The European Court of Justice (ECJ) has ruled on a preliminary request from an Hungarian Court on the interpretation of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts. The issue was whether national courts must rule, on their own motion, on the unfairness of a contractual term contained in a contract with a seller or supplier.
The Directive provides that unfair terms used in a contract between a consumer and a seller or supplier are not binding on consumers. The protection conferred by the Directive on consumers extends to cases in which a consumer fails to raise the unfairness of the term, whether because he is unaware of his rights or because he is deterred from enforcing them on account of the cost of judicial proceedings.
On this basis, the ECJ ruled that it is for the national court to assess on its own motion whether a contractual term may be categorised as unfair, where it has the legal and factual elements necessary for that task. It is not necessary for the consumer to have raised the validity of an allegedly unfair term beforehand. Therefore, if the national court considers such a term to be unfair, it must not apply it, unless the consumer opposes that non-application.