§1.2.4 Interplay with the Unfair Contract Terms Directive

The Unfair Contract Terms Directive (51) (UCTD) applies to all business-to-consumer contracts and concerns contractual terms which have not been individually negotiated in advance (e.g. pre-formulated standard clauses). Contractual terms may be regarded as unfair based on a general prohibition (52), an indicative list of potentially unfair terms (53) or an obligation to draft terms transparently, i.e. in plain, intelligible language (54). In contrast to the UCPD, which is without prejudice to contract law and does not provide for the invalidity of contracts that result from unfair commercial practices, breaches of the UCTD have contractual consequences: under Article 6(1) of that directive, unfair terms used in a contract with a consumer must ‘not be binding on the consumer’ (55). Relationship between unfair contract terms and unfair commercial practices The UCTD applies to business-to-consumer contracts in all sectors of economic activity, meaning that it may apply in parallel to other provisions of EU law, including other consumer protection rules such as the UCPD. The Court has clarified certain elements of the relationship between these two Directives in the Pereničová and Perenič case, which concerned a credit agreement where the annual percentage rate of charge indicated was lower than the actual rate (56). The Court concluded that such erroneous information about the total price of the credit provided in the contract terms is ‘misleading’ within the meaning of the UCPD if it causes, or is likely to cause, the average consumer to take a transactional decision that they would not have taken otherwise. The fact that a trader resorted to such an unfair commercial practice is one of the elements to be considered in the assessment of unfairness of contractual terms under the UCTD (57). In particular, this element may be used to establish whether a contract term which is based on it creates a ‘significant imbalance’ in the rights and obligations arising under the contract, to the detriment of the consumer, under Article 3(1) and Article 4(1) of the UCTD. Similarly, this element could be relevant in assessing whether a contract term is transparent under Articles 4(2) and 5 of the UCTD (58). At the same time, a finding that a trader resorted to an unfair commercial practice has no direct effect on whether the contract is valid under Article 6(1) of that Directive, without prejudice to any national rules pursuant to which the contract entered into on the basis of unfair commercial practices is void as a whole (59). The Court has not ruled directly on whether, in reverse, the use of unfair contract terms under the UCTD is to be regarded as an unfair commercial practice under the UCPD. It can be argued nevertheless that the use of such unfair contract terms, that are non-binding on the consumer as a matter of law, may in some cases be relevant for the identification of an unfair commercial practice. In particular, it can be the mark of a misleading action pursuant to Article 6 of the UCPD, insofar as it results in false information or in misleading the average consumer about the rights and obligations of the parties under the contract. In addition, the recourse to non-transparent contract terms, which are not drafted in plain and intelligible language as set out in Articles 4(2) and 5 of the UCTD, should be taken into account when assessing the transparency of material information and the existence of a misleading omission pursuant to Article 7 of the UCPD (60). Furthermore, the use of unfair contract terms could indicate that a trader has failed to meet the requirements of professional diligence under Article 5 of the UCPD. Only a few Member States’ consumer protection authorities have specific powers in the area of contract terms to prohibit the use of non-negotiated standard contract terms which they consider to be unfair without having to take the trader to court (61). Ex officio assessment The Court has consistently held that national courts are under an obligation to assess unfair contract terms of their own motion (ex officio) (62), i.e. even if the unfairness of contract terms is not raised by the consumer. The obligation stems from Article 6(1) of the UCTD, which provides that unfair terms are not to be binding on the consumer, as well as from the principle of effectiveness which requires that national implementing measures do not make it in practice impossible or excessively difficult to exercise the rights conferred on consumers by EU law (63). The requirement of an ex officio control has been justified by the consideration that the system of protection established by the UCTD is based on the idea that the consumer is in a weak position vis-à-vis the trader as regards both the bargaining power and level of knowledge, which leads to the consumer agreeing to terms drawn up in advance by the trader without being able to influence the content of those terms (64). Therefore, there is a real risk that consumers, particularly because of a lack of awareness, will not rely on the legal rule that is intended to protect them. The Court recalled in the Bankia case (65) that a national court which assesses the fairness of contract terms in the light of the UCTD, including of its own motion, has the possibility to assess, in the context of that review, the unfairness of a commercial practice on which that contract was based (66). By contrast, the Court ruled that, in the other cases, national courts are not obliged to assess ex officio whether a particular contract or any of its terms has been concluded under the impact of unfair commercial practices (67). In particular, the Court found that, during mortgage enforcement proceedings, it is not necessary for national courts to be able to review whether the enforceable instrument breaches the UCPD because this directive does not place such an obligation on the national courts. This interpretation has been justified by the fact that the UCPD does not provide for contractual consequences, unlike Article 6(1) of the UCTD. Moreover, the Court explained that the UCPD, in particular its Article 11, does not contain requirements similar to Article 7(1) of the UCTD, which precludes national legislation that does not provide for the possibility of interim measures in enforcement procedures. The absence of interim relief would limit the remedies available to consumers under the UCTD to a mere subsequent protection of a purely compensatory nature if the enforcement is carried before the judgment of the court declaring unfair the contract term on which the mortgage is based and annulling the enforcement proceedings (68). However, Directive (EU) 2019/2161 on better enforcement and modernisation of Union consumer protection rules introduces individual remedies for victims of breaches of the provisions of the UCPD in a new Article 11a of the UCPD, applicable as from 28 May 2022. Under this new provision consumers harmed by unfair commercial practices should have access to proportionate and effective remedies, including compensation for damage suffered by the consumer and, where relevant, a price reduction or the termination of the contract (see section 1.4 for additional information). The addition of that clear and unequivocal new provision may entail an extension of the requirement of an ex officio control to the unfair commercial practices under the UCPD (to be confirmed by the Court).

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