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Dear Jas 3: contracts and consumer protection

By on April 24, 2012

Jas Purewal is a games lawyer at Osborne Clarke and writer of Gamer/LawThis is the third of a series of guest posts answering your questions about games development and the law. Got a question for Jas? Ask him!


Shared under a creative commons license by Victor1558

Question: I’ve recently been told that just because something is in a contract does not mean it is enforceable, particularly in consumer contracts like EULA. There are rules about “fairness”, “unenforceability” and so on which means that contracts may not be watertight. Is this true? Can I safely avoid reading the iTunes terms and conditions because I’m protected by consumer law? How about in my business contracts?

Answer:

In a consumer context, yes you’re right: just because it is in a contract doesn’t make it enforceable.

Consumer protection

There are a wide range of legal ways in which a clause in a contract might be unenforceable, especially if it is contrary to consumer protection law.  Under UK law (and the law of most other EU member states), a clause is unfair if it causes a ‘significant imbalance’ between the rights of the supplier and the consumer AND that imbalance is unreasonable.  This is an extremely wide power than potentially bites on any clause in a contract which causes harm to consumers.  For more info on how it applies to consumer contracts like EULAs, have a look at my slides here.

Those wide powers don’t apply in a business context, because the law takes the view that businesspeople are more able to negotiate for themselves compared to consumers.  The exception is where you’re forced to use someone else’s standard T&Cs with no option to negotiate them.  In those circumstances, under UK law, any attempt by the supplier to limit their liability to you is subject to a reasonableness test.  This is therefore a lower level of protection than in consumer contracts, which subjects ALL clauses to a test of reasonableness.

Contracts are only as good as their authors

More generally, there are other circumstances in which any kind of contract might be unenforceable (for example, if the contract contains a misrepresentation or just doesn’t make any sense).

To draw that together:

  • A contract is only as good as the person who drafted it and the guy who signed it.  If it’s been badly drafted, without an understanding of the law, or if you’ve contracted with someone who is not trustworthy or creditworthy, then you could be in trouble.
  • If you’re drafting the contract, you need to make sure you know what you’re doing, otherwise you won’t really get what you want and it may not be enforceable anyway.
  • If you’re a consumer or businessperson signing a contract, you do have some legal protections in place if things go wrong – especially if you’re a consumer.  But that doesn’t mean you can ignore the contract – you should still read it and try to understand it, because those parts which are legally enforceable will be binding on you.

Jas Purewal is a games lawyer at Osborne Clarke and writer of Gamer/LawThis is the third of a series of guest posts answering your questions about games development and the law. Got a question for Jas? Ask him!

About Jas Purewal

Jas Purewal is an interactive entertainment lawyer at Osborne Clarke and writer of Gamer/Law