# European Commission published Guidance Note on interpretation of Unfair Terms and Conditions



## Brendan Burgess (30 Jul 2019)

On 22 July 2019, the Commission adopted a Guidance Notice on the interpretation and application of Directive 93/13/EEC. The main purpose of the Guidance Notice is to present the rich case law of the Court of Justice of the European Union on this Directive in a structured manner in order to facilitate effective application of the Directive in the EU and EEA Member States. It is addressed, in the first place, to legal practitioners and other actors involved in the defence of consumer rights. However, it may be beneficial also to businesses and consumer organisations and all those who are involved in the application of the rules on unfair contract terms.

The Guidance Notice is available in 23 languages:



UCTD Guidance 2019


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## Brendan Burgess (30 Jul 2019)

I know that a few people have raised this in their appeals and complaints on tracker mortgages.

There might be some cases of interest here.

I find these EU documents very hard going.  If you want to read it, I suggest starting with Section 3 , on page 23. I have attached this section to this post. 

3. The general unfairness test and transparency requirements .............................................................. 20
3.1. Unfairness and transparency in general ...................................................................................... 20
3.2. Contract terms relating to the main subject matter of the contract or the price and remuneration
(Article 4(2) UCTD) .......................................................................................................................... 23
3.2.1. Contract terms relating to the definition of the main subject matter of the contract ........... 24
3.2.2. Contract terms relating to the price and remuneration ........................................................ 24
3.3. Transparency requirements ........................................................................................................ 26
3.3.1. Transparency requirements under the UCTD ...................................................................... 26
3.3.2. Transparency requirements stemming from other EU acts ................................................. 29
3.4. Unfairness assessment under Articles 3 and 4(1) UCTD ........................................................... 31
3.4.1. The framework for the assessment under Articles 3(1) and 4(1) ........................................ 31
3.4.2. The relevance of statutory provisions and the significance of the imbalance ..................... 33
3.4.3. Sanctions or consequences of the consumer’s failure to comply with contractual obligations
....................................................................................................................................................... 34
3.4.4. Possible unfairness of the price or remuneration ................................................................. 36
3.4.5. Circumstances at the time of the conclusion of the contract ............................................... 36
3.4.6. Relevance of lack of transparency for the unfairness of contract terms .............................. 37
3.4.7. Role of the Annex referred to in Article 3(3) UCTD .......................................................... 39


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## tnegun (30 Jul 2019)

There is some reading in that, for the Prevailing Rate cohort this would certainly appear to be the case from pg.28

"The Court has summarised the standard to be expected from sellers and suppliers as follows"
"......the  fact  related  to  the  failure  to  mention  in  the  loan  agreement  the  information regarded as being essential with regard to the nature of the goods or services which are the subject matter of that contract "

Also 

"Where  the  nature  of  the  contract  term  requires  sellers  or  suppliers  to  provide  certain information or explanations prior to the conclusion of the contract, they will also have to bear the burden to prove that they provided consumers with the necessary information in order to be able to claim that the relevant terms are plain and intelligible"


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## elacsaplau (30 Jul 2019)

So clearly banks failed to comply with these terms and in respect of certain cohorts, the CB thinks this is ok?!


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## WizardDr (30 Jul 2019)

You can assume Europe is actually watching this tracker debacle.
This is a short Directive that was put into Irish Law as a statutory instrument.
It is going to come back to haunt the Banks and the Central Bank.
It will be interesting how those contortionists in PTSB will avoid being impaled on this.
Unless of course the FSPO deserts his post again.


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## jpbyrne (31 Jul 2019)

Some useful guidance for national courts and reference to promotional material provided by the lender in the below


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## tnegun (31 Jul 2019)

I don't have AIBs response to hand but I believe one of their contentions was that the Letter of Offer did not mentioning a tracker so there could be no expectation of a tracker.  

Which goes against this principal "contract term is plain and intelligible within the meaning of the UCTD" "For example, contract terms whose impact can only be understood when reading them jointly, should not be presented in such a way that their joint impact is obscured, e.g. through placing them in different parts of the contract"

Also in relation to the interpretation of the then Prevailing Rate from pg. 21

"Recital 20 Whereas  contracts  should  be  drafted  in  plain,  intelligible  language,  the  consumer  should actually be given an opportunity to examine all the terms and, if in doubt, the interpretation most favourable to the consumer should prevail;"

This was quoted already but I believe that the phrase "then prevailing rate" fails the transparency test so is even more relevant.


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## WizardDr (31 Jul 2019)

Annex 2 gives a summary of the transposition measures adopted by each country.

Ireland (and Croatia and Malta) "National Law does not go beyond minimum standard of the UCTD"

That is an indictment on 'consumer law' in this Country.


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