

(Amendment  No  2) 
Article  1(2) 

The  contractual  terms which  reflect 
mandatory,  statutory  or  regulatory 
provisions  and  the provisions or 
principles of  international 
conventions  to which  the Member 
States or  the Community  are  party, 
particularly  in the  transport  area, 
shall  not  be subject  to the 
provisions of  this  Directive. 

The contractual  terms which  reflect 
statutory  or  regulatory  provisions 
and  the provisions or  principles of 
international  conventions  to which 
the Member  States or  the  Community 
are party,  particularly  in the 
transport  area, shall  not  be 
subject  to  the provisions of  this 
Direct ive. 

(Amendment  6) 
Article  7(1) 

The Member  States  shall  ensure  that, 
in the  interests of  consumers  and of 
competitors,  adequate  and  effective 
means exist  to prevent  the continued 
use of  unfair  terms  in contracts 
concluded  with  consumers  by  sellers 
or  SUPPIiers. 

The Member  States  shall  prohibit 
the use of unfair  terms  in any 
contract  concluded  with  a consumer 
by any  person  acting  in the  course 
of  his  trade, business or 
profession:  this prohibition  shall 
be without  prejudice  to the 
seller's  right  to obtain 
compensation  from  his own  supplier 

(Amendment  7) 
Annex,  paragraph  1,  indent  g)a  (new) 

in the case of  contracts  relating 
to the purchase of  immovable 
properties on  à timeshare  basis, 
establishing  the date on which  the 
contract  is concluded  in such  a way 
as to make  it  impossible  for  the 
consumer  to  terminate  the  contract 
within  a period  of  14 clear  days 
from  the date on which  it was 
concluded. 

ISSN 0254-1475 

COM(93) 11  final 

DOCUMENTS 

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Catalogue number : CB-CO-93-015-EN-C 

ISBN 92-77-51948-7 

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