Unfair terms
Compared with most other businesses, gas and electricity are heavily regulated (see Chapter 14). Therefore, there should be less chance of contracts containing unfair terms and if you come across a term which might be unfair, you can complain, initially to the Citizens Advice consumer service. However, regulation is not a guarantee. You may still need to assert your rights against unfair terms. Even better, you can try to avoid unfair terms by checking over a contract before you sign it. All terms are approved by the Department for Business, Energy and Industrial Strategy and reviewed by Ofgem.
An ‘unfair term’ is one which causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer – ie, if a contractual term goes too far in favour of the supplier, it is unfair. An unfair term is not binding on you.1s62(2) CRA 2015 Unfair terms are governed by the Consumer Rights Act 2015 (see here). Contractual terms must be written in plain, intelligible language.2s68 CRA 2015 If there is any doubt as to the meaning of a particular term, the interpretation most favourable to you should be used.3s69(1) CRA 2015 The courts consider that a doctrine of good faith applies in examining any term and whether it is unfair. In Director General of Fair Trading v First National Bank plc [2001], Lord Bingham stated:4[2001] UKHL 52, [2002] 1 AC ‘The requirement of good faith in this context is one of fair and open dealing. Openness requires that the terms should be expressed fully, clearly and legibly, containing no concealed pitfalls or traps. Appropriate prominence should be given to terms which might operate disadvantageously to the customer. Fair dealing requires that a supplier should not, whether deliberately or unconsciously, take advantage of the consumer’s necessity, indigence, lack of experience, unfamiliarity with the subject matter of the contract, weak bargaining position…It looks to good standards of commercial morality and practice.’
If you come across possibly unfair terms or unintelligible language, you can refer the contract to the Competition and Markets Authority or Ofgem (see Chapter 14). The civil courts can also grant a remedy known as a ‘declaration’ to establish the legal effect or meaning of a term. Compensation, including for inconvenience and distress, may be awarded.5West and Another v Ian Finlay & Associates (a firm) [2014] EWCA civ 316