Contract terms define the rights and duties of the parties who are bound to them. In consumer contracts, sellers and suppliers possess a considerable advantage by defining the terms in advance that are not individually negotiated. Standard term contracts, however, facilitate commercial transactions and if abuses can be prevented, it can also work to the advantage of consumers.

The Unfair Contract Terms Directive therefore introduces a notion of "good faith" in order to prevent significant imbalances in the rights and obligations of consumers on the one hand and sellers and suppliers on the other hand. This general requirement is supplemented by a list of examples of terms that may be regarded as unfair.

Terms that are found unfair under the Directive are not binding for consumers. The Directive also requires contract terms to be drafted in plain and intelligible language and states that ambiguities will be interpreted in favour of consumers.

Member States must make sure that effective means exist under national law to enforce these rights and that such terms are no longer used by businesses. All Member States were required to implement the Directive into their national law by 31 December 1994.

Council Directive 93/13/EEC of 5 April 1993 on Unfair Terms in Consumer Contracts

Report from the Commission on the implementation of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts, 27 April 2000 (+/-350KB)

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