In consumer contracts entered into on a business's standard terms, the court can find on a claim by an individual consumer that a term is unreasonable and unenforceable as against that particular consumer.

In addition, the court can also hold, on a general challenge by a body not a party to the contract, that such a term is unreasonable and unenforceable in all such consumer contracts entered into by that business.

Moreover, such at finding on a general challenge will apply retrospectively to contracts already in existence before the finding of unreasonableness and which have not been individually challenged.

This was the decision of the Court of Appeal in Office of Fair Trading v Foxtons Ltd. The Office of Fair Trading (OFT) challenged the fairness of certain terms in the defendant estate agent's standard form of contract under the procedure set out in the Unfair Terms in Consumer Contracts Regulations 1999 (the Regulations).

The Regulations enable "general challenges" to be made i.e. challenges by bodies who are not a party to the contract complained of, as a method of providing effective protection for consumers who might be reluctant to challenge more powerful businesses.

The OFT sought an injunction to prevent the defendant from enforcing the relevant unfair terms in existing contracts.

At first instance, the judge declined to grant the injunction holding the defendant should not be prevented from enforcing individual contracts already entered into as although the term might be unfair on a general challenge, it might be fair in the particular circumstances of the contract entered into.

On appeal, the Court of Appeal held that protection of the consumer is at the heart of the Regulations. It would be inadequate protection to consumers if a court on a general challenge, having found a term unfair, had no power to prevent the business from continuing to enforce that unfair term in existing contracts.

The court held that a general challenge can relate to a term in a current as well as future contract and that the courts do have the power to prevent the offending term being enforced in existing as well as future contracts.

The OFT was therefore entitled to an injunction to prevent enforcement of the terms in current, as well as future, contracts.


This is an important decision for finance companies dealing with consumers on their own standard terms and conditions. If a term is found to be unreasonable on a general challenge, its effect can be widespread. Not only will the term have to be changed in all future contracts, but it will be unenforceable against consumers in existing contracts, which may be numerous and go back for a number of years.  

This article was published in the May issue of Motor Finance