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Case Details

Case Details
National ID Patent and Market Court of Appeal, Judgment 7011-17
Medlemsstat Sverige
Common Name N/A
Decision type Court decision, first degree
Decision date 18/12/2018
Domstol Patent and Market Court of Appeal
Kärande Consumer Ombudsman
Svarande Advisor Fondförvaltning AB
Nyckelord terms and conditions, standard terms, unfair terms, service contract, standard contract

Unfair Contract Terms Directive, Article 3 Unfair Contract Terms Directive, Article 4

A standard term in a contract for management services for premium pensions stating that the binding period can be more than 12 months is to be considered unfair.

The defendant, as part of its operations, provides management services for premium pensions to consumers. In the standard terms some provisions were stating that a contract with a customer could be in force for one, two, three or five years and in case the customer did not terminate the contract, this would be extended for another equally long period. If the customer wanted to terminate the contract, then the customer had to pay for the whole period.

The plaintiff brought an action against the defendant and asked the Patent and Market Court (court of first instance) to prohibit the use of a term stating that a binding period can be of more than 12 months for consumers.

The court of first instance stated that as a starting point a binding period of more than one and two years respectively is to be regarded as exceeding what might be considered allowed by the Act (1994:1512) on contract conditions in consumer relationships. Such a term may be allowed only if the advantages for the consumers overweigh the disadvantages. This was, however, not the case in this situation since the term lead to disadvantages for the consumers (such as extra costs and the missing of other alternatives) which could not be compensated by the advantages (the discounts based on the chosen period).

The defendant appealed the ruling of the court of first instance.

Is a standard term providing for a binding period of more than one year unfair?

The Patent and Market Court of Appeal affirmed the judgment of the court of first instance stating that long binding periods may lead to lock-in effects and hinder competition. Additionally, consumers may always choose to use the services of a trader of that kind for as long as they wish but they also have to have the possibility to rethink their choice at least every year. The only advantage provided by the defendant in this case for a long binding period was a somewhat lower price, something that cannot overweigh the disadvantages of such a practice. That the consumer can always terminate the contract at wish is not changing anything since the consumer had to pay the price for the whole period.

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The court affirmed the decision of the court of first instance.