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Case Details

Case Details
National ID SKC–116/2016
Member State Latvia
Common Name link
Decision type Supreme court decision
Decision date 14/09/2016
Court Department of Civil Cases of the Supreme Court
Subject
Plaintiff AS „SEB banka”
Defendant Unknown
Keywords proportionality, unfair terms

Unfair Contract Terms Directive, ANNEX I, 1. Unfair Contract Terms Directive, ANNEX I, 1., (l) Unfair Contract Terms Directive, ANNEX I, 1., (n)

A contractual term that has not been individually negotiated between a consumer and a trader due to this fact alone cannot be held as unfair. When none of the grounds indicated in Art. 3(1) or Annex I, Art.1 of the Directive 93/13/EEC exist, the lack of individual negotiation between the parties is not relevant and in itself cannot be a ground for holding a contractual term as unfair and invalid.
The defendant (a consumer) and plaintiff’s subsidiary concluded a lease contract according to which plaintiff’s subsidiary bought a vehicle and gave it for use to the defendant for the duration of the lease contract . Because the defendant did not make timely payments, the plaintiff’s subsidiary unilaterally withdrew from the lease contract and sold the vehicle. According to provisions of the contract the defendant had an obligation to pay the remaining value of the vehicle as well as the overdue lease payments. However, the defendant refused to comply with this request. Furthermore, it was argued by the defendant that such a provision constitutes an unfair term since it had not been individually negotiated between both parties. Consequently, the plaintiff’s subsidiary assigned its claim against the defendant to the plaintiff. The plaintiff then brought the claim against the defendant before the court.
The court first analysed the nature of the lease contract. It stated that the defendant has an obligation to pay damages in circumstances where the other party has lawfully exercised its right of withdrawal. Furthermore, the court held as irrelevant the defendant’s argument that the contractual term obliging the defendant to repay the remaining value of the vehicle was not individually negotiated. The court stated that a contractual term that has not been individually negotiated between the parties cannot be held as unfair due to such fact alone. For the term to be held unfair, it is necessary to find one of the grounds indicated in Art. 3(1) or Annex I (1) of the Directive 93/13/EEC which causes a significant imbalance in the parties’ rights and obligations arising under the contract to the detriment of the consumer. Without such a ground, the contractual term that has not been individually negotiated cannot be used as a basis for holding a contractual term as unfair and invalid.
Can a contractual term that has not been individually negotiated between a consumer and a trader be held as unfair when none of the grounds indicated in Art. 3(1) or Annex I, Art.1 of directive 93/13 exist?
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The court upheld the judgement of the second instance court which satisfied the plaintiff’s claim.