European Court of Justice: national courts required to examine, of their own motion, unfairness of terms in consumer contracts

Upon reference for preliminary ruling instituted by a Hungarian District Court (Budaőrsi Városi Bíróság), ECJ held that the protection which Directive 93/13/EEC on unfair terms in consumer contracts confers on consumers extends to cases in which a consumer who has concluded with a seller or supplier a contract containing an unfair term fails to raise the unfairness of the term, whether because he is unaware of his rights or because he is deterred from enforcing them on account of the costs which judicial proceedings would involve.As a consequence, the role of the national court in the area of consumer protection is not limited to a mere power to rule on the possible unfairness of a contractual term, but also consists of the obligation to examine that issue of its own motion, where it has available to it the legal and factual elements necessary for that task, including when it is assessing whether it has territorial jurisdiction.Where the national court considers such a clause to be unfair, it must not apply it, unless the consumer, after having been informed of it by the court, does not intend to assert its unfairness and non-binding status.Source: ECJ press release 46/09; full text of judgement C-243/08 – Pannon GSM of June 4th, 2009 available here>>.

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