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Hungary: unfairness in consumer contracts

Hungary
17/06/2009
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National courts should examine the unfairness of terms in standard form consumer contracts whenever the requisite legal and factual elements are available, the ECJ has ruled.

The ECJ's ruling also states that, in contracts between sellers or suppliers and their customers that are not individually negotiated:

  • consumers are not bound by unfair terms even before they have successfully contested their validity in court
  • national courts should examine the unfairness of terms and evaluate the factors which make them unfair even where not asked to do so by the consumer
  • terms giving exclusive jurisdiction to the courts where the seller or supplier is based may be unfair
  • any unfair terms should not be applied unless the consumer wants them to be

Under EU law, terms in consumer contracts which have not been individually negotiated are unfair if they create an significant inequality in the parties' rights and obligations to the detriment of the consumer and contrary to the requirements of good faith. Unfairness is a matter for national courts to decide by reference to what the contract is for and the circumstances in which it was made.

Businesses should now review the terms of their standard form consumer contracts to ensure they do not contain any unfair term which a court might rule invalid even where not related to its dispute with the consumer concerned.

Law: Case C 243/08 (European Court of Justice); Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts; Government Decree No 18/1999 implementing Directive 93/13/EEC

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