Consumer law and IP contracts

Consumer law might seem a long way from IP contract drafting, but here is the connection…

Contracts with consumers, if they are to be legally effective, must comply with an ever-increasing number of consumer protection laws.  In the European Union (EU) those laws require (among other things) that contract terms and conditions be written in plain, straightforward language and not be “unfair”.

In practice, the terms and conditions of consumer contracts come in all shapes and sizes. Some are simply written and say very little about consumer rights (but equally, say little about excluding those rights). Amazon’s terms and conditions of sale are a good example of this approach.

Other consumer ts and cs are still wedded to an old-fashioned style of drafting or try to limit the consumer’s rights in a clever or less-than-clever way. There are too many examples of this approach in circulation.  Some of these ts and cs seem to go on forever (my mobile telephone contract, for example, which is printed in a very small type size).

The European Commission (EC) has come up with two ideas: first, that there should be an EU-wide system of contract law; and second, that the EC should provide model contract terms and conditions. This is primarily aimed at cross-border trade (for most consumers, a purchase from Amazon is a cross-border trade, as Amazon is incorporated in Luxembourg). A further aim of these proposals is to lower transaction costs for all businesses who wish to start trading, not only those involved in cross-border transactions. There is a good case for a new business wishing to sell goods over the internet having access to a set of contract terms and conditions which is well-drafted, fully-compliant with EU consumer laws, and “straight out of the box”.

Most IP contracts that we encounter are not focussed on consumers, although IP terms are often found in consumer contracts.  For example, licensing terms are found in the terms of sale of software products (eg a Microsoft consumer package) and IP provisions are included in the terms of use of many websites.

It is sometimes difficult to reconcile the technical precision required in IP agreements with the need for plain, straightforward language in consumer contracts.  A chapter on drafting consumer contracts under English law appears in our book, A-Z Guide to Boilerplate and Commercial Contracts.  Anyone involved in drafting consumer contracts under English law should also consult the Office of Fair Trading’s website.  That website includes specimen contract wording that the OFT has challenged under consumer legislation, including both “before” and “after” versions of the wording, following the OFT’s intervention.

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