A court can only assess a term in a consumer contract for fairness under the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR) if it has not been individually negotiated (Regulation 5). Essentially, if the term has been drafted in advance and the consumer has had no say in its wording, it cannot be said to have been individually negotiated.
In the case of Khurana and another v Webster Construction Limited the claimants, who had employed the defendant builders to carry out works on their house, contested the decision of an adjudicator in respect of a dispute over the building works. The adjudication agreement agreed between the parties stated that the adjudicator’s decision (which went against the claimants) was binding, but the claimants argued that this term was unfair as it was contained in a letter drafted by the defendant’s solicitors proposing adjudication as the means to settle any dispute and had therefore not been individually negotiated.
The judge rejected the claimants’ assertion and stated that, as long as it could be shown that the term presented for consideration in the letter had not been drafted in advance of the production of the letter, there was no issue. It could otherwise be argued that any written proposal in any circumstance had not been individually negotiated.
The above is important as it comprises the only judicial guidance on the meaning of ‘drafted in advance’ in respect of the UTCCR. Whilst the Consumer Rights Act 2015 will soon replace the UTCCR in respect of unfair contract terms, it remains likely that claims will be brought under the Regulations for some time after they are repealed and thus the above case remains significant.