Unfair Contractual Clauses: Identification, Challenge, and Annulment

Introduction

Unfair contractual clauses represent one of the most prevalent issues confronting consumers and professionals in contractual relationships. While freedom of contract constitutes a fundamental principle of civil law, it is by no means absolute. Both Romanian and European legislation have developed sophisticated protection mechanisms against contractual stipulations that create a significant imbalance between the rights and obligations of the parties.

In legal practice, unfair clauses appear predominantly in adhesion contracts --- contracts whose terms are pre-established by one party, without the other party having any real opportunity to negotiate their content. Bank credit agreements, insurance contracts, utility supply contracts, and mobile telephony contracts are just a few examples where this phenomenon manifests with regularity.

This article analyses the legal regime governing unfair clauses from the perspective of both Romanian and European law, providing a practical guide for the identification, challenge, and annulment of such clauses.

Definition of Unfair Clauses

Pursuant to Article 4(1) of Law No. 193/2000 on unfair clauses in contracts concluded between professionals and consumers, a contractual clause that has not been directly negotiated with the consumer shall be considered unfair if, by itself or in conjunction with other provisions of the contract, it creates, to the detriment of the consumer and contrary to the requirements of good faith, a significant imbalance between the rights and obligations of the parties.

This definition faithfully transposes the wording of Article 3(1) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts. The essential elements of this definition are:

Absence of direct negotiation: the clause was not individually discussed with the consumer but was drafted in advance by the professional, and the consumer had no opportunity to influence its content;

Significant imbalance: the clause creates a considerable disproportion between the contractual rights and obligations of the parties, to the detriment of the consumer;

Contravention of good faith: the inclusion of the clause contravenes the standard of honest and equitable conduct that the professional should observe in commercial relations.

It should be emphasised that, pursuant to Article 4(2) of Law No. 193/2000, a clause is considered not to have been directly negotiated with the consumer if it was established without affording the consumer the opportunity to influence its substance, as is the case with pre-formulated standard contracts or the general conditions of sale applied by traders.

Legislative Framework

Domestic Law

The principal legislative instrument governing unfair clauses in Romanian law is Law No. 193/2000 on unfair clauses in contracts concluded between professionals and consumers, as republished. This law was adopted to transpose Directive 93/13/EEC and has undergone several subsequent amendments, including through Law No. 363/2007 and Government Emergency Ordinance No. 38/2014.

Law No. 193/2000 contains, in its Annex, an indicative and non-exhaustive list of clauses that may be deemed unfair. These include clauses that:

Grant the professional the right to unilaterally modify the terms of the contract without a valid reason stipulated in the contract;

Oblige the consumer to comply with contractual conditions of which they had no real opportunity to become aware prior to the conclusion of the contract;

Grant the professional exclusive authority to interpret contractual clauses;

Limit or exclude the consumer's right to bring legal action or to exercise any other legal remedy;

Impose on the consumer the payment of disproportionate sums in the event of non-performance of contractual obligations.

Furthermore, the Civil Code (Law No. 287/2009) contains relevant provisions, particularly Article 1203 on unusual clauses. This article establishes that clauses providing for the limitation of liability in favour of the party proposing them, the right to unilaterally terminate the contract, to suspend the performance of obligations, or clauses providing for forfeiture of rights or of the benefit of a time limit, limitation of the right to raise defences, restriction of the freedom to contract with other persons, tacit renewal of the contract, the applicable law, arbitration clauses, or clauses derogating from rules on the jurisdiction of courts shall not produce effects unless they are expressly accepted in writing by the other party.

European Law

At the European level, Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts constitutes the foundation of protection against unfair clauses. The Directive has been supplemented and consolidated by subsequent legislative acts, including Directive (EU) 2019/2161 (known as the Omnibus Directive), which introduced significant changes regarding transparency and sanctions.

An essential principle enshrined in Directive 93/13/EEC is that of transparency: contractual terms must be drafted in plain, intelligible language. Pursuant to Article 5 of the Directive, where there is doubt about the meaning of a term, the interpretation most favourable to the consumer shall prevail (interpretatio contra proferentem).

Criteria for Assessing Unfairness

The assessment of the unfair nature of a contractual clause requires a multi-factorial analysis. Pursuant to Article 4(5) of Law No. 193/2000, the assessment of the unfair nature of clauses shall not relate to the definition of the main subject matter of the contract, nor to the adequacy of the price and remuneration, on the one hand, as against the services or goods supplied in exchange, on the other, insofar as those terms are expressed in plain, intelligible language.

The principal criteria employed by courts when evaluating the unfair nature of a clause are:

1. The nature of the goods or services to which the contract relates. The specificity of the commercial sector may influence the assessment of unfairness. For example, in credit agreements, the risks associated with financial market fluctuations may justify certain clauses that, in a different context, might be considered unfair.

2. All the circumstances attending the conclusion of the contract. The court will examine the context in which the contract was concluded, including the commercial pressures exerted, the degree of information provided to the consumer, and the availability of genuine alternatives on the market.

3. Other clauses of the same contract or of another contract on which it is dependent. The unfair nature of a clause cannot be assessed in isolation but must be evaluated within the overall structure of the contract. A clause that, viewed individually, appears disadvantageous may be offset by other provisions favourable to the consumer.

4. The transparency requirement. According to the settled case law of the Court of Justice of the European Union (CJEU), the requirement of transparency is not limited to the formally and grammatically intelligible character of the clause but requires that an average consumer, who is reasonably well informed and reasonably observant and circumspect, should be in a position to evaluate the economic consequences of the clause in question.

Effects of a Finding of Unfairness

A finding that a contractual clause is unfair produces significant legal consequences. Pursuant to Article 6 of Law No. 193/2000, unfair clauses contained in a contract, as established either personally or through bodies authorised by law, shall not produce effects vis-a-vis the consumer, and the contract shall continue to be performed, with the consumer's consent, only if it can continue to exist after the elimination of those clauses.

From a civil law perspective, unfair clauses are subject to absolute nullity. This classification has been repeatedly confirmed by the CJEU, notably in Case C-168/05 Mostaza Claro, where the Court held that the protection granted to consumers by Directive 93/13/EEC is a matter of public policy. The consequences of absolute nullity are:

Retroactive effect: the clause is deemed never to have existed, and the parties must be restored to their prior position. This may entail the restitution of sums paid under the clause in question;

Unenforceability: the clause produces no legal effects either between the contracting parties or vis-a-vis third parties;

Impossibility of confirmation: absolute nullity cannot be remedied by subsequent confirmation or waiver by the consumer;

Invocability by any interested person: the unfair nature may be invoked not only by the consumer but also by third parties, or may be established by the court of its own motion.

Case Law of the Court of Justice of the European Union

The case law of the CJEU has played a decisive role in shaping the legal regime of unfair clauses at the European level. Among the landmark decisions are:

Joined Cases C-240/98 to C-244/98 Oceano Grupo: The Court established that the national court may assess of its own motion the unfair nature of a contractual clause, without requiring such a request from the consumer. This decision was fundamental to the consolidation of effective consumer protection.

Case C-168/05 Mostaza Claro: The CJEU confirmed that the provisions of Directive 93/13/EEC are a matter of public policy and that national courts are obliged to examine of their own motion the unfair nature of contractual clauses, even in enforcement proceedings.

Case C-415/11 Aziz: The Court provided detailed criteria for assessing the unfair nature of clauses in mortgage credit agreements, including clauses concerning default interest and acceleration clauses. This decision had a major impact on judicial practice throughout the Member States.

Case C-26/13 Kasler: The CJEU specified the conditions under which clauses relating to the exchange rate in credit agreements may be subject to an unfairness assessment. The Court held that such clauses, while potentially forming part of the main subject matter of the contract, are subject to review if they are not drafted in plain, intelligible language.

Joined Cases C-154/15, C-307/15, and C-308/15 Gutierrez Naranjo: The Court established that the effects of the nullity of unfair clauses must be complete and that national courts may not limit in time the effects of the restitution of sums paid under a clause declared unfair.

These judgments have directly influenced judicial practice in Romania, as national courts are obliged to apply the interpretative standards established by the CJEU.

Procedure for Challenging Unfair Clauses

The challenge of unfair clauses under Romanian law may be pursued through several mechanisms:

Individual Action

A consumer who considers that a contract contains unfair clauses may bring a civil action before the competent court. The claim may seek a declaration of the absolute nullity of the clause in question, as well as the restitution of performances rendered under it. Pursuant to the rules on jurisdiction, the action is brought before the court of first instance or the tribunal at the consumer's domicile, depending on the value of the claim.

An important advantage for the consumer is that, pursuant to Article 15 of Law No. 193/2000, actions brought by consumers are exempt from court stamp duty.

Collective Action

Consumer protection associations and the National Authority for Consumer Protection (ANPC) may bring actions for the cessation of the use of unfair clauses. This action is preventive and collective in nature, aimed at the elimination of unfair clauses from the contracts used by a professional.

Administrative Control

ANPC exercises administrative oversight over contracts between professionals and consumers. Where unfair clauses are identified, ANPC may impose administrative fines and may order the modification of contracts. The fines provided for under Law No. 193/2000 have been significantly increased through subsequent legislative amendments.

Ex Officio Examination by the Court

A fundamental aspect, established by the CJEU case law and adopted in the practice of Romanian courts, is the obligation of courts to examine of their own motion the unfair nature of contractual clauses, whenever they have the necessary elements of law and fact to do so. This obligation applies even in enforcement proceedings, as the CJEU held in Case C-415/11 Aziz.

Practical Considerations

Drawing upon practical experience in challenging unfair clauses, several essential recommendations emerge:

Thorough documentation of the contractual relationship. Before initiating any legal proceedings, it is essential to collect and organise all relevant documents: the complete contract (including annexes and general conditions), any addenda, correspondence with the professional, and proof of payments made.

Comparative analysis of market practice. In order to demonstrate the unfair nature of a clause, it may be useful to highlight the practices of other professionals in the same sector, showing that the challenged clause deviates from the customary market standard.

The importance of a negotiation request. Although the absence of negotiation is a condition for a finding of unfairness, it is advisable for the consumer to request in writing that the professional negotiate the clauses considered unfair before resorting to judicial proceedings. A negative response or a failure to respond will constitute relevant evidence before the court.

Attention to limitation periods. While an action for a declaration of absolute nullity is, in principle, imprescriptible, an action for the restitution of performances rendered under an unfair clause is subject to the general limitation period of three years, pursuant to Article 2517 of the Civil Code. The calculation of this period may raise specific issues, particularly in the case of contracts with successive performance.

The evidentiary value of case law. Although the Romanian legal system is not a system of judicial precedent, CJEU judgments are binding on national courts. Invoking relevant CJEU case law and the decisions of senior Romanian courts can prove decisive for the outcome of the case.

Conclusion

Protection against unfair contractual clauses constitutes an essential pillar of consumer law and of contractual balance more broadly. The Romanian legislative framework, read in conjunction with the case law of the CJEU, provides effective instruments for the identification and sanctioning of such clauses, restoring equilibrium between the contracting parties.

The complexity of this legal domain necessitates, however, a careful analysis of each individual case. The specific elements of the contract, the context of its conclusion, and developments in case law are all factors that may decisively influence the outcome of a dispute.

If you are a party to a contract containing clauses that you consider unfair, or if you require legal assistance in evaluating a commercial or consumer contract, the law office of Tudor Grigorean is at your disposal for a specialised consultation. With experience in the field of contract law and consumer protection, we can provide you with legal solutions tailored to your specific situation. Do not hesitate to contact us to discuss the legal options available to you.