Indices, unfair terms and the OFT

Indices, unfair terms and the OFT

The Consumer Prices Index (eg inflation) is currently sitting at a relatively low 2.0%.

That said, this figure seems pretty academic for many people. Many staples of daily life seem to be going up at more than this amount. In true tabloid-speak, consumers are seeing 'inflation-busting price hikes' in many of the basics of life from utility bills to train fares.

So how legal are such 'price hikes' in consumer contracts?

Let's have a look at the Unfair Terms in Consumer Contract Regulations 1999.

In essence, consumer terms must be fair and reasonable. Unfair terms may be unlawful and not binding on the consumer. A term will be unfair if, contrary to the requirement of good faith, it gives rise to a significant imbalance in the commercial relationship and the imbalance is to the consumer's detriment.

So far, so good; but what about when a business wants to set the price for a product or service? What about when it wants to increase it at a later date?

Under these regulations, terms in consumer contracts which set the initial price are 'core terms' of the contract and are exempt from the test of fairness as long as they meet the plain language requirement.

Therefore this would be allowed:

The price of the services is £100 (plus VAT at the applicable rate)

This wouldn't:

Notwithstanding the generality of the foregoing, the price for the Deliverables shall be (GBP)£100 (one hundred pounds sterling) or, at the absolute discretion of the vendor, at a price determined in accordance with its standard scale of charges in force on the Effective Date exclusive of any VAT and other taxes, levies, contributions, duties or imposts similar to, replaced by or replacing any of it and them and all penalties, charges, fines and interest included in or relating to any tax assessment therefor, regardless of to whom any such taxes, penalties, charges and fines are, and any interest is, directly or indirectly chargeab

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