§4.3.1 The principle: Setting aside unfair contract terms and prohibition from revising them

Under Article 6(1), while unfair contract terms are not binding on consumers, the remainder of the contract continues to bind the parties ‘if it is capable of continuing in existence without the unfair terms.’ The Court (290) has stressed repeatedly that ‘[…], in accordance with Article 6(1) of Directive 93/13, national courts are merely required to refrain from applying an unfair contractual term in order that it may not produce binding effects with regard to the consumer, without being empowered to revise the content of that term. That contract must continue in existence, in principle, without any amendment other than that resulting from the deletion of the unfair terms, in so far as, in accordance with the rules of domestic law, such continuity of the contract is legally possible […] (291).’ This means, for instance, with regard to unfair penalty clauses, that national courts may not reduce the amount payable under the contract term to an acceptable level, but simply have to discard the term in its entirety (292). The revision of unfair contract terms would, in fact, imply that the terms in question would remain partially binding and that sellers or suppliers would somewhat benefit from having used such terms. This would undermine the effectiveness of Article 6(1) UCTD and remove the dissuasive effect that Article 6(1) UCTD seeks to achieve by considering unfair contract terms not to be binding (293). The removal of such dissuasive effect would also be inconsistent with the objective of combatting the continued use of unfair contract terms reflected in Article 7(1) UCTD (294). Following the same logic, also the partial deletion of an unfair contract term is inadmissible, as, generally, it will be equivalent to a revision of a contract term by altering its substance (295). This may be different only in cases where what may look like one ‘contract term’ is, in reality, composed of different contract terms within the meaning of Article 3(1). This may be the case in particular where a contract term contains two (or more) stipulations that can be separated from each other in such a way that one of them can be deleted, while the remaining stipulations are still clear and comprehensible and can be assessed on their own merits. So far, the Court has given only a few indications regarding the criteria for determining what constitutes a contract term in its own right. It distinguishes, for instance, between contract terms setting out the fundamental obligations for the consumer to pay back a loan in a given currency and terms setting out the currency conversion mechanism (296), which are therefore, by definition, separate contract terms. The same applies to terms setting out the price to be paid by the consumer and a mechanism for price changes in long-term contractual relations (297). The Court (298) has also distinguished between a term determining the ordinary interest rate to be paid for a mortgage loan and a term on late payment interest, even if the latter is defined as a top-up to the ordinary interest rate. Having established that ordinary interest and default interest have very different functions, the Court explained that ‘[…] those considerations apply regardless of the way in which the contractual term determining the default interest rate and that fixing the ordinary rate of interest are worded. In particular, they apply not only when the default interest rate is fixed independently of the ordinary interest rate, in a separate contractual term, but also when the default interest rate is fixed in the form of an increase in the ordinary interest rate by a certain number of percentage points. In the latter case, as the unfair term consists in that increase, Directive 93/13 requires solely that that increase be annulled.’ In connection with partial deletion, so far the Court has not indicated whether the ‘blue pencil doctrine’, applied, for instance, by the German Supreme Court, is compatible with the UCTD (299). Under this doctrine, a distinction is made between the inadmissible revision (300) of a contract term and the permissible deletion of an unfair stipulation contained in a contract term if the remaining content of the term can apply without any further intervention. However, the Court has ruled that, in relation to a term in a mortgage credit agreement which allowed the bank to call in the entire loan after the consumer had failed to pay a single monthly instalment, the early repayment obligation cannot be separated from the condition of (only) one unpaid monthly instalment without altering the substance of those terms. In that case, the clause was thus not severable. In sum, — what matters for the severability of contract terms is the content or function of particular stipulations rather than the way in which they are presented in a given contract and that — a partial deletion is not possible where two parts of a contract term are linked in such a way that the removal of one part would affect the substance of the remaining contract term. In this connection, it is, not excluded that a single paragraph/number in a contract contains more than one contract term within the meaning of Article 3(1) UCTD. Conversely, it is possible that two paragraphs/numbers or even provisions in different documents form a single contract term, in light of their content. The principle that national courts may not revise unfair contract terms applies regardless of whether unfairness is invoked by the consumer or is considered ex officio. However, this principle does not affect the right of the parties to amend or replace an unfair contract term with a new one, within their contractual freedom. If the new term is a contract term within the meaning of Article 3(1) UCTD, it will have to be assessed on its own merits pursuant to Articles 3, 4 and 5 UCTD. At the same time, the amendment or replacement of an unfair contract term cannot, in principle, remove the consumer's rights stemming from the non-binding character of the amended/replaced term, such as restitution claims (301). The Court may shed more light on these questions in connection with so-called novation agreements (302). The principle that unfair contract terms simply have to be eliminated from the contract, whereas the remainder of the contract continues to bind the parties, does not raise difficulties in cases where the contract can be performed without the unfair contract term(s). For example, this can be the case for contractual penalties such as late payment interests (303), clauses limiting the trader's liability for improper performance, or choice-of-law, jurisdiction or arbitration clauses. Cases where this is more complicated are discussed in Section 4.3.2.

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Source: EUR-Lex (Cellar) · retrieved 2026-09-07