Unfair Contract Terms in Consumer Contracts – A Guide for Businesses

An unfair contract term in a consumer contract is a stipulation that is detrimental to the consumer, violates the requirement of good faith and fair dealing, and leads to a significant imbalance between the rights and obligations of the merchant or supplier and the consumer. These terms create considerable risk for the merchant because EU legislation provides substantial guarantees and allows courts, on their own motion, to declare consumer contracts entirely or partially void. Consequently, every merchant should avoid including unfair terms in their contracts.
Examples of unfair contract terms include those that:
1. place the performance of the merchant’s or supplier’s obligations dependent on a condition whose fulfillment relies solely on their own will;
2. obligate the consumer, upon non-performance of their obligations, to pay an unreasonably high indemnity or a penalty;
3. provide for an unreasonably short period for the consumer’s implied consent to continue the contract if the consumer does not object;
4. impose upon the consumer the acceptance of terms they had no opportunity to review before concluding the contract;
5. allow the merchant or supplier to unilaterally change the terms of the contract based on grounds not provided for therein;
6. stipulate that the price is to be determined upon receipt of the goods or provision of the service, or give the merchant or supplier the right to increase the price without the consumer having the right to withdraw from the contract if the finally determined price is significantly higher than the price agreed upon at the time of contract conclusion;
7. require the consumer to fulfill their obligations even if the merchant or supplier fails to fulfill theirs.
These examples are not exhaustive. An unfair term in a contract concluded with a consumer is assessed by taking into account the type of goods or service that is the subject of the contract, all circumstances related to its conclusion as of the date of signing, as well as all other terms of the contract or any other contract upon which it depends.
This approach corresponds to the case law of the Court of Justice of the European Union (CJEU), which interprets Council Directive 93/13/EEC of 5 April 1993 on unfair contract terms in consumer contracts. According to the CJEU, an individual term is unfair if, contrary to the requirement of good faith and fair dealing, it creates a significant imbalance between the rights and obligations, to the detriment of the consumer (CJEU Judgment of 14 March 2013, Case C-415/11 – Aziz). Two cumulative requirements must be present:
1. a substantive aspect (existence of a “significant imbalance”) – the term must result in an imbalance between the rights and obligations of the merchant and the consumer, to the detriment of the consumer; i.e., the consumer’s rights must be restricted or the merchant must be relieved of obligations, or conversely, the consumer’s obligations are unduly onerous, or the merchant possesses disproportionately large rights;
2. a formal aspect (“contrary to the requirement of good faith”) – the term must have been created in such a way that the consumer did not have the opportunity to exercise their freedom of contract; if the contract allows the consumer a choice whether or not to enter into it, it is sufficient that the terms were published and sufficiently comprehensible for the consumer to consider them when choosing whether to proceed with the contractual relationship; if the contract does not give the consumer such a choice – as is the case here – the merchant must prove that the term is fair, respects the consumer’s interest, and that the consumer would have accepted it if they had freedom of choice.

Unfair Contract Terms in Standard Terms and Conditions
Unfair contract terms in contracts are void unless they have been individually negotiated. Terms that were drafted in advance, and which the consumer therefore had no opportunity to influence their substance, are not considered individually negotiated, especially in cases involving standard terms and conditions. For this reason, unfair terms are most often found in contracts concluded under standard terms and conditions, as well as in form (template) contracts.
The above is why there are higher requirements for the drafting and use of standard terms and conditions. When concluding a standard terms contract with a consumer, the standard terms only bind the consumer if they were provided to the consumer and the consumer consented to them. The consumer’s consent to the standard terms is certified by their signature. The merchant or their authorized representative is obligated to provide the consumer with a copy of the standard terms signed by the merchant.
Furthermore, the merchant is required to notify the consumer of any change in the standard terms of the concluded contract within 7 days of the change occurring, using a contact phone, email, or correspondence address provided by the consumer. If the consumer disagrees with the changes, they may withdraw from the contract within 1 month of receiving the notification from the merchant, without stating a reason and without owing indemnity or a penalty, or they may continue to perform the contract under the standard terms that were in effect prior to the amendment. Changes to the standard terms bind the consumer only when the consumer has been notified of them and has not exercised their right to withdraw.

Consequences of Unfair Contract Terms
In light of the above, it should be noted that the Commission for Consumer Protection is competent to:
1. draft guidelines or recommendations regarding specific unfair terms in standard terms contracts or in contracts used in particular industries or sectors of activity;
2. recommend the use of specific terms in contracts used in certain specialized industries or sectors of activity;
3. conduct negotiations with representatives of merchant associations concerning the drafting of model contracts applicable to specific industries or sectors of activity;
4. refer the matter to the competent court when unfair terms are present in standard terms contracts, requesting their declaration as void under the procedure of the Consumer Protection Act in specific cases.
As noted above, unfair terms in contracts are void, unless individually negotiated. However, the presence of an unfair term in a consumer contract does not lead to the nullity of the entire contract if the remainder of the contract can be applied without that term.
According to the CJEU’s case law, where a term which contains a stipulation that is separable from the other stipulations of that term and capable of being the subject of an individual examination of its unfairness, the removal of which would make it possible to restore real balance between the parties without affecting the substance of the contract concerned, that provision, read in the light of the principles of effectiveness, proportionality, and legal certainty, does not mean that that term, or even that contract, should be declared invalid in their entirety. However, if a term is found to be unfair, that term solely regulates a specific aspect of the relationship between the parties, and the contract cannot continue to be performed without that term, the contract may be declared void (CJEU Judgment of November 23, 2023, Case C-321/22 – Provident Polska).
When finding an unfair term in a contract concluded between a seller/supplier and a consumer to be invalid, national courts may not supplement the contract by modifying the content of that term. However, national courts are permitted to replace an unfair term with a supplementary provision of national law in cases where the invalidity of the unfair term would require the court to annul the contract in its entirety, thereby exposing the consumer to particularly unfavourable consequences, so that the consumer would thus be penalised (CJEU Judgment of 25November 2020, Case C-269/19 – Banca B.; CJEU Judgment of 16March 2023, Case C-6/22 – M.B., et al.).