EU on Good Faith in Standard Form Contracts Richard Warner

Directive on Unfair Terms “A contractual term [1] which has not been individually negotiated shall be regarded as unfair if, [2] contrary to the requirement of good faith, [3] it causes a significant imbalance in the parties' rights and obligations arising under the contract, [4] to the detriment of the consumer.” Article 3, Paragraph 1.

“Not Individually Negotiated” “A term shall always be regarded as not individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term, particularly in the context of a pre-formulated standard contract.” Article 3, Paragraph 2.

Additional Considerations “Whereas the assessment, according to the general criteria chosen, of the unfair character of terms, in particular in sale or supply activities of a public nature providing collective services which take account of solidarity among users, must be supplemented by a means of making an overall evaluation of the different interests involved; whereas this constitutes the requirement of good faith . . .”

Lack of Effectiveness “In practice, consumer law has been tardy in its consideration of digital matters compared to other areas of EU law. 17 There is scant Court of Justice of the European Union (CJEU) jurisprudence on unfairness in digital consumer contracts, even though several types of terms commonly used in such contracts would likely fail the current ‘unfairness’ test.” Angela Daly, Private Power, Online Information Flows and EU Law: Mind The Gap