Protests over plan to shake up contract rules

Date: 12/10/00

By Peter Chapman

EUROPEAN Commission plans to overhaul rules outlawing unfair terms in consumer contracts have come under attack from industry before they have even left the drawing board.

Consumer affairs chief David Byrne is carrying out a full-scale consultation on the existing EU legislation before finalising proposals to change the rules later this year. The original measure, approved in 1993, makes it illegal for most contracts to contain clauses deemed unfair to consumers.

But industry lawyers claim that possible amendments suggested by Byrne's officials would be bad for business and should be rejected immediately.

The potential changes would force firms to obey court rulings on unfair contract terms against any company in any EU member state. This means that if one firm had a particular clause outlawed by a court anywhere in the Union, others using the same term would automatically be guilty of breaking the law. "If a French trader is stopped from using a clause and an English firm or Dutch one has a similar clause, then it would be a criminal offence," said Mike Pullen, a partner of UK law firm DLA.

Industry lawyers also claim a recent European Court of Justice judgement, coupled with the contract terms directive, could be used to outlaw 'jurisdiction clauses' dictating which courts would hear legal disputes. This, they argue, would impose another layer of bureaucracy on companies, although legal experts disagree about the implications of the ECJ ruling.

But consumer organisations insist the proposed amendments are justified. Ursula Pachl, of the European lobby group BEUC, said the Commission's intention to take a tougher approach towards unfair contracts would benefit consumers.

European Commission plans to overhaul rules outlawing unfair terms in consumer contracts have come under attack from industry before they have even left the drawing board.