Unfair terms in consumer contracts – Significant imbalance in the parties’ rights and obligations under the contract

European Court of Justice ruled recently on interpretation of Unfair Terms Directive in ‘risk-weighted’ contract cases (joined cases Dexia Netherlands v XXX and Z (C-229/19 and C-289/19).

According to the Court, a contractual term, in a risk-weighted contract concluded between a seller or supplier and a consumer, such as share leasing agreements, must be regarded as unfair, since, having regard to the circumstances surrounding the conclusion of the contract in question and by reference to the date of its conclusion, that term may create a significant imbalance between the rights and obligations of the parties during the performance of the contract, even though that imbalance could occur only if certain circumstances were to arise and, in other circumstances, that term could even benefit the consumer.

In those circumstances, it is for the referring court to ascertain, in the light of the circumstances attending the conclusion of the contract, whether a term fixing in advance the advantage which the seller or supplier is to enjoy in the event of premature termination of the contract was, from the time that contract was concluded, liable to create such an imbalance.

The Court also affirmed that a seller or supplier which has imposed on a consumer a term declared unfair and, consequently, void by the national court cannot claim the statutory compensation provided for by a supplementary provision of national law which would have been applicable in the absence of that term where the contract is capable of continuing in existence without that term.

For any further information and legal advice on unfair terms of any kind of agreements, please contact us tel: +357 22272360 / email: info@dplawcyprus.com



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