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Consumer Rights BillPage 50

10 A term which has the object or effect of irrevocably binding the consumer to
terms with which the consumer has had no real opportunity of becoming
acquainted before the conclusion of the contract.

11 A term which has the object or effect of enabling the trader to alter the terms
5of the contract unilaterally without a valid reason which is specified in the
contract.

12 A term which has the object or effect of permitting the trader to determine
the characteristics of the subject matter of the contract after the consumer has
become bound by it.

13 10A term which has the object or effect of enabling the trader to alter
unilaterally without a valid reason any characteristics of the goods, digital
content or services to be provided.

14 A term which has the object or effect of giving the trader the discretion to
decide the price payable under the contract after the consumer has become
15bound by it, where no price or method of determining the price is agreed
when the consumer becomes bound.

15 A term which has the object or effect of permitting a trader to increase the
price of goods, digital content or services without giving the consumer the
right to cancel the contract if the final price is too high in relation to the price
20agreed when the contract was concluded.

16 A term which has the object or effect of giving the trader the right to
determine whether the goods, digital content or services supplied are in
conformity with the contract, or giving the trader the exclusive right to
interpret any term of the contract.

17 25A term which has the object or effect of limiting the trader’s obligation to
respect commitments undertaken by the trader’s agents or making the
trader’s commitments subject to compliance with a particular formality.

18 A term which has the object or effect of obliging the consumer to fulfil all of
the consumer’s obligations where the trader does not perform the trader’s
30obligations.

19 A term which has the object or effect of allowing the trader to transfer the
trader’s rights and obligations under the contract, where this may reduce the
guarantees for the consumer, without the consumer’s agreement.

20 A term which has the object or effect of excluding or hindering the
35consumer’s right to take legal action or exercise any other legal remedy, in
particular by—

(a) requiring the consumer to take disputes exclusively to arbitration
not covered by legal provisions,

(b) unduly restricting the evidence available to the consumer, or

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(c) imposing on the consumer a burden of proof which, according to the
applicable law, should lie with another party to the contract.

Part 2 Scope of Part 1

5Financial services

21 Paragraph 8 (cancellation without reasonable notice) does not include a term
by which a supplier of financial services reserves the right to terminate
unilaterally a contract of indeterminate duration without notice where there
is a valid reason, if the supplier is required to inform the consumer of the
10cancellation immediately.

22 Paragraph 11 (variation of contract without valid reason) does not include a
term by which a supplier of financial services reserves the right to alter the
rate of interest payable by or due to the consumer, or the amount of other
charges for financial services without notice where there is a valid reason,
15if—

(a) the supplier is required to inform the consumer of the alteration at
the earliest opportunity, and

(b) the consumer is free to dissolve the contract immediately.

Contracts which last indefinitely

23 20Paragraphs 11 (variation of contract without valid reason), 12
(determination of characteristics of goods etc after consumer bound) and 14
(determination of price after consumer bound) do not include a term under
which a trader reserves the right to alter unilaterally the conditions of a
contract of indeterminate duration if—

(a) 25the trader is required to inform the consumer with reasonable notice,
and

(b) the consumer is free to dissolve the contract.

Sale of securities, foreign currency etc

24 Paragraphs 8 (cancellation without reasonable notice), 11 (variation of
30contract without valid reason), 14 (determination of price after consumer
bound) and 15 (increase in price) do not apply to—

(a) transactions in transferable securities, financial instruments and
other products or services where the price is linked to fluctuations in
a stock exchange quotation or index or a financial market rate that
35the trader does not control, and

(b) contracts for the purchase or sale of foreign currency, traveller’s
cheques or international money orders denominated in foreign
currency.

Price index clauses

25 40Paragraphs 14 (determination of price after consumer bound) and 15
(increase in price) do not include a term which is a price-indexation clause
(where otherwise lawful), if the method by which prices vary is explicitly
described.

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Section 70

SCHEDULE 3 Enforcement of the law on unfair contract terms and notices

Application of Schedule

1 This Schedule applies to—

(a) 5a term of a consumer contract,

(b) a term proposed for use in a consumer contract,

(c) a term which a third party recommends for use in a consumer
contract, or

(d) a consumer notice.

10Consideration of complaints

2 (1) A regulator may consider a complaint about a term or notice to which this
Schedule applies (a “relevant complaint”).

(2) If a regulator other than the CMA intends to consider a relevant complaint,
it must notify the CMA that it intends to do so, and must then consider the
15complaint.

(3) If a regulator considers a relevant complaint, but decides not to make an
application under paragraph 3 in relation to the complaint, it must give
reasons for its decision to the person who made the complaint.

Application for injunction or interdict

3 (1) 20A regulator may apply for an injunction or (in Scotland) an interdict against
a person if the regulator thinks that—

(a) the person is using, or proposing or recommending the use of, a term
or notice to which this Schedule applies, and

(b) the term or notice falls within any one or more of sub-paragraphs (2),
25(3) or (5).

(2) A term or notice falls within this sub-paragraph if it purports to exclude or
restrict liability of the kind mentioned in—

(a) section 31 (exclusion of liability: goods contracts),

(b) section 47 (exclusion of liability: digital content contracts),

(c) 30section 57 (exclusion of liability: services contracts), or

(d) section 65(1) (business liability for death or personal injury resulting
from negligence).

(3) A term or notice falls within this sub-paragraph if it is unfair to any extent.

(4) A term within paragraph 1(1)(b) or (c) (but not within paragraph 1(1)(a)) is
35to be treated for the purposes of section 62(4) and (5) (assessment of fairness)
as if it were a term of a contract.

(5) A term or notice falls within this sub-paragraph if it breaches section 68
(requirement for transparency).

(6) A regulator may apply for an injunction or interdict under this paragraph in
40relation to a term or notice whether or not it has received a relevant
complaint about the term or notice.

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Notification of application

4 (1) Before making an application under paragraph 3, a regulator other than the
CMA must notify the CMA that it intends to do so.

(2) The regulator may make the application only if—

(a) 5the period of 14 days beginning with the day on which the regulator
notified the CMA has ended, or

(b) before the end of that period, the CMA agrees to the regulator
making the application.

Determination of application

5 (1) 10On an application for an injunction under paragraph 3, the court may grant
an injunction on such conditions, and against such of the respondents, as it
thinks appropriate.

(2) On an application for an interdict under paragraph 3, the court may grant an
interdict on such conditions, and against such of the defenders, as it thinks
15appropriate.

(3) The injunction or interdict may include provision about—

(a) a term or notice to which the application relates, or

(b) any term of a consumer contract, or any consumer notice, of a similar
kind or with a similar effect.

(4) 20It is not a defence to an application under paragraph 3 to show that, because
of a rule of law, a term to which the application relates is not, or could not
be, an enforceable contract term.

(5) If a regulator other than the CMA makes the application, it must notify the
CMA of—

(a) 25the outcome of the application, and

(b) if an injunction or interdict is granted, the conditions on which, and
the persons against whom, it is granted.

Undertakings

6 (1) A regulator may accept an undertaking from a person against whom it has
30applied, or thinks it is entitled to apply, for an injunction or interdict under
paragraph 3.

(2) The undertaking may provide that the person will comply with the
conditions that are agreed between the person and the regulator about the
use of terms or notices, or terms or notices of a kind, specified in the
35undertaking.

(3) If a regulator other than the CMA accepts an undertaking, it must notify the
CMA of—

(a) the conditions on which the undertaking is accepted, and

(b) the person who gave it.

40Publication, information and advice

7 (1) The CMA must arrange the publication of details of—

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(a) any application it makes for an injunction or interdict under
paragraph 3,

(b) any injunction or interdict under this Schedule, and

(c) any undertaking under this Schedule.

(2) 5The CMA must respond to a request whether a term or notice, or one of a
similar kind or with a similar effect, is or has been the subject of an
injunction, interdict or undertaking under this Schedule.

(3) Where the term or notice, or one of a similar kind or with a similar effect, is
or has been the subject of an injunction or interdict under this Schedule, the
10CMA must give the person making the request a copy of the injunction or
interdict .

(4) Where the term or notice, or one of a similar kind or with a similar effect, is
or has been the subject of an undertaking under this Schedule, the CMA
must give the person making the request—

(a) 15details of the undertaking, and

(b) if the person giving the undertaking has agreed to amend the term or
notice, a copy of the amendments.

(5) The CMA may arrange the publication of advice and information about the
provisions of this Part.

(6) 20In this paragraph—

(a) references to an injunction or interdict under this Schedule are to an
injunction or interdict granted on an application by the CMA under
paragraph 3 or notified to it under paragraph 5, and

(b) references to an undertaking are to an undertaking given to the CMA
25under paragraph 6 or notified to it under that paragraph.

Meaning of “regulator”

8 (1) In this Schedule “regulator” means—

(a) the CMA,

(b) the Department of Enterprise, Trade and Investment in Northern
30Ireland,

(c) a local weights and measures authority in Great Britain,

(d) the Financial Conduct Authority,

(e) the Office of Communications,

(f) the Information Commissioner,

(g) 35the Gas and Electricity Markets Authority,

(h) the Water Services Regulation Authority,

(i) the Office of Rail Regulation,

(j) the Northern Ireland Authority for Utility Regulation, or

(k) the Consumers’ Association.

(2) 40The Secretary of State may by order made by statutory instrument amend
sub-paragraph (1) so as to add, modify or remove an entry.

(3) An order under sub-paragraph (2) may amend sub-paragraph (1) so as to
add a body that is not a public authority only if the Secretary of State thinks
that the body represents the interests of consumers (or consumers of a
45particular description).

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(4) The Secretary of State must publish (and may from time to time vary) other
criteria to be applied by the Secretary of State in deciding whether to add an
entry to, or remove an entry from, sub-paragraph (1).

(5) An order under sub-paragraph (2) may make consequential amendments to
5this Schedule (including with the effect that any of its provisions apply
differently, or do not apply, to a body added to sub-paragraph (1)).

(6) An order under sub-paragraph (2) may contain transitional or transitory
provision or savings.

(7) An order under sub-paragraph (2) is subject to annulment in pursuance of a
10resolution of either House of Parliament.

(8) In this paragraph “public authority” has the same meaning as in section 6 of
the Human Rights Act 1998.

Other definitions

9 In this Schedule—

The Financial Conduct Authority

10 The functions of the Financial Conduct Authority under this Schedule are to
20be treated as functions of the Authority under the Financial Services and
Markets Act 2000.

Section 75

SCHEDULE 4 Amendments consequential on Part 2

Misrepresentation Act 1976

1 (1) 25Section 3 of the Misrepresentation Act 1967 (avoidance of provision
excluding liability for misrepresentation) is amended as follows.

(2) At the beginning insert “(1)”.

(3) At the end insert—

(2) This section does not apply to a term in a consumer contract within
30the meaning of Part 2 of the Consumer Rights Act 2014 (but see the
provision made about such contracts in section 62 of that Act).

Unfair Contract Terms Act 1977 (c. 50)Unfair Contract Terms Act 1977 (c. 50)

2 The Unfair Contract Terms Act 1977 is amended as follows.

3 In section 1(2) (scope of Part 1) for “to 4” substitute “, 3”.

4 35In section 2 (negligence liability), after subsection (3) insert—

(4) This section does not apply to—

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(a) a term in a consumer contract, or

(b) a notice to the extent that it is a consumer notice,

(but see the provision made about such contracts and notices in
sections 62 and 65 of the Consumer Rights Act 2014).

5 (1) 5Section 3 (liability arising in contract) is amended as follows.

(2) In subsection (1) omit “as consumer or”.

(3) After subsection (2) insert—

(3) This section does not apply to a term in a consumer contract (but see
the provision made about such contracts in section 62 of the
10Consumer Rights Act 2014).

6 Omit section 4 (unreasonable indemnity clauses).

7 Omit section 5 (“guarantee” of consumer goods).

8 (1) Section 6 (sale and hire-purchase) is amended as follows.

(2) After subsection (1) insert—

(1A) 15Liability for breach of the obligations arising from—

(a) section 13, 14 or 15 of the 1979 Act (seller’s implied
undertakings as to conformity of goods with description or
sample, or as to their quality or fitness for a particular
purpose);

(b) 20section 9, 10 or 11 of the 1973 Act (the corresponding things
in relation to hire purchase),

cannot be excluded or restricted by reference to a contract term
except in so far as the term satisfies the requirement of
reasonableness.

(3) 25Omit subsections (2) and (3).

(4) After subsection (4) insert—

(5) This section does not apply to a consumer contract (but see the
provision made about such contracts in section 31 of the Consumer
Rights Act 2014).

9 (1) 30Section 7 (miscellaneous contracts under which goods pass) is amended as
follows.

(2) After subsection (1) insert—

(1A) Liability in respect of the goods’ correspondence with description or
sample, or their quality or fitness for any particular purpose, cannot
35be excluded or restricted by reference to such a term except in so far
as the term satisfies the requirement of reasonableness.

(3) Omit subsections (2) and (3).

(4) After subsection (4) insert—

(4A) This section does not apply to a consumer contract (but see the
40provision made about such contracts in section 31 of the Consumer
Rights Act 2014).

10 Omit section 9 (effect of breach of contract).

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11 Omit section 12 (“dealing as consumer”).

12 In section 13(1) (varieties of exemption clauses) for “and 5 to” substitute “, 6
and”.

13 In section 14 (interpretation of Part 1), at the appropriate places insert—

14 (1) Section 15 (scope of Part 2) is amended as follows.

(2) 10In subsection (2) for “to 18” substitute “and 17”.

(3) In subsection (3)—

(a) for “to 18” substitute “and 17”, and

(b) in paragraph (b) omit sub-paragraph (ii) and the “or” preceding it.

15 In section 16 (liability for breach of duty), after subsection (3) insert—

(4) 15This section does not apply to—

(a) a term in a consumer contract, or

(b) a notice to the extent that it is a consumer notice,

(but see the provision made about such contracts and notices in
sections 62 and 65 of the Consumer Rights Act 2014).

16 (1) 20Section 17 (control of unreasonable exemptions in consumer or standard
form contracts) is amended as follows.

(2) In the heading omit “consumer or”.

(3) In subsection (1)—

(a) omit “a consumer contract or”,

(b) 25in paragraph (a) omit “consumer or”, and

(c) in paragraph (b) omit “consumer or”.

(4) After subsection (2) insert—

(3) This section does not apply to a term in a consumer contract (but see
the provision made about such contracts in section 62 of the
30Consumer Rights Act 2014).

17 Omit section 18 (unreasonable indemnity clauses in consumer contracts).

18 Omit section 19 (“guarantee” of consumer goods).

19 (1) Section 20 (obligations implied by law in sale and hire-purchase contracts) is
amended as follows.

(2) 35After subsection (1) insert—

(1A) Any term of a contract which purports to exclude or restrict liability
for breach of the obligations arising from—

(a) section 13, 14 or 15 of the 1979 Act (seller’s implied
undertakings as to conformity of goods with description or
40sample, or as to their quality or fitness for a particular
purpose);

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(b) section 9, 10 or 11 of the 1973 Act (the corresponding things
in relation to hire purchase),

shall have effect only if it was fair and reasonable to incorporate the
term in the contract.

(1B) 5This section does not apply to a consumer contract (but see the
provision made about such contracts in section 31 of the Consumer
Rights Act 2014).

(3) Omit subsection (2).

20 (1) Section 21 (obligations implied by law in other contracts for the supply of
10goods) is amended as follows.

(2) In subsection (1), for paragraphs (a) and (b) substitute “such as is referred to
in subsection (3) below shall have no effect if it was not fair and reasonable
to incorporate the term in the contract.”

(3) In subsection (2)(b) omit “unless it is a consumer contract (and then only in
15favour of the consumer)”.

(4) After subsection (3A) insert—

(3B) This section does not apply to a consumer contract (but see the
provision made about such contracts in section 31 of the Consumer
Rights Act 2014).

21 20Omit section 22 (consequence of breach of contract).

22 (1) Section 25 (interpretation of Part 2) is amended as follows.

(2) In subsection (1)—

(a) omit the definition of “consumer”,

(b) for the definition of “consumer contract” substitute—

(c) at the appropriate place insert—

(3) 30Omit subsections (1A) and (1B).

(4) In subsection (5), for “and 16 and 19 to” substitute “, 16, 20 and”.

23 In section 26(2) (international supply contracts) omit “or 4”.

24 (1) Section 27 (choice of law clauses) is amended as follows.

(2) In subsection (2)—

(a) 35omit “(either or both)”, and

(b) omit paragraph (b) and the “or” preceding it.

(3) Omit subsection (3).

25 Omit section 28 (temporary provision for sea carriage of passengers).

26 (1) Schedule 1 (scope of sections 2 to 4 and 7) is amended as follows.

(2) 40In the heading, for “to 4” substitute “, 3”.

Consumer Rights BillPage 59

(3) In paragraph 1, for “to 4” substitute “ and 3”.

(4) In paragraph 2—

(a) for “to 4” substitute “, 3”, and

(b) omit “except in favour of a person dealing as consumer”.

(5) 5In paragraph 3—

(a) for “, 3 and 4” substitute “and 3”, and

(b) omit “, except in favour of a person dealing as consumer,”.

27 In Schedule 2 (“guidelines” for application of reasonableness test), for “6(3),
7(3) and (4),” substitute “6(1A), 7(1A) and (4),”.

10Companies Act 1985 (c. 6)1985 (c. 6)

28 (1) Schedule 15D to the Companies Act 1985 (specified descriptions of
disclosures for the purposes of section 449) is amended as follows.

(2) In paragraph 17—

(a) omit paragraph (i), and

(b) 15after paragraph (k) insert—

(l) Schedule 3 to the Consumer Rights Act 2014.

(3) For paragraph 25 substitute—

25 A disclosure for the purposes of enabling or assisting a regulator
under Schedule 3 to the Consumer Rights Act 2014 other than the
20Competition and Markets Authority to exercise its functions
under that Schedule.

Merchant Shipping Act 1995 (c. 21)1995 (c. 21)

29 In section 184 of the Merchant Shipping Act 1995 (application of Schedule 6
to carriage within British Islands) omit subsection (2).

25Arbitration Act 1996 (c. 23)1996 (c. 23)

30 The Arbitration Act 1996 is amended as follows.

31 (1) Section 28 (application of unfair terms regulations to consumer arbitration
agreements) is amended as follows.

(2) In subsection (1), for “the Unfair Terms in Consumer Contracts Regulations
301994” substitute “Part 2 (unfair terms) of the Consumer Rights Act 2014”.

(3) For subsection (2) substitute—

(2) In those section “the Part” means Part 2 (unfair terms) of the
Consumer Rights Act 2014.

32 For section 90 (regulations apply where consumer is a legal person)
35substitute—

90 Part applies where consumer is a legal person

The Part applies where the consumer is a legal person as it applies
where the consumer is an individual.

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