Towards a Common Approach to Unfair Terms and Unfair Commercial Practices

In all likelihood Member States will try to restrict the effects of both decisions on the law of unfair terms, that is to say how the legal position of the consumer with regard to unfair terms is affected by unfair commercial practices. However, there is good reason to reflect in light of Perenicova and Invitel more systematically on the degree to which a common approach can be developed with regard to the effects of the two areas of law. Perenicova cuts across the boundaries of contract law and commercial practices law. However, its impact is yet limited. Unfair commercial practices are just one factor among others to decide over the unfairness of contract terms. The more far-reaching question is what are the potential effects of unfair commercial practices, which are 'prohibited, on contract terms'? Is it possible to give a verdict on a prohibited commercial practice a more general meaning? In that it affects the assessment of unfairness in contract law? Can there be deviating standards on unfairness in the law on unfair commercial practices and the law on unfair terms? If the answer is no - what the ECJ seems to argue - is there a 'general' effect on commercial practices which are 'prohibited' on contract terms?

Does the assessment of unfairness in the law on commercial practices 'infect' the fairness of contract terms, generally? Does this extend beyond all boundaries of individual litigation and individual circumstances?

This is the first issue I would like to analyse in more detail. The second concerns whether and to what extent it is possible to use Invitel as an argument to discuss an extension of res judicata for actions of injunctions on unfair commercial practices to unfair contract terms. By now Invitel remains within the boundaries of Directive 93/13/EEC. It concerns the extension of res judicata of contract terms which have been declared unfair in an action for injunction to individual litigation. Then pushing the issue further ahead, the question arises whether the action for injunction in the field of unfair commercial advertising produces some sort of a 'general effect' which reaches beyond the 'prohibited' unfair commercial practices and covers contract terms which are infected by the commercial practices.

Both proceedings might give important thought-provoking impulses.[1] Before delving deeper into the questions, however, it has to be recalled that there are important conceptual differences between the two Directives, respectively the two fields of law. The law on unfair commercial practices differs from that of Directive 93/13/EEC, since Directive 2005/29/EC is not addressing the individual consumer. The individual dimension can only be read into the law on unfair commercial practices by using fundamental rights rhetoric. Its focus lies rather on the collective level, on regulating the market behaviour of the participants. So it seems as if the law on unfair commercial practices is perhaps not only, but mainly to be regarded as collective regulation. The law on unfair terms starts exactly from the opposite premise. The focus lies on individual litigation where the contracting parties enjoy contractual remedies to challenge unfair terms. The collective litigation was added later and took shape only in the last 25 years of the last millennium. At the collective level the parallel between the two fields seems more obvious. A certain bias remains - the law on unfair commercial practices is going to be individualized, this means its effects on contractual relations are becoming ever clearer; the law on unfair terms is already collectivized, a development which has gone on for a couple decades now, but which never triggered a systematic analysis and the linkage between the collective and the individual dimension.

A common approach to the two fields first and foremost requires us to compare the respective rules in the two Directives regulating the effect of 'unfairness'. Article 6 of Directive 93/13/EEC does not have a direct counterpart in Directive 2005/29/EC, at least not explicitly. But there is more. What is equally needed is to take a hard look at the distinction between the individual versus the collective dimension of unfair commercial practices and unfair terms, a distinction which concerns rights, remedies and effects.

Translated into a table, the solved and the unsolved issues are more easily captured.

Table 7.1. A Table of Problems

UCTD (Unfair

Contract Terms Directive)









Substance individualized

Unfair Good faith

Significant imbalance




Art 4(1) 'gateway'

Unfair/misleading/ aggressive

Problem: no such thing as 'individual commercial advertising', but what about 'sales promotion'?

Substance standardized

Unfair Good faith

Significant imbalance

Coherent interpretation

Art 4(1) and (2) applicable to standard terms?

Commission v Sweden?

Unfair/misleading/ aggressive

commercial practices

Collective regulation per definitional

Procedure/ effects

Individual relations

Contractual remedies Term is 'not binding'

Art 6

Towards a common approach via constitutionalization

Art 47 Charter

Individual rights to stop unfair commercial practices?

Effects on individual contract? Right to withdrawal?

Contrary to Art 3(2) and Art 11 UCPD

Procedure/ effects

Action for injunction

Art 6(1) 'not binding' applicable to Art 7(2) Invitel

UCTD extension from collective to individual (Invitel)

Action for injunction

Art 5 'shall be prohibited'

Problem: what does this imply?

Extension of res judicata

Ex officio

Minimum standard? Mandatory

UCPD extension to UCTD (across subjects)

Note: *There is a case pending exactly on this issue, Case C-388/13 - UPC Magyarorszag Kft. v Nemzeti Fogyasztovedelmi Hatosag.

  • [1] As to the relation of the law on unfair commercial terms and contract law for example with regard to misleading vs. malice, see S Whittaker, 'Form and Substance in the Reception of EC Directives into English Contract Law' 381.
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