Unfair contract terms in Romanian and EU law: a collaboration and convergence of laws

Contracting primarily has as basis the meeting of minds (‘consensus ad idem’) and the general principle of good faith viewed in an objective manner – though England & Wales do not have the latter as part of their legal system, they have ‘imported’ a narrow form of good faith from their civil law counterpart in the case of consumer contracts, specifically when having had transposed EU law on unfair contract terms into their very own Consumer Rights Act 2015. Coming back to the broader discussion, usually, unfair contract terms going against the principle of contracting in good faith and creating a significant imbalance in the rights of the – specifically to the detriment of the weaker – parties do not operate in a vacuum and it is rare if not altogether uncommon for a claim to be brought on the basis of the basic substantive fairness of the contract in question. The claim is typically based upon the precise unfairness of restrictions enclosed within, for example, a vendor’s exemption clauses, which disproportionately affect the ability of the weaker party to act to their own benefit. The law seeks as much as possible to remedy the inequality here by, in most jurisdictions, recognizing and calling out an unfair contract term whose ramifications lead to a disbalance in the respective rights and obligations of the parties.

The Council Directive 93/13/EEC on unfair terms in consumer contracts (hereon out referred to as UCTD) specifically aims, according to Art. 1(1), to bring into the European community a high standard of consumer protection by enabling, or rather rightfully obliging, the Member States to transpose the UCTD into their national legislation. Law no. 193/2000 is the one which transposes the Arts. and spirit of the UCTD into Romanian law. Above all else, it is a faithful transposition of the work of the Council, many Arts. reading the same, if not for the presence of slight variations and distinct numbering. Therefore, both UCTD and Legea nr. 193/2000 depict unfair contract terms, in Art. 3 UCTD, as those situations where contractual terms are not individually negotiated, in Art. 4 UCTD, mandatorily not constituting core terms of the contract at hand, in Art. 5 UCTD, being of non-intelligible language and writing in which case the contra proferentem rule applies, and lastly the Annex gives a list of terms which is solely indicative and non-exhaustive – a grey list – according to Art. 3(3) UCTD.

In order to paint the full picture, I have so far mentioned the overarching EU law and its transposition into Romanian law. However, it must be clarified that (EU) supranational law and national law work in tandem together as to offer the most comprehensive consumer protection possible in the area of contracts effectuated between consumers and sellers or suppliers, Art. 1(1).

The request for a preliminary ruling sent to the Court of Justice of the European Union (CJEU) in the case SC Topaz Development SRL v Constantin Juncu and Raisa Juncu raised by the Bacău Court of Appeal showcased the tight bond between the two distinct levels in the area of the UTCD. Topaz and Mr. and Mrs. Juncu had signed a contract for purchasing immovable property in Bacău, Romania. The contract contained a clause among others which was a commissary pact of grade IV, meaning that once agreed to as part of the whole contract, it would signify the consent of the buyers for an automatic resolution of the contract without judicial or other authorities’ interference. Specifically, in this case, it is the automatic unilateral – from the side of Topaz – termination of the contract between the parties at hand, in case that the buyers would fail to make the payments on time and in full. It is also mentioned that the clause is followed by a penal clause completely in favour of Topaz, the seller, further showing the imbalance in rights and obligations. The clauses of the contract are, in addition, standardized, and while Topaz claimed that the terms had been negotiated, the tribunal sending the request for preliminary ruling has clarified that negotiation involves the possibility of the parties to the contract to discuss and eventually alter the terms making up the contract. This did not take place with Topaz. Once the Juncu family began having outstanding payments, they were to be subjugated to these two specifically unfair clauses. As a result, following the Bacău Court of Appeal’s opinion on that the terms were abusive and should be replaced by court instead of nullified, they were left with questions as to how to offer the best remedy. They paused procedures and turned to the CJEU with three questions constituting a request for a preliminary ruling.

The CJEU answered. First, with Arts. 3(2) & 4(1) UCTD in mind, the CJEU mentioned that the test as to whether a clause was individually negotiated is up to the national courts to apply, but in principle that the simple signing of a contract with a supplier does not overturn the presumption that certain clauses were not individually negotiated, thus rendering them unfair. Secondly, with Art. 3(3) UCTD referring to the Annex in mind, it is indeed that the commissary pact clause of grade IV and the penal clause following it can constitute abusive terms, especially in cases where those clauses include a very low percentage of outstanding payment amount to trigger their effect to the great detriment of the consumer, in this case the Juncu family. Lastly, the third question, with Art. 6 UCTD in mind, is regarding the ability of the national courts to provide a remedy in the form of replacing the abusive contract terms with their own reasonable and fair terms instead of admitting outright nullity, which is answered in the negative, unless the contract cannot exist without those abusive clauses and the termination of the contract in question would bring upon the consumer disproportionally awful consequences.

In conclusion, the link between the EU and Romania in the legal sphere can be deemed to at least be a collaboration indeed between, here, a supranational and a national level respectively of the judiciary. The Romanian legal system offers its trust to the CJEU to clarify any uncertainties as regards the interpretation of the EU legislation. On the other hand, the CJEU and the other EU bodies constituting the EU legal network trust the Romanian one to firstly transpose and thus de facto converge the laws of this community, but also to apply them and the spirit of the law in casu. This is an especially wonderous thing for most legislation provided by the EU to the Member States, but even more so when it comes to the protection of weaker parties to a contract – the consumer who moves and transforms the EU Single Market one step at a time.

Toma Sara-Maria

Legal Intern R&R Partners Bucharest

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