In its latest ‘Unfair contract terms’ case reports, the OFT slams small print used by British Airways Air Miles and Virgin Wine Online. How do your standard terms measure up? We look at the sort of clauses that excite the OFT’s ire at
Who: The Office of Fair Trading & Air Miles Travel Promotions Limited
When: December 2003
The Office of Fair Trading released its latest reports on its activities policing the Unfair Terms in Consumer Contracts Regulations 1999. Entitled “Unfair Contracts Terms Bulletins 24 and 25″ the release includes reports of cases handled between April and September 2003.
In a relatively new development, the case reports extend also to enforcement action taken by the OFT under other sets of consumer protection regulations. These include the Consumer Protection (Distance Selling) Regulations 2000 and the Package Travel, Package Holiday and Package Tours Regulations 1992
Following their now well established format, the bulletins open with a short and helpful preview summarising some of the more important cases handled and then report in detail on each case, listing the contract clauses which caused problems and the changes made by the business using those terms in order to placate the OFT.
Here we will look at two cases covered, those involving Virgin Wine On-Line Limited and Air Miles Travel Promotions Limited.
Virgin Wine Online
In the Virgin case (previously reported on marketinglaw.co.uk), the terms in focus were all on-line and applied to offers of food and drink, as well as a “win your weight in wine” prize promotion.
No less than six of the rules applicable to the “win your weight in wine” promotion were objected to by the OFT. These included an exclusion of liability for death or injury contained in a wordy and unclear term. This was substituted by Virgin, after discussion with the OFT, with a clearer statement regarding liability (no doubt bearing in mind that it is not possible under UK law to exclude liability for death or personal injury resulting from negligence.)
Another clause restricted the consumer’s remedies to English law and the exclusive jurisdiction of the courts of England and Wales. Perceived by the OFT as unfair to residents of Scotland, for instance, the wording was altered by Virgin so as to indicate the relevant law was “UK law” and that the relevant courts were the courts of the UK. Another provision seeking to exclude or restrict Virgin’s liability for failing to perform was objected to and amended. A right given to Virgin to cancel without notice was amended to impose a notice period of 30 days.
Elsewhere, no less than 15 complaints were raised over terms and conditions. Unclear statements as regards the consumer’s statutory rights were clarified. Exclusions of liability for defective or misdescribed goods were deleted, as was a restriction on giving refunds, credits and replacements only in “exceptional circumstances” and at the absolutely discretion of the supplier.
An unreasonably tight time limit on claims in respect of defective goods delivered was revised to require notification within 90 days of anything being delivered in a broken or spoilt state. An obscure legal reference to liability being “excluded to the fullest extent permitted by law” was deleted, as was another term which seemed to permit the supplier not to perform its contractual obligations at all. Another provision which excluded liability for defective or misdescribed goods was revised to show that such liability would be accepted in circumstances where the supplier was in breach.
Moving to the Air Miles Travel Promotions Limited (“AMTP”) case, this related to terms and conditions originating in 2002.
Some of the terms in focus dealt with the Air Miles promotion itself as opposed to the booking of holidays.
In this category, a provision which put the onus on the consumer to contact the company or its supplier to check that the terms and conditions of the offer had not been changed was deleted following the OFT action. A provision that Air Miles could not be replaced if they were lost by consumers was revised to provide that they could not be replaced unless consumers could supply the serial numbers of the lost Air Miles and they had not already been spent. Another provision, this time dealing with AMTP’s liability where consumers’ Air Miles were used by an impostor, was also revised. In its original form it provided that the company could not accept liability for any such unauthorised use.
Another provision gave AMTP the absolute right to terminate consumers’ accounts if they were earning or spending Air Miles in a manner detrimental to AMTP or its distributors. This was revised to provide that the right to terminate would only be exercised reasonably.
Why this matters:
These cases underline the need on the part of all those drafting loyalty scheme, promotion and on-line sales terms and conditions to ensure that these are clear, in plain English, and not likely to encounter the wrath of the Office of Fair Trading.
By listing in these Bulletins the clauses that have come under their scrutiny, the OFT provides a helpful guide to the types of contract term that will cause problems, and as the OFT steadily intensifies its enforcement activity, for those who have not already organised one, an up to date compliance audit of all consumer-facing standard terms is strongl