Protecting consumers from unfair terms in contracts

SUMMARY OF:

Directive 93/13/EEC on unfair terms in consumer contracts

WHAT IS THE AIM OF THE DIRECTIVE?

Directive 93/13/EEC protects consumers in the European Union (EU) from unfair terms and conditions which might be included in a standard contract for goods and services that they purchase. It refers to the notion of ‘good faith’ to avoid any significant imbalance in mutual rights and obligations.
As part of the new deal for consumers, Directive 93/13/EEC has been amended by Directive (EU) 2019/2161, which aims to modernise EU consumer law and improve its enforcement.

KEY POINTS

Directive 93/13/EEC

The nature of the goods and services involved, circumstances of the transaction and all other terms and conditions have to be taken into account when assessing whether a clause in a contract is fair or not.
The actual price paid for goods or services is not subject to this assessment, unless the term in question is not plain and intelligible.
The directive contains a non-exhaustive and indicative list of unfair contract terms. These include requiring consumers to pay an unreasonably high penalty (e.g. for late payment) or holding them to terms they had no time to fully understand before signing the contract.
The wording of all written contracts must be in plain, intelligible language. When there is doubt about the meaning of a term, it should be interpreted in a manner favourable to the consumer.
Contract terms deemed unfair are not binding on consumers, but the rest of the contract remains valid where this is legally possible.
EU Member States must ensure that there are effective remedies to prevent unfair terms from continuing to be used in contracts.
Organisations or individuals with a legitimate interest in protecting consumers’ rights may go to court to prevent an unfair contract term continuing to apply.
In 2019, the European Commission issued guidance on the interpretation and application of Directive 93/13/EEC. The guidance presents the case-law of the Court of Justice of the European Union on the directive in a structured manner, to facilitate effective application of the directive in the EU and in European Economic Area countries.

Penalties

Amending Directive (EU) 2019/2161 requires Member States to introduce effective, proportionate and dissuasive penalties applicable to infringements of the rules on unfair contract terms, based on a set of parameters. These criteria include:
- the nature, gravity, scale and duration of the infringement;
- any action taken by the trader to mitigate or remedy the damage suffered by consumers;
- any previous infringements by the trader;
- penalties imposed on the trader for the same infringement in other Member States in cross-border cases, where information about these penalties is available through the mechanism set up by Regulation (EU) 2017/2394 (see summary).
Under the new directive, Member States must also be able to impose fines when, in connection with coordinated actions under Regulation (EU) 2017/2394, they identify major cross-border infringements affecting consumers in several Member States. Fines must be able to reach at least 4% of a trader’s annual turnover, or €2 million if information about the trader’s turnover is unavailable.

FROM WHEN DO THE RULES APPLY?

Directive 93/13/EEC had to be transposed into the national law of Member States by 31 December 1994.
Amending Directive (EU) 2019/2161 had to be transposed into national law by 28 November 2021. Member States have had to apply the rules since 28 May 2022.

BACKGROUND

For further information, see:

Unfair contract terms directive (European Commission)
Review of EU consumer law – fitness check of EU consumer law on digital fairness (European Commission).

MAIN DOCUMENT

Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ L 95, 21.4.1993, pp. 29–34).

Successive amendments to Directive 93/13/EEC have been incorporated into the original text. This consolidated version is of documentary value only.