Case law

  • Case Details
    • National ID: 232/2007/2
    • Member State: Malta
    • Common Name:F.Advertising Limited [C 27689] vs Anthony u Mary Rose konjugi Tabone
    • Decision type: Other
    • Decision date: 04/10/2011
    • Court: Qorti ta’ l-Appell (Appellate court)
    • Subject:
    • Plaintiff:
    • Defendant:
    • Keywords:
  • Directive Articles
    Unfair Contract Terms Directive, Article 2 Unfair Contract Terms Directive, Article 3, 1. Unfair Contract Terms Directive, Article 4, 1.
  • Headnote
    Terms used in a consumer – trader contract considered to be unfair and therefore unenforceable against the consumer; nullity of terms where consumer is bound to abide with obligations whereas the trader is not – breach of article 44(2) of Cap. 378.
  • Facts
    Plaintiff company filed a claim against defendants for the payment of advertising services provided. Defendants argued that the claims were inadmissible since various terms in the agreement made with plaintiff company were unfair and prohibited in accordance with the Consumer Affairs Act; that plaintiff company failed to provide the services it had agreed to provide given that the only advert made was made wrongly and this to detriment of defendants. The Court of Magistrates [being the court of first instance] noted that defendants had decided to terminate the services of plaintiff company when the first advert was issued describing their property wrongly. Defendants were asked to sign a cancellation letter whereby they undertook to pay in full plaintiff company in the event that their property was sold. The said cancellation letter also included a clause whereby if the said letter was not signed plaintiffs would continue to advertise the property. Defen-dants signed the letter and plaintiff company stopped advertising. Later defendants even-tually sold their property and defendants were asked to pay the full amount of the services allegedly provided to them by plaintiffs on the basis of the contractual clauses and the cancellation letter.
    The First Court however held that the clauses inserted both in the contract of agreement to provide the advertising services and of the standard cancellation letter signed by defendants constituted unfair terms under articles 44 and 45 of the Consumer Affairs Act. The said Court held that notwithstanding the signing of the agreement and of the standard cancellation letter, the Court had to examine whether in fact the rights of defendants were adequately protected and whether plaintiff company had acted in good faith. The Court in particular noted the imbalance in the negotiating power of the parties in particular that one of the defendants declared that she was illiterate. The Court determined that the use of a clause whereby on the one hand defendants are tied to their contractual obligations to pay plaintiff company even if the services contracted for are not provided, whereas plaintiff company is exonerated if it does not provide the services contracted for, is an unfair term and in breach of article 44(2)(u) of the Consumer Affairs Act and was consequently in leading to an imbalance between the rights of plaintiff company and defendants. The Court further noted that defendants agreed to sign the standard cancellation letter on the basis of verbal assurances given to them by representatives of plaintiff company, not realising the true significance of the terms included in the cancellation letter. The Court of first instance therefore decided not to uphold the claims of plaintiff company.
  • Legal issue
    Plaintiff company filed an appeal from the decision of the Court of Magistrates given on the 4 October 2010. Plaintiff company argued that the First Court was mistaken in stating that the terms in question were unfair in that this had to be considered in the ambit of the whole agreement and not in an isolated manner. Plaintiff company argued that factually the terms and conditions of the contract were balanced and that the payment was due only if the property was sold.
    Court of Appeal disagreed with the reasoning of plaintiff company. In doing so the Court referred to the contractual clause whereby in particular defendants were required to pay plaintiffs irrespective of whether the services contracted for were provided, or provided in full. This effectively was in breach of article 44(2)(u) whereby consumers were required to abide with their obligations whereas plaintiff company was not. The Court further noted that the said clause was made even more unfair in that another clause required defendants to pay a further sum of five thousand Maltese liri in the form of pre-liquidated damages if within two weeks of being asked to pay for the services allegedly provided, the said sum was not paid. The Court said that it was confronted with a situation were in the contract made defendants were required to pay even if the services contracted for – in this case advertising of property – were not provided for or were not properly provided for. The Court noted there was no doubt that the inclusion of such a clause was of serious prejudice to the rights of the consumers in question. The Court proceeded to determine that the said clauses were abusive and contrary to the requirements of articles 44 and 45 of the Consumer Affairs Act and confirmed the decision of the first court with costs against appellants.
  • Decision

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