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Automatic Renewals and The Unfair Contract Terms Act 1977

Comment 1st September 2010

My suggestion is an amendment to the Unfair Contract Terms Act 1977, to make a subscription that renews automatically (motor insurance policy, anti virus subscriptions, book clubs, etc., automatically unenforceable.

As the law stands, it is quite legal for a company to hide, within its terms and conditions, a clause that allows it to renew a subscription and charge a customer for another year’s subscription, without actually inviting the customer to renew.

Others may mention it at the time the contract is entered into, But at the end of the year, the customer may have forgotten, or doesn’t wish for it to be renewed, and has the devil of a job cancelling and obtaining a refund.

My argument is that it effectively flies in the face of the judgement in Felthouse v Bindley 1862: i.e. that one cannot impose an obligation on another to reject one's offer. In that respect, I believe that the any such contract term – hidden or not – is – or at least should be – judged unfair per se.

The Unfair Terms In Consumer Contracts Regulations 1999 later gave some protection against this practice in that it prevents renewals where someone is not given reasonable opportunity to prevent the renewal. But one may be away on holiday, or in hospital, for instance, when the notification arrives, nor is the sender obliged to provide proof of delivery. Also – ‘reasonable opportunity’ has not been defined – if indeed it ever could be. 

A change that makes it unlawful to renew without some positive act of confirmation (such as a signed reply slip or even a recorded telephone conversation) to enact renewal, would clear this up and put the consumer back in the driver's seat.

Why does this matter?

Because it is open to abuse, is abused, and puts the consumer at a disadvantage.

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