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76. Terms that unduly restrict the consumer’s freedom to transfer their rights
under the contract to someone else raise comparable concerns. An example
of such a right would be a guarantee covering goods or work on the
consumer’s property. There are usually fairer and less restrictive ways of
protecting the business’s interests than refusing to honour a guarantee if a
claim is made by anyone but the consumer.
Hindering or preventing consumers from taking legal action
77. A term is likely to be unfair if it seeks to remove the consumer’s right to seek
redress when the trader is in default, or could have the effect of hindering
legitimate efforts to seek redress. Such a term may be blacklisted under
Part 1 of the Act as well as being found to be unfair under Part 2.
78. For instance, a clause stating that disputes must be heard in remote or
inappropriate courts could unfairly limit the consumer’s ability, in practice, to
initiate legal proceedings where the trader is in breach of contract.
79. Clauses that require (rather than allow) consumers to submit to arbitration all
disputes for sums of £5,000 or less are always unfair.
The CMA considers
that a requirement to refer disputes to an Alternative Dispute Resolution
process of any kind will be under strong suspicion of unfairness if its effect is
to remove or limit the consumer’s right to take legal action before the courts.
Allowing excessive burdens or requirements to be imposed on the consumer
80. Wording may be unfair if it could allow excessive and unexpected financial
burdens to be imposed on the consumer. This has a similar effect to a price
variation clause.
81. For example, an explicit right to demand payment of unspecified amounts at
the business’s discretion (such as a security deposit).
82. However, unfairness is much less likely if, for instance:
the consumer has agreed to pay a specific amount, in specified
circumstances;
Section 91 of the Arbitration Act 1996.
The law now requires that ADR provided by a certified ADR body is available for most disputes concerning
contractual obligations between a consumer and a business. But note that this does not alter the position set out
above; a term that purports to require consumers to submit disputes to a certified ‘ADR entity’ is not binding on
the consumer if the agreement was concluded before the dispute arose, and has the effect of depriving the
consumer of the right to bring proceedings before the courts.
Note, however, that a term may meet these requirements but still be unfair if, for instance, its real purpose is to
act as a financial sanction and it is disproportionately high.