In a landmark ruling, the Office of Fair Trading (OFT) has won a case against estate agents Foxtons, which could revolutionise the way businesses contract with consumers.
The OFT challenged unfair terms in Foxtons' letting contracts which required consumer-landlords to:
- pay substantial sums in commission where a tenant continues to
occupy a property after the initial fixed period of a tenancy has
expired - even if Foxtons plays no part in persuading a tenant to stay,
and does not collect rent or manage a property;
- pay commission even after selling a property;
- pay full estate agent fees for sale of a property to a tenant, even where Foxtons plays no part in negotiating the sale.
Foxtons buried the terms in small print and failed to use "plain and intelligible" language. Justice Mann equated the charging of commission to a "trap" or a "time bomb" for consumers.
The judge held that businesses must prominently and unambiguously flag such
important terms not just in the contract, but also in any sales literature and
He said a typical consumer would be unlikely to read standard terms with a great degree of attention and would not expect important obligations to be tucked away in the small print and not specifically brought to their attention.
Consequently, he agreed with the OFT and ruled that the contractual terms breached the Unfair Terms in Consumer Contracts Regulations 1999.
OFT Chief Executive, John Fingleton, said: "This ruling sends out a clear and unambiguous message
that businesses offering services need to ensure unexpected or surprising terms
are not hidden away in small print.
"Contracts need to be written in clear and straightforward language with important provisions, particularly those which may disadvantage consumers as in this case, given prominence and actively brought to people's attention."** Additional Information & Advice **
For comprehensive information and advice about contract terms and letting agreements, you should speak to a solicitor. You can be matched with one in your area for free via solicitor matching services, which can also help you to understand the best course of action and whether you are ready to hire a solicitor.