What’s fair in consumer-facing contracts

If you’ve read our guide to goods, services and consumer rights, you’ll know that a business that’s selling or planning to sell goods to consumers (known as B2C trading) in Ireland needs to make sure that it’s complying with the rules under Irish and European Union (EU) legislation.

One of those rules directs that there must be a contract in place between the trader and the consumer.

Other rules govern what that contract must include, how it should be written and presented, and the rights and restrictions that you can lawfully include.

If you need a contract

We’ve got several contract templates that will help you to get started in creating legally robust documentation.

If you want a contract that looks more like standard terms and conditions, then you can use our B2C terms and conditions of sale of goods, our B2C terms and conditions of services or, one which combines them both, our B2C terms and conditions of goods and services .

These are great for one-off purchases and where you don’t need the consumer to have signed something for a contract to be struck.

How can you ensure that your contract complies with the law?

There are a number of key factors that you must consider to ensure you’ve got a legally compliant arrangement that won’t leave you vulnerable in the face of consumer complaints.

We’ve set these out below.

The contract must be fair

If a customer makes a complaint against you, your contract terms will only be legally binding if they’re considered fair.

Terms are automatically considered unfair if they try to lessen or remove the customer’s statutory rights, or if they work more in the favour of the trader’s business than the consumer.

The assessment of what’s unfair considers the way the contract is worded, what’s being sold, how the term fits in with the rest of the contract, and in what situation the contract was agreed to.

The contract must be clear

This involves drawing attention to any important terms (particularly those that could significantly impact the customer) rather than putting them into small print.

The contract should also be written in plain English, without unnecessary jargon.

If it uses any terms of particular significance, then those terms should be defined, to avoid any confusion or ambiguity.

It should detail renewal dates, how and when the contract may be changed and how consumers can cancel the contract without paying a cancellation fee.

The contract mustn’t be a copy

Even if a business is generally the same as yours, you shouldn’t copy and paste their terms into your contracts without taking advice.

It would be a breach of copyright to copy someone else’s contract wording.

Technically the copyright owner could therefore stop you from using it and sue for damages/an account of the profits.

And just because another business may look the same on the surface, there may be subtle differences in the way they work, and therefore your contracts will need different wording to theirs.

Not to mention the copyright issues that copying another business would create!

For example, a small business copying a much more established business’ terms and conditions could find itself facing onerous and unfavourable insurance and liability obligations that would not ordinarily be necessary- or expected – of a business its size.

If something goes wrong, e.g. a consumer complains about a fault or defect, the business owner may have no choice but to pay more or incur greater costs, than it would otherwise have done.

The contract must allow for refunds

While you aren’t required to give a refund in every situation, the contract cannot lawfully operate a blanket no-refund policy.

If you do have a term such as this in the contract, it’ll likely be deemed unfair (and therefore unenforceable), as refunds should be allowed in some situations (e.g. if the consumer cancels the contract within the correct timeframe or if faulty goods or services are supplied).

The contract mustn’t request unjustified deposits or charges

If you take consumer orders for your products or services and as part of your payment model, you request that the consumer lay down a deposit to secure that order, you must make sure that the level of that deposit can be justified.

When it comes to any cancellation charges that as a trader you wish to apply where customers change their minds, these charges must accurately reflect the amount of money you have directly lost because of the order not going ahead.

They cannot have any punitive impact on the consumer.

The contract must describe what happens if the trader cancels

The contract must show that the if the trader cancels, the consumer will receive a refund of the amount they’ve paid so far (if any).

It must also make clear that any cancellations by the trader should be made with reasonable notice, unless the reasons are deemed serious enough for immediate cancellation – these exceptions should be listed in the contract.

You’ll generally find this detail set out in the ‘termination’ and ‘consequences of termination’ clauses within a contract.

The contract must not limit the trader’s liability

For example, the trader must not state that their liability is only up to the value of the goods or services sold, rather than allowing for any relevant compensation that the consumer may be legally entitled to – which might be the case if, for example, the consumer bought goods and the goods damaged the consumer’s property.

The consumer should be entitled to recover the costs of setting right that damage, as well as the cost of the original goods bought.

The trader is also not permitted to exclude liability for death or serious injury to the consumer as a result of the consumer buying the goods.

You’ll find appropriate wording to cover what you can and cannot exclude in our templates.

Look for the liability clause.

The contract must not give the trader the right of final decision.

In the event that a contract term is ambiguous and therefore it’s not clear if a party has breached it or not, the law does not give the trader the benefit of the doubt; it will side with the consumer’s view of the interpretation.

This highlights the importance of ensuring every clause in the contract is clear and simply stated.

The contract mustn’t stop a consumer taking legal action

A contract is entitled to seek compensation through the Irish Courts  – and a contract cannot legally say otherwise.

The contract mustn’t invalidate verbal agreements

For example, if a sales agent makes the consumer a verbal offer and the consumer accepts the offer based on what is said, the trader must accept liability for, and honour, that verbal offer, even if it deviates from the trader’s usual terms of trade.

The contract mustn’t make the customer unreasonably liable

While there are some situations where a customer could be liable to pay the trader damages, as a consumer, they cannot be made liable for expensive damages out of their control (for example, weather-damaged equipment). Instead, the trader should ensure they’re appropriately insured.

These events that are out of someone’s reasonable control are typically called ‘force majeure’ events.

You’ll find a clause for these in all our standard contracts.

Whilst not covered by Consumer Rights legislation, it’s also worth remembering that any personal data that a customer gives to you in your contracts is collected, handled, and processed responsibly and legally.

You can find out more about this in our guide to data handling rules and GDPR (coming soon).