Uniform contracts - the end to the small print in the contract

For the attention of dealers and consumers: On the second and third reading, the Knesset approved the Standard Contracts Law (Amendment No. 3), 2010, which was the result of cooperation between MK Kirshenbaum and the "Public Trust" organization.

A standard contract is a contract whose terms have been determined in advance by one party to the contract, the supplier, to be used as the basis for contracts between it and its customers. Standard contracts are formulated at a great length, in a legal language that is not understood by the supplier, and often in macroscopic letters and is suited only to his own interests, and therefore by nature they may implicitly include important clauses that restrict the rights of customers. The client understands his obligations and especially his rights within the framework of the contract and in any case to negotiate the conditions, is limited and does not actually know what he is signing. Examples include: contract terms of use with a cellular company, bank loan agreements and an increase in the framework, operating regulations on cable or satellite networks and marketing networks, standing orders for the payment of monthly bills and the like.

In order to protect customers and consumers from the restrictive conditions in the standard supplier contracts, the Knesset passed the Standard Contracts Law, 5743-1982 ("the Law"). In effect, the law established the Uniform Contracts Tribunal with the object and authority to cancel or require the amendment of clauses in the uniform contract that restrict the rights of the customer. However, due to low public awareness of the possibility of applying to the court, the actual use of it is minimal.

Tax Repair. 3 of the Law amends the law so that it obligates different types of suppliers to prominently state the fact that the contract is a uniform contract and whether the contract was approved or not by the court or was not submitted at all to its approval. According to criteria that will ensure that there is a public interest that the Tribunal will examine their standard contracts. The obligation to specify the existence or absence of approval by the Uniform Contracts Tribunal is expected to increase consumer and customer awareness of the Court's ability to examine standard contracts and to disqualify depriving clauses and may even encourage suppliers to apply for approval.

The criteria for examining whether the clauses included in a standard contract are affected by the discrimination that guide the courts are as follows: According to section 3 of the Standard Contracts Law, a condition in a standard contract which - taking into account the entirety of the terms of the contract and other circumstances - Fair to a supplier that could lead to the deprivation of customers, is a depriving condition.

All this is fine, but what will be considered as a denial of customers? In the context of the discrimination test, one must examine, among other things, the parties' relations with the contract and their typical interests, as well as the social perception of the legal system, which is fair and reasonable. Thus, for example, a condition that embodies excessive defense over the supplier's interest, while exploiting the inequality in the power relations between the supplier and the customers, and the supplier's information advantage will be considered discriminatory. Examples of depriving conditions are:

• A condition that removes any warranty from the supplier or places insufficient liability on him. For example, a condition that allows a courier company to lose the shipment without any warranty.

• Conditions that provide the supplier with an unreasonable possibility to reject, cancel or change his obligations unilaterally. For example, a courier company decides to delay delivery.

• A condition enabling the supplier to transfer the performance of his obligations to a third party. For example, a courier company transfers delivery to another company.

• A condition that permits the supplier to unilaterally change price or other material charges to the customer. For example, a courier company that raises a price after the shipment has already been shipped.

• A condition that obligates the customer to contract with a third party or prohibits him from entering into a contract with any third party. For example, a courier company which requires a customer to work only with her.

• A condition which in some way restricts the client from receiving any remedy (compensation) that would have come to him without this condition.

• A condition that transfers the burden of proof to the customer, which the supplier normally had to prove, without this condition.

• A condition that denies recourse to the courts (except for a condition that dictates an accepted arbitration agreement).

• A condition that dictates an unreasonable place of judgment, or which allows the provider to dictate the place of jurisdiction. For example, a courier company that works in Haifa dictates the jurisdiction in Eilat.

• A condition that dictates transfer to arbitration, where the supplier has some advantage over arbitration (determining the arbitrator or place). For example a company that dictates that the arbitrator will always be the lawyer on its behalf.

The amendment also amends Section 4A of the Consumer Protection Law, 5741-1981, in a manner permitting the Minister of Industry, Trade and Labor (MITL), with the approval of the Knesset Economics Committee, to prescribe by regulations provisions regarding all or part of the letters in a uniform contract within the meaning of the Standard Contracts , Including provisions regarding the minimum size of the letters, the relationship between them and the area in which the information is included, and the manner in which they are written and presented, thereby helping consumers to read and understand the contract so that they can sign it in an informed manner , Meaning that the law actually requires the business owner to prominently mention the main clauses at the head of the contract The terms of the contract, such as the terms of payment, terms of cancellation of the transaction, terms of liability, etc. Moreover, the legislator intends to cause a situation where every standard contract in the economy will be accompanied by a preliminary page showing the essential clauses of the contract and disclosure of the existence or absence of court approval for uniform contracts.

Section 39 of the Consumer Protection Law is also amended so that it in fact produces the parallel authority of entities such as the Supervisor of Banks and the Commissioner of Insurance to issue instructions similar to those of the Minister of Industry, Trade and Labor under section 4A of the bodies under their supervision with the aim of protecting customers. The amendment to the law is still not regulated. The customer is unable to negotiate the standard contract clauses formulated by the supplier, as in the case of the cellular and cable companies, and I hope that those involved in the legislative work will also take an interest in this issue. At the same time, the size of the expected change in the field should not be underestimated in light of the amendment, and I believe that this is a real revolution in the field of uniform contracts.